LZ - Lubrizol Corp. – It looks like a well-timed bullish bet on Lubrizol Corp. initiated in April contract calls less than one week ago paid off big time for one options strategist following the announcement of Berkshire Hathaway’s $9 billion acquisition of the specialty-chemicals company this morning. Shares in Lubrizol Corp. shot up as much as 27.3% during the session to hit an intraday and all-time high of $134.20, which is just 80 pennies shy of the $135.00 a share deal reported today. Options volume on the stock is heaviest at the April $110 strike where one trader appears to have raked profits in off of the table within the first 20 minutes of the opening bell. Open interest patterns at that strike suggest around 2,650 calls were picked up for an average premium of $2.35 per contract back on March 9, 2011, when shares in the Lubrizol closed the session at a $106.55. The purchase of the calls, which were the closest-to-the-money contracts available at the time of the transaction, cost the investor around $622,750. Since then, news of the deal with Berkshire Hathaway sent shares in the chemical company soaring, driving up the value of the now deep in-the-money April $110 call options. It looks like the investor sold the 2,650 calls this morning at a premium of $23.90 per contract. Net profits on the sale amount to $21.55 per contract, or a grand total of $5,710,750. Lubrizol’s overall reading of options implied volatility came crashing down today, and currently stands 88.3% lower at 3.75% as of 11:35am in New York.
AFL - Aflac, Inc. – Shares in the U.S.-based insurance provider, which provides health and life insurance to a large portion of the Japanese population, fell 3.80% to $53.44 by 1:00pm in New York trading. The stock earlier declined more than 6.0% to touch down at an intraday low of $52.12. Investors bracing for further bearish movement in Aflac’s shares picked up April $50 strike…
PXP – Plains Exploration & Production Co. – The implementation of a three-legged bullish options combination play on Plains Exploration & Production Co. drew our attention to the November contract where one investor utilized call and put options to position for a rebound in the price of the underlying stock. Shares of the independent oil and gas company soured in late afternoon trading, slipping 3.2% lower to stand at $20.98 by 3:35 pm (ET). PXP’s current price of $20.98 represents a 40.4% decline in value since April 15, 2010, when the stock touched an intraday high of $35.41. But, the options activity observed in the November contract today indicates one trader is expecting the stock to rebound sharply ahead of expiration in five months time. The investor essentially sold short put options in order to partially finance the purchase of a debit call spread. The trader purchased 10,000 calls at the November $22.5 strike for a premium of $2.45 each, sold 10,000 calls at the higher November $28 strike for a premium of $0.70 each, and finally sold 10,000 puts at the November $17.5 strike for a premium of $1.30 a-pop. The net cost of the transaction amounts to $0.45 per contract. Thus, the investor responsible for the three-legged play is positioned to make money as long as PXP’s shares rally 9.4% to surpass the effective breakeven price of $22.95 by expiration day in November. Maximum potential profits of $5.05 per contract are available to the trader if Plains’ shares surge 33.5% to surpass $28.00 by November expiration.
MRVL – Marvell Technology Group Ltd. – Global semiconductor maker, Marvell Technology Group Ltd., popped up on our ‘most active by options volume’ market scanner in the second half of the trading session due to rampant bearish options activity in the July and August contracts. Marvell’s shares edged 1.50% lower this afternoon to stand at $17.11 just ahead of the closing bell. Pessimistic traders expecting shares to continue lower ahead of July expiration sold 3,100 calls at the July $17 strike for an average premium of $0.74 each. Call selling spread to the August $15 strike where 2,300 in-the-money calls were sold at an average premium of $2.52 per contract. Perhaps in-the-money call sellers are hoping to keep…
The canary in the coalmine of an increasingly desperate energy industry just croaked. With "unusual timing" and at "distressed prices,"Reuters reports that Phillips 66 - the major US refiner owned by Warren Buffett - dumped crude oil for immediate delivery into Cushing storage tonight. This sparked heavy selling of the front-month WTI contract (to a $26 handle) and crashed the 1st-2nd month spread to 5 year lows.
I know…I know. As soon as I wrote that I could almost hear the cries of the “perma-bull” crowd exclaiming “how many times have we heard that before.”
They would be right. The problem with the majority of technical analysis, in my opinion, is that time frames are too short for most investors. When looking at technical price patterns using daily data, there have been numerous occasions where analysts have spotted “Head and Shoulder” patterns, “Hindenberg Omens,” and &ldqu...
The dollar nursed losses around three-and-a-half-month lows on Wednesday, pressured by fears of a global economic slowdown following recent falls in oil prices and growing concerns about the health of European banks.
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Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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