Investors Hungry for Smithfield Foods Options as Shares Rally
by Option Review - March 24th, 2011 4:05 pm
Today’s tickers: SFD, SD, CBS & BMTI
SFD - Smithfield Foods, Inc. – Shares in the hog producer and pork processing company rallied as much as 5.95% this afternoon to touch an intraday- and more than two-year high of $24.04 following an upgrade to ‘buy’ from ‘hold’ with a 12-month target share price of $28.00 at BB&T Capital Markets. Options on Smithfield Foods are more active than usual today, but investors are favoring puts over calls as of 12:40pm. More than 2.6 puts are trading on SFD at present for each single call in action. Put volume is heaviest at the July $23 strike where more than 4,340 contracts have changed hands on open interest of just 609 lots. Investors bought almost all of the put options at the July $23 strike for a premium of $1.50 apiece. Put buyers make money if shares in the packaged meat provider plunge 10.6% from today’s high of $24.04 to breach the effective breakeven price of $21.50 ahead of July expiration. Demand for puts on the stock spread to the lower July $22 strike where more than 1,750 puts were picked up at a premium of $1.10 each, versus previously existing open interest of 213 contracts. Traders long the puts stand prepared to profit in the event that Smithfield’s shares drop 13.0% in the next four months to trade below the effective breakeven price of $20.90 by expiration day. The closeness in the timing of the put transactions at these strikes suggest one investor could be responsible for most if not all of the put activity described. The trader or traders responsible for the put buying may be outright bearish on Smithfield Foods through July expiration, or are perhaps building up downside protection on a long position in the underlying stock. The pork producer is scheduled to report fourth-quarter earnings ahead of the opening bell on June 16, 2011.…
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DiggHumana Call Options Fly Off the Shelves as Shares Hit New 2-Year High
by Option Review - October 13th, 2010 4:54 pm
Today’s tickers: HUM, SIGA, ALXN, CBS, REP & GAP
HUM - Humana Inc. – Call options on the health benefits company are in high demand this afternoon with shares of the underlying stock trading higher by 3.15% to arrive at $53.85 in the final hour of the session. Shares rallied as much as 3.965% earlier today to secure a new 2-year high of $54.27. An analyst at Wedbush said earlier that health insurers may wind up reporting a better third quarter than previously forecast. Additionally, she mentioned Humana is her top pick for a health insurer that’s most likely to top Wall Street estimates in the third quarter. Humana is scheduled to report results ahead of the opening bell on November 1, 2010. Activity in November contract calls indicates one big player sees today’s rally in Humana’s shares extending through to expiration day next month, post-earnings. It looks like the bullish investor purchased 14,176 calls outright at the November $55 strike for an average premium of $1.425 per contract. The call buyer makes money if HUM’s shares rally another 4.8% over the current price of $53.85 to surpass the average breakeven point to the upside at $56.425 ahead of expiration. Options implied volatility on HUM is up 11.6% to arrive at 32.71% with 35 minutes remaining in the session.
SIGA - SIGA Technologies, Inc. – Shares of the bio-defense company jumped 52.7% today to an all time high of $13.07 on reports the firm won a U.S. government contract worth up to $2.8 billion to supply its smallpox antiviral drug. The stock is currently up 42.75% at $12.22 heading into the close. Options traders initiated bullish stances on the stock right out of the gate this morning in order to position for continued appreciation in the price of SIGA’s shares. Investors picked up approximately 1,200 in-the-money calls at the October $12 strike for an average premium of $0.44 apiece, and are poised to profit should shares exceed $12.44 through expiration on Friday. Nearly 1,000 calls were…
Who Owns The Media? The 6 Monolithic Corporations That Control Almost Everything We Watch, Hear And Read
by ilene - October 6th, 2010 8:49 pm
Who Owns The Media? The 6 Monolithic Corporations That Control Almost Everything We Watch, Hear And Read
Courtesy of Michael Snyder at Economic Collapse
Back in 1983, approximately 50 corporations controlled the vast majority of all news media in the United States. Today, ownership of the news media has been concentrated in the hands of just six incredibly powerful media corporations. These corporate behemoths control most of what we watch, hear and read every single day. They own television networks, cable channels, movie studios, newspapers, magazines, publishing houses, music labels and even many of our favorite websites. Sadly, most Americans don’t even stop to think about who is feeding them the endless hours of news and entertainment that they constantly ingest.
