Shares in teen retailer Aeropostale Inc. (Ticker: ARO) earlier rallied to the highest level since June 2nd, perhaps after the stock was rated new ‘hold’ at Wunderlich Securities with an 18-month price target of $3.50 a share. The move in the price of the underlying spurred heavier than usual trading in upside call options on the name, perhaps as some traders take positions ahead of the company’s second-quarter earnings report on August 21st. Shares in ARO are currently up 3.5% at $3.49 after earlier rising as much as 9.0% to $3.68.
The most traded options contracts on Aeropostale thus far in the session are the Jan ’15 3.0 strike in-the-money calls, with volume topping 16,000 contracts as of the time of this writing, versus open interest of just 1,412 contracts. Time and sales data suggests most of the volume was purchased for an average premium of $0.89 per contract. Traders long the 3.0 strike calls stand ready to profit at expiration in the event shares in ARO exceed the average breakeven price of $3.89. As the one-year chart below illustrates, shares in Aeropostale are down roughly 75% since this time last year.
Chart – 1-year performance of shares in Aeropostale
FB – Facebook Inc. – Shares in Facebook rallied more than 4.0% on Friday to $40.14, the highest traded price since the company’s IPO in May of 2012. The move in FB shares spurred heavy trading traffic in short-dated upside calls on the stock as some traders look for further upside in the shares in the near term. The most actively traded Aug 30 ’13 expiry options are the at the money calls, with volume in the $40 contracts topping 11,000 lots versus open interest of 5,822 contracts just before midday. Time and sales data suggests most of the volume was purchased during the first half of the trading day for an average premium of $0.60 each. Buyers of the $40 calls stand ready to profit at expiration next week in the event that Facebook’s shares settle above the average breakeven price of $40.60. The Aug 30 ’13 $40.5 strike calls are also changing hands today, with more than 2,000 of those contracts purchased for an average premium of $0.50 apiece. Overall options volume on the stock is approaching 310,000 contracts as of 12:05 p.m. ET, surpassing FB’s average daily options volume of around 265,000 contracts. Trading of Facebook call options is outpacing that of puts, driving the call/put ratio above 2.3 as of the time of this writing.
ARO – Aeropostale, Inc. – Options are active on Aeropostale today with shares in the teen retailer unraveling on the heels of lower than expected second-quarter earnings reported after the close on Thursday. Shares in ARO are currently down 20% at $8.78, the lowest level since 2008, as of 11:45 a.m. in New York trading. Trading in September expiry put options this morning suggests some traders are positioning for further weakness in the price of the underlying in the near term.…
TRIP - TripAdvisor, Inc. – Shares in the online travel company rallied nearly 7% to a fresh record high of $50.88 on Wednesday morning on positive comments and a target share price increase to $52.00 from $50.00 at Deutsche Bank. TripAdvisor’s shares have increased more than 75% during the past four months, rebounding explosively off a 52-week low of $28.63 set back in November of 2012. Options traders positioning for TRIP’s shares to extend gains during the next few months appear to be buying upside calls across several expiries today. Near-term bulls snapped up around 1,600 calls at the Mar. $55 strike for an average premium of $0.09 apiece this morning, and may profit at expiration next week in the event that shares in the name surge 8.3% to top the average breakeven point at $55.09. The $55 strike call options expiring in April and June are also active, with traders picking up around 550 lots at the June $55 strike for an average premium of $0.80 each, and roughly 650 of the June $55 strike calls at an average premium of $2.29 a-pop in the early going today. Finally, it looks like one options strategist has generated substantial paper profits on a bullish spread initiated back on February 12th. The sizable one-by-two ratio call spread, constructed with the purchase of 1,500 Mar. $47 calls at a premium of $2.40 each against the sale of 3,000 Mar. $50 calls at a premium of $1.20 apiece, was purchased flat and makes maximum potential profits of $3.00 per contract if shares in TRIP settle at $50.00 at March expiration next week.
