SFD Smithfield Foods, Inc. – Shares of the hog producer, pork processor, and beef processor have surged upwards by 6% to $10.50. Analysts in recent weeks used high feed prices and sluggish sales as reason enough to slash targets on food-producing companies, while there had also been concern on Smithfield’s ability to meet some forthcoming debt covenants. Corn prices have eased from $4.18 to $3.82 per bushel since the start of the month. Pork sales are also sensitive to the economy’s fortunes and sales have eased as consumers switch to cheaper grain-based foodstuffs and so perhaps today’s rally is based on expectations of a return to traditional consumption habits. Option investors crowded into the call-corral hoping that shares would continue to rise through expiration in June. The May 12.5 strike price had more than 7,200 calls purchased for 34 cents per contract while the June 12.5 strike witnessed some 2,300 calls coveted for 89 cents apiece. In order for these calls to land in-the-money, shares would need to continue to climb by another 19% from the current price. Option implied volatility has spiked to 102% from the value recorded at the start of the traded day of 77%.
LTD Limited Brands, Inc. – The specialty retailer of such brands as Victoria’s Secret and Henri Bendel has experienced a share price rally of 2% to stand at $10.88. LTD edged onto our ‘hot by options volume’ market scanner after one investor picked up a hefty chunk of puts in the August contract. Perhaps this bearish investor expects retailers to struggle through the summer months as consumers exchange their rally-caps for thrift-caps. This trader purchased 17,800 puts at the August 10 strike price for a premium of 1.25 per put option. It is possible that this trader is long the stock and is therefore utilizing the put options as downside protection should shares relapse over the next six months. The puts would begin to yield profits if shares were to decline by expiration, beginning at the breakeven share price of $8.75.
XLF Financial Select Sector SPDR – Shares of the financials ETF are slightly higher today by about 0.5% to $10.65. As usual, the fund was one of the top tickers on our ‘most active by options volume’ market scanner. One interesting trade we observed took place in the September…
EEM iShares MSCI Emerging Market ETF – For the most part, option traders were observed shedding calls and buying puts as though they were going out of style, despite the more than 5.5% rally in shares to $27.09. The trading pattern on the emerging markets ETF was bearish except for one investor who went against the grain today. At the April 25 strike price about 30,500 puts were purchased for an average premium of 48 cents each, while the June contract enticed investors looking for protection at even lower strikes. At the June 21 strike price 10,000 puts were picked up for 66 cents apiece whereas 5,000 puts were coveted at the June 24 strike for 1.37 apiece. Call options were sold in high volume, with 5,000 shed at the in-the-money June 24 strike for 4.45, some traders were seen banking gains on the current share price rally. Similarly, 10,000 calls were sold at the now in-the-money June 27 strike for 2.55 per contract. Some investors do not see the rally continuing through $31.00 by expiration in June as 32,500 calls were shed at the June 31 strike price for 90 cents apiece. Finally, the contrarian trade occurred in the midst of the put buying and call selling late in the trading day. One investor sold 25,000 puts at the June 24 strike for 1.32 each in order to fund the purchase of 25,000 calls at the June 29 strike price for a premium of 1.64. The net cost of getting long of the bullish call options amounts to 32 cents. This optimistic trader will begin to reel in profits if shares can breach the breakeven point at $29.32 by expiration.
QCOM Qualcomm, Inc. – The wireless communications company has experienced a 3% increase in shares to $40.93. QCOM appeared on our ‘most active by options volume’ market scanner as more than 75,000 contracts traded hands throughout the day. Put options traded twice for each call in action yielding a put-to-call ratio of 2.0. The May contract in particular caught our eye as one investor appears to have initiated a ratio put spread. At the May 40 strike price 7,000 puts were purchased for an average premium of 2.37 while the May 35 strike had about 14,000 puts sell for 86 cents apiece. By selling twice as many put options…
The S&P 500 got off to weak start and, after retracing a modest morning rally, spent most of the day in the shallow red with an intraday low of 0.63%. But in the last seven minutes of trading, the index recovered enough to a make a small gain of 0.14%. This is the fourth advance, the first was Monday's 1.60 surge, but the last three have ranged from 0.05% to 0.17% with today's close near the high of the miserly three-day series.
The index is now up 5.02% for 2012, which is 6.93% off the interim closing high.
From an intermediate perspective, the S&P 500 is 95.2% above the March 2009 closing low and 15.6% below the nominal all-time high of October 2007.
Below are two charts of the index, with and without the 50 and 200-day moving averages.
Bill Moyers continues to make astonishing television with his truly great new PBS series, Moyers and Company. It’s unmissable, the most intelligent hour of programming on American TV today, bar none.
In the latest episode, Rage Against The Machine’s Tom Morello—a man I have a lot of admiration for—joined Bill Moyers for a particularly moving and inspiring conversation. From the show’s website
Songs of social protest—music and the quest for justice—have long been intertwined, and the troubadours of troubling times—Guthrie, Seeger, Baez, Dylan, and Springsteen among them—have become famous for their dedication to both. Now we can add a name to the ranks of those who l...
And it was shaping up to be such a good year. According to the latest just released HSBC hedge fund performance update, increasingly more funds are starting to lose it, certainly for the month, but increasingly more for the year. How many LPs will be eager to keep on paying 2% management fees (forget performance) to funds who at best are long AAPL (at least 226 of them), and at worst have underperformed the S&P, for the second year in a row, by anywhere from 5 to 15%?
TIF - Tiffany & Co., Inc. – A surprise earnings miss and a reduced full-year profit and sales forecast from luxury jewelry retailer, Tiffany & Co., took some of the luster out of its shares today, with the stock trading down 8.5% at $56.55 as of 11:50 a.m. in New York. Options activity on Tiffany this morning suggests mixed sentiment on the st...
RealNetworks, Inc. (NASDAQ: RNWK) today announced that it has reached an agreement with the Washington State Attorney General over discontinued e-commerce practices. In accordance with the settlement agreement, RealNetworks has committed to:
Discontinuing the use of pre-checked boxes for purchases of RealNetworks subscription products; Spelling out more clearly the material terms of RealNetworks product offerings; Offering online cancellation of subscription offerings; Enhancing RealNetworks customer support guidelines regarding cancellation. Statement from Thomas Nielsen, President & CEO of RealNetworks:
"About two years ago, the Washington State Attorney General's Office contacted us regarding concerns they had with some of our e-commerce practices.
To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...
First we'll go to the technicals. Back in mid April I had opined a 'bear flag' formation was being created. [Apr 17, 2012: Potential Bear Flag Forming] But the market being the difficult beast it is, head faked everyone and rather than a break down from said flag it first went UP and nearly touched yearly highs. This caused everyone to think the bear flag had failed…. only to lead to a horrid May in the market. Generally a bear flag will resolve relatively quickly but the longer...
Despite the fact that U.S. equities are well-positioned and well-supported to go up, once again it is the headlines out of Europe—especially Greece—that are scaring off investors. Some are saying that it is now likely (