Most Americans don’t really seem to care about who owns the media. But they should. The truth is that each of us is deeply influenced by the messages that are constantly being pounded into our heads by the mainstream media. The average American watches 153 hours of television a month. In fact, most Americans begin to feel physically uncomfortable if they go too long without watching or listening to something. Sadly, most Americans have become absolutely addicted to news and entertainment and the ownership of all that news and entertainment that we crave is being concentrated in fewer and fewer hands each year.
The six corporations that collectively control U.S. media today are Time Warner, Walt Disney, Viacom, Rupert Murdoch’s News Corp., CBS Corporation and NBC Universal. Together, the "big six" absolutely dominate news and entertainment in the United States. But even those areas of the media that the "big six" do not completely control are becoming increasingly concentrated. For example, Clear Channel now owns over 1000 radio stations across the United States. Companies like Google, Yahoo and Microsoft are increasingly dominating the Internet.
But it is the "big six" that are the biggest concerns. When you control what Americans watch, hear and read you gain a great deal of control over what they think. They don’t call it "programming" for nothing.
Back in 1983 it was bad enough that about 50 corporations dominated U.S. media. But since that time, power over the media has rapidly become concentrated in the hands of fewer and fewer people….
In 1983, fifty corporations dominated most of every mass medium and the biggest media merger in history was a $340 million deal. … [I]n…
Bullish Strategies Abound as Market Posts Gains
by Option Review - October 5th, 2010 4:16 pm
Today’s tickers: IPG, UPS, ATML, CBS, CHL, CAVM, ROST & WL
IPG - Interpublic Group Companies, Inc. – Long-term bullish trading in Interpublic Group LEAPs indicates one strategist is preparing for the price of the underlying stock to climb substantially higher by expiration day in January 2012. Shares of the advertising and marketing services firm rose 4.80% to $10.46 by 2:50 pm ET. The options strategist appears to have enacted a delta neutral transaction, buying 210,000 shares of the underlying stock at $10.40 each, spread against the sale of 5,000 calls at the January 2012 $12.5 strike for an average premium of $0.975 apiece on a 0.42 delta. The sale of the calls can be considered a financing mechanism as well as a potential exit strategy on the long position in shares. The investor could wind up having the shares called from him at $12.50 each in the event that at expiration IPG’s shares exceed $12.50. In this case, the trader would realize gains of 32.625% on the rally in shares from the reduced purchase price of $9.425 a share up to $12.50 a share. Interpublic’s overall reading of options implied volatility is down 3.4% at 40.65% one hour before the final bell. The marketing services provider announces its third-quarter results before the market opens on October 29, 2010.
UPS - United Parcel Service, Inc. – A sizeable near-term bullish transaction involving 23,000 call options and a large chunk of UPS shares caught our eye today. Shares of the world’s largest package delivery company, which announced Friday it plans to raise the non-contractual UPS Freight rate by 5.9% starting October 18, are currently up 3.20% to stand at $68.25 as of 2:30 pm ET. It looks like the investor responsible for the transaction established a covered call on the stock to position for the price of the underlying shares to continue higher ahead of October expiration. The trader purchased approximately 322,000 shares at $67.57 each and sold 23,000 calls at a premium of $0.19 apiece on…
TLP: About F#^king Time
by ilene - July 14th, 2010 11:25 am
TLP: About F#^king Time
Courtesy of Jr. Deputy Accountant
Yeah, but what about intentional f-bombs?
NYT:
A federal appeals court struck down a Federal Communications Commission policy on indecency Tuesday, saying that regulations barring the use of “fleeting expletives” on radio and television violated the First Amendment because they were vague and could inhibit free speech.
The decision, which many constitutional scholars expect to be appealed to the Supreme Court, stems from a challenge by Fox, CBS and other broadcasters to the F.C.C.’s decision in 2004 to begin enforcing a stricter standard of what kind of language is allowed on free, over-the-air television.