SWHC - Smith & Wesson Holding Corp. – Gun manufacturer, Smith & Wesson, raised its profit and sales forecast for fiscal 2013, reported third-quarter net income that more than tripled versus the year ago quarter on a near 40% rise in sales for the period, yet shares in the firearms maker are selling off today, down 6% at $9.60 as of the midday…
ARO - Aeropostale, Inc. – Shares in teen retailer, Aeropostale, Inc., are up 6.2% this morning at $13.87 in sympathy with Abercrombie & Fitch after that company raised its guidance for full-year earnings and reported better-than-expected third-quarter results before the opening bell on Wednesday. Aeropostale, which acquired online women’s apparel and shoe retailer GoJane.com yesterday, is scheduled to report third-quarter earnings after the close of trading on November 29th. ARO call options are buzzing with activity today, with some traders adjusting existing positions, while others take profits and establish bullish stances on the stock ahead of earnings in two weeks. One strategist responsible for the purchase of approximately 2,000 Nov. $14 strike calls for a premium of $0.10 apiece back on October 31st appears to be selling the calls today for three times that amount, or $0.30 in premium per option contract. Meanwhile, the purchase of more than 2,000 upside calls out at the Dec. $14 strike for a premium of $1.00 apiece looks for shares in ARO to extend gains in the near term. The trader or traders picking up the Dec. $14 strike calls may profit at expiration next month if shares in Aeropostale rally another 8% to surpass the average breakeven price of $15.00 at expiration. Call buying spread to the Dec. $15 and $16 strikes as well, with more than 500 contracts purchased at each strike earlier in the trading session. Interest in the Dec. $14, $15 and $16 strike calls today adds to positions established during the prior trading week.
WYNN - Wynn Resorts Ltd. – Trading traffic in call options on casino resort operator, Wynn Resorts Ltd., this morning suggests one strategist is positioning for shares in the name to rally substantially by year end. Shares in Wynn Resorts are down 1.2% this morning to stand at $105.67 as of 11:50 a.m. ET. The most active contracts on WYNN by volume so far today are the…
EXPR - Express, Inc. – Specialty retailer Express, Inc.’s shares are getting hammered today, down more than 20% at $11.90 as of 11:10 a.m. in New York, after the company lowered its third-quarter earnings forecast and said same-store sales will decline in the mid-single digit range. Express, Inc. shares, publicly traded since the company’s May 2010 IPO, have not yet managed to catch a bid in today’s session as the stock continues to hit fresh record lows. Options traders betting shares in the name will rebound by the start of the new calendar year snapped up January 2013 expiry call options this morning. Contrarian bets are heaviest at the Jan. 2013 $15 strike where approximately 975 calls were purchased at a premium of $0.45 apiece. Call buyers may profit at expiration next year in the event that EXPR shares jump 30% over the current price of $11.90 to top the effective breakeven point at $15.45. Getting long the Jan. 2013 $15 call has been painful for one or more options traders who appear to have purchased at least 550 of the contracts back on September 4th for a premium of $2.20 per contract. The value of the call options has collapsed in the four weeks since then, down nearly 90% so far to the current asking price of $0.30 apiece.
ARO - Aeropostale, Inc.– Shares in teen retailer, Aeropostale, Inc., are moving lower this morning, perhaps in sympathy with Express, Inc., after the specialty retailer cut its third quarter profit forecast. ARO shares are currently down 2.3% at $13.05 as of 11:00 a.m. ET, and it looks like some options traders are positioning for the price of the underlying to extend losses in the near term. Trading traffic in Aeropostale options is heaviest in the Oct. $13 strike put where more than 8,000 contracts have changed hands versus open interest of 1,239 positions. It looks like most of the…
DOW - Dow Chemical Co. – Bearish trading in DOW options this morning suggests some traders are positioning for the price of the underlying to decline further this summer. Shares in Dow Chemical fell 1.6% to $31.73 on Tuesday following a downgrade to ‘Neutral’ from ‘Overweight’ at JPMorgan. Upwards of 4,500 puts changed hands at the Aug. $31 strike in the first half of the trading session against open interest of 1,413 contracts. It looks like most of the puts were purchased at a premium of $1.33 apiece, including a large block of 1,568 contracts that traded within minutes of the opening bell this morning. Put buyers may be taking outright bearish positions on the name or hedging long positions in the underlying shares ahead of the company’s second-quarter earnings report on July 26th. Profits – or downside protection – kick in on the long put positions should shares in the manufacturer of plastic materials and chemicals slide 6.5% to breach the effective breakeven price of $29.67 by August expiration.
