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…
There wasn't much to say about to about today as Indices worked on consolidating the last couple days of gains. The real action came from supporting technicals, as they looked to mark a shift from a generally bearish technical picture to a net bullish one.
The S&P got to resistance of what was looking a reversal head-and-shoulder pattern. This pattern won't be negated until 2,111 is breached, but today's action is a step in the right direction. The only negative is the continued relative under performance against Small Caps.
By Jacob Wolinsky. Originally published at ValueWalk.
Donald Trump will be good for economy, bad for Wall Street: David Rosenberg
Published on May 25, 2016
Live from the 2016 Strategic Investment Conference
Get the latest updates live from the sold-out 2016 Strategic Investment Conference with John Mauldin, Richard W. Fisher, David Rosenberg, James Grant, Niall Ferguson, George Friedman, Pippa Malmgren, Charles Gave, Neil Howe, and many more. Click go to following link to visit the conference’s live blog:
Hello, everyone who has joined us on the second day of SIC 2016. It’s going to be a long and exciting day. Today, we’ll hear speeches from George Friedman, Lacy Hunt, David Rosenberg, and other well-known financial and political experts. We’ll also do video interviews with each speaker, and all of th...
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Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?
Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.
I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.
I was thinking of this since a buddy of mine recently started ...
After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,
The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now.
And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now.
Phil writes back,
I was expecting them to start throwing poop at each other &n...
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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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