The stricter policy followed several incidents that drew widespread public complaint, including Janet Jackson’s breast-baring episode at the 2004 Super Bowl and repeated instances of profanity by celebrities, including Cher, Paris Hilton and Bono, during the live broadcasts of awards programs. The Janet Jackson incident did not involve speech but it drew wide public outrage that spurred a crackdown by the F.C.C.
In a unanimous three-judge decision, the Court of Appeals for the Second Circuit in New York said that the F.C.C.’s current policy created “a chilling effect that goes far beyond the fleeting expletives at issue here” because it left broadcasters without a reliable guide to what the commission would find offensive.
The appeals court emphasized that it was not precluding federal regulation of broadcast standards. “We do not suggest that the F.C.C. could not create a constitutional policy,” the court said. “We hold only that the F.C.C.’s current policy fails constitutional scrutiny.”
So the court gives the FCC a fleeting "F" for FAIL. And the best part is that the judges totally let loose with all kinds of profanity in the ruling.
PSW Rewind of 2009 – The First Quarter
by Phil - January 1st, 2010 2:42 pm
Thursday’s close was very exciting, wasn’t it?
Well it sure was for us as my 10:01 Alert to Members was a play on the DIA Jan $103 puts at .56. Thanks to the late afternoon dip, they finished the day at .90 (up 60%) after peaking out at .95, a very nice win to close off the year. That was the only Alert trade all week as this market has been too tough to call and we don’t make trades just for the hell of it. I had been sniping at DIA puts all week expecting a pay-off but Thursday it finally came together.
Of course, I also strongly advocated hedging on Thursday morning and listed 4 trade ideas in the morning post to hedge ourselves against the possibility of just such a drop so don’t say you haven’t been warned. Whether there will be follow-through on Monday or a full reversal remains to be seen and, even if I knew, I wouldn’t tell you here because this is a review – predictions are another article entirely.
We treaded very cautiously into last year because our PSW Holiday Retail Survey was not looking very pretty so it was no surprise to us, on Dec 26th, when we got some horrific retail reports. These are, of course, the same reports that we "beat" this year – but not by much. Dec 29th was Monday and Israeli jets attacked Hamas targets in the Gaza sending oil flying up to $48 a barrel. That gave us a nice commodity rally into the close of the year but January 2nd was a Friday and we decided (fortunately) to take the money and run on our long plays, holding open our main cover of SKF Jan $120s at $4.35, which hit $80 later in the month (up 1,732%) and USO Feb $32 puts at $3.40, which hit $10.50 in the Feb dip (up 208%) so, on the whole, not too differently positioned than we are now, coming into the new year. Visually 2009 looked a little like this:
January – Waiting for Obama, or Something, to Change
We began January much the same way we ended December with my Wed Jan 7th comment being: "We call it "Testy Tuesday" for a reason and our 5% rule was tested twice during the day but the market failed to…
Which Way Wednesday – Fed Edition
by Phil - September 23rd, 2009 8:22 am
We’re just waiting on the Fed today, as are the rest of the markets.
Yesterday’s volume was the lowest since Sept 11th but not as low as Monday, which was our lowest volume since the end of June, just before we had a 5% correction. June 26th and 29th were our last two consecutive ultra-low volume days but June 30th was much bigger (a down 100 day), July 1st was up again on low volume and then July 2nd was another big down day and we bottomed out on July 10th. That was the time that the media was telling us we were forming a "classic" head and shoulders pattern and were doomed to revisit the March lows. It was also the last time we enthusiastically bought stocks.
At the time of that weekly review (7/11), we had CAL at $10 (now $16.82), CBS at $5.97 (now $12.58), COST at $43.45 (now $58.58), CVX – who we just shorted – at $58.20 (now $72.60), DIS at $22.41 (now $28.38), EXM at $6.05 (now $7.32), RT at $7.12 (now $8.85), SNDK at $14.47 (now $22.91), SPY at $87.96 (now $107.27), SPWRA at $22.35 (now $32.63), SUN at $22.09 (now $27.75), V at $59.86 (now $74.41), VLO at $15.57 (now $20.50), WFR at $16.61 (now 19.09), X at $30.77 (now $50.45), XLF at $11.10 (now $15.35), XOM at $65.12 (now $69.85) and ZION at $11 (now $19). Of course our members had much better entries as we had been targeting our entries on all of those but anyone reading our weekend review on July 11th could have played along at home from those prices (we even spiked down at Monday’s open) and when I say we are now bearish – it is that we are bearishly protecting these ridiculous profits – the kind of profits you usually don’t get after 3 years, not 3 months!