CVH - Coventry Health Care, Inc. – The managed care company popped up on our scanners this morning after a large bearish spread was initiated in the front month options today ahead of a decision from the Supreme Court on the 2010 health care law. Shares in Coventry Health Care are off their lows of the session but remain in negative territory, down 0.60% at $33.33 as of 12:15 p.m. in New York. A large 5,000-lot July $28/$32 put spread appears to have been purchased for a premium of $0.95 per contract. The position, rather sizable next to overall open interest on the stock of 32,696 contracts, could be a hedge to protect a long position in the stock or an outright bearish stance on the near term performance of the shares. The spread is profitable – or yields downside protection – in the event that Coventry’s shares decline…
ARO - Aeropostale, Inc. – Investors are initiating bullish positions on the teen retailer ahead of the company’s first-quarter earnings report on Thursday after the close. Shares in Aeropostale are up 1.25% at $21.41 as of 11:50am, rallying in sympathy with teen apparel company Abercrombie & Fitch Co. following ANF’s better-than-expected earnings report. One options strategist expecting Aeropostale’s shares to extend gains over the next few months sold 9,900 puts at the July $19 strike for a premium of $0.40 each, and purchased the same number of calls up at the higher July $23 strike at a premium of $0.75 apiece. Net premium paid to initiate the bullish play amounts to $0.35 per contract. The trader responsible for the transaction profits at expiration as long as shares in ARO surge 9.1% over the current price of $21.41 to exceed the effective breakeven price of $23.35. Of course, the investor could unravel the position ahead of expiration. He could exit the trade profitably should some catalyst – such as an earnings surprise to the upside – send shares and call premium higher, and put premium lower. The short stance in put options suggests the trader is willing to have shares put to him at $19.00 should the puts land in-the-money at expiration. While the investor runs the risk of having the stock put to him at expiration, it seems the financing received to reduce the cost of buying the calls is worth this risk as ARO’s shares have not traded beneath $19.00 since April 2009. Meanwhile, other bullish players engaged in plain-vanilla call buying, picking up some 3,200 calls at the July $26 strike for an average premium of $0.20 per contract. Call buyers make money if shares in Aeropostale jump 22.4% to top the average breakeven price of $26.20 at expiration in July. The clothing company’s shares were up above $26.20 as recently as April 21, 2011.…
The first thing you will hear this morning is that COST had a 9% rise in sales, with International sales up a whopping 25%. What you are less likely to hear is that COST sells a lot of gasoline, which has doubled in price since last December and, excluding inflation in gas prices, same-store sales are up just 2%, a tremendous miss of the 7.9% expected. Out of the 25% increase in International sales, 15% is attributable to currency exchange so up 10% is the real number.
This is nothing against Costco, I like that company, but it’s a caution sign to look carefully at the retail numbers we’re going to be seeing today as there are several outside factors that are skewing the results drastically – to the point where the numbers, whether good or bad, are almost meaningless. It’s also good to keep in mind that we are comping sales to the WORST CHRISTMAS EVER so anything less than double digit gains over last year is still pretty sad.
Mish did a good job yesterday of pointing out the statistical nonsense known as the Non-Farm Payroll Report, where "Birth/Death" model revisions that were as much as 356,000 a month last year (January) make the data beyond useless for any kind of serious analysis. Nonetheless, analyze it they will and if we manage to avoid posting our 24th CONSECUTIVE month of losses, surely they will be pouring champagne on CNBC and acting like Capitalism has once again triumphed over evil (evil being people without money who still want to live with dignity).
Speaking of dignity – if you know 100 people in Nevada then, statistically, 3 of them went bankrupt this year, up 61% from last year as our economy "recovers". In Tennessee, Georgia and Alabama, just 2 of your 100 friends filed while California, surprisingly "only" had one in 66 households file for bankruptcy so you can go almost a whole day and not run into someone who lost everything in California – too bad the same can’t be said for the State overall! California needs $21Bn over the next 18 months to keep the lights on. This doesn’t seem so bad, GMAC is losing $13Bn this quarter and we’re bailing them out but if we bail out CA then NY, NJ and 47 other states will come knocking to the tune…
GLD – SPDR Gold Trust ETF – Surprise, surprise…shares of the gold exchange-traded fund reached another record high by climbing up to $119.42 today. We observed one investor initiate a contrarian play in the January 2010 contract. The trader established a bearish risk reversal by selling 4,000 calls at the January 120 strike for 3.65 apiece, spread against the purchase of 4,000 puts at the same strike for 4.60 each. The net cost of the spread amounts to 95 cents per contract. The trader, if long shares of the underlying, enacted downside protection to hedge against potential declines in the price of gold through expiration in January. Perhaps this investor believes gold has peaked, at least as far as the next couple of months are concerned. In contrast, longer-term trading in the September contract was decidedly bullish. The trader sold 5,750 puts at the September 117 strike for 9.35 apiece in order to finance the purchase of the same number of calls at the higher September 140 strike for an average premium of 5.88 each. The investor banks a net credit of 3.47 per contract on the transaction, which he retains in full as long as shares remain higher than $117.00 through expiration. Additional profits amass if shares jump 17% to surpass the $140-level by expiration in September.
MGT – MGIC Investments Corp. – Bullish investors populated MGIC Investments Corporation with various optimistic option strategies throughout the trading day. Shares surged 20% to $5.10 after its Wisconsin regulator waived minimum capital requirements for two years. This permits the company to continue selling coverage despite nine straight quarterly losses. Investor reacted by picking up nearly 5,000 calls at the now in-the-money December 5.0 strike for an average premium of 30 cents apiece. Call-buyers will profit if MTG’s shares surpass the breakeven price of $5.30 by expiration. Additional bullish transactions appeared in the January 2010 and March 2010 contracts. Optimistic individuals shed 3,000 puts at the January 5.0 strike for 60 cents premium apiece. Investors retain the premium received on the sale if shares remain above $5.00 through January’s expiration day. Put-sellers stand ready to have shares of the underlying stock put to them at an effective price of $4.40 per share if the puts land in-the-money. Finally, another chunk of 5,000 puts were sold at the March 5.0…
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 firstname.lastname@example.org 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.
Here is a update in response to a standing request from a couple of sources that I also share with regular visitors to my Advisor Perspectives pages.
The request is for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. In response, I maintain two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just refer to as the CPI). The charts below have been updated through the August 29th close.
Buffalo Wild Wings Inc. (Ticker: BWLD) shares are in positive territory in early-afternoon trading on Thursday, reversing earlier losses to stand up 0.50% on the session at $148.50 as of 12:15 pm ET. Options volume on the restaurant chain is running approximately three times the daily average level due to heavy put activity in the October expiry contracts. It looks like one or more traders are buying the Oct 140/145 put spread at a net premium of roughly $1.45 per contract. As of the time of this writing, the spread has traded approximately 3,000 times against very little open interest at either striking price. The put spread may be a hedge to protect a long stock position against a roughly 6% pullback in the price of the underlying through October expiration, or an outright bearish play anticipating a dip in BWLD shares in the next couple of months. The spread makes money at expiration if shares in BWLD decline 3.3% from the current price of $148.50 to breach the breakeven point...
Gradient Senior Analyst Nicholas Yee reports on six companies that are using a variety of techniques to shift pretax profits to lower-tax areas. Featured in this USA Today, article, the companies include CELG, ALTR, VMW, NVDA, LRCX, and SNPS.
Mt Gox may be long gone in the annals of bankruptcy, but its founder refuses to go gentle into that insolvent night. And, as CoinDesk reports, the disgraced former CEO of the one-time premier bitcoin trading platform has decided to give it a second try by launching new web hosting service called Forever.net and is registered under both Karpeles’ name and that of Tibanne, the parent company of Mt Gox.
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
I just wanted to be sure you saw this. There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.
If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither MaddJack Enterprises, LLC
d/b/a PhilStockWorld (PSW) nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.