Overall, the broader market is up 20% over that time so it can be argued that a monkey with a dart board could have made good picks at that time but, if you read that week’s notes – you’ll notice that this monkey was screaming for people to buy and was going against what pretty much EVERY other analyst was saying and I was confident enough to lay out my picks, my strategy and my fundamental arguments for everyone to see. It would have really sucked…
Alcoa Options Busy
by Option Review - August 3rd, 2009 4:22 pm
Today’s tickers: AA, KEY, EWZ, F, CBS, TCK & OSK
Is Obama Gorbachev?
by ilene - July 21st, 2009 9:29 pm
Powerful read, as always but more so, by Jim Kunstler. - Ilene
Is Obama Gorbachev?
Courtesy of James Howard Kunstler
It was instructive to notice that the program following "Sixty Minutes" — in the supreme weekly slot of 8p.m. Sunday — was a childish and stupid "reality" show called "Big Brother." This said even more about the craven quality of the people currently running CBS. It was also a useful lesson in the diminishing returns of technology as applied to television, since it should now be obvious that the expansion of cable broadcasting since the heyday of the "big three" networks has led only to the mass replication of video garbage rather than a banquet of culture, as first touted.
It should remind us more generally that when a society’s operations become broadly fraudulent and unreal, authority and legitimacy wither. This is analogous to the position Barack Obama now finds himself in. He was elected as the politician most trusted in America to change the fraudulent and unreal operations of the US government. Don’t bother protesting that all politics is necessarily unreal and fraudulent. If it were so, you’d have to argue that the US Constitution was wholly a fraud, as well as Madison, Jefferson, Hamilton and the rest. It only has strong tendencies in that direction. (The Declaration of Independence was itself a direct strike against the fraud and unreality of British royal governance in America.)As president, Barack Obama is faced with the
…
Thrill-Ride Thursday, Finally Some Earnings!
by Phil - July 9th, 2009 7:24 am
Wheee, what a day yesterday!
Of course we hit it out of the ballpark with our ICE puts as that stock melted so fast it turned to vapors (or at least the calls did!). Fortunately, we had the puts and the Aug $95 puts I mentioned in the morning post, that we had taken at $6.20 on Tuesday, opened at $8.50 and ran up to $14.35 (up 131%) at the day’s end – all without a significant pullback to stop us out. Since we LOVE to go back to a well that’s paying off, we jumped on the Aug $90 puts for $3 as our first trade of the day at 9:39 and those finished the day at $7.35 (up 145%), not bad for our 3rd play on the same stock in 48 hours!
The best thing about having 100%+ put side winners in a downturn is it gives us free reign to speculate on the upside. Since we had a bottomish view of the downturn yesterday, we were able to use the cushion provided by the gains on ICE (as well as our longer-term DIA and USO short positions) to establish a bunch of speculative upside positions on stocks we thought were bottoming. The key to this strategy is position sizing and virtual portfolio management. If you invest, for example, $2,000 per position and are willing to take 20% losses as a stop-out, then having a 100% winner on ICE (and we had 3!) allows you to take 5 bullish position as the total risk on $10,000 is the $2,000 you gained on the bear side. We don’t just mindlessly flip-flop of course. In fact, it’s been more than a month since we picked up bullish positions for more than a quick trade and we’re not SURE these are going to work but, since we had the winning put plays, it’s a good place to make a stand – dipping our toes in the bullish waters once again.
I mentioned our brand-new $5,000 Virtual Portfolio yesterday and our first play was a net .71 spread on AA where we bought the $7.50 calls for $1.75 and sold the $9 calls for $1.04. On yesterday’s dip, we had the opportunity to take out the $9 calls for .70, which was a .35 profit and left us with the naked $7.50 calls at net $1.40, with a break-even at $8.90. We tried to sell them for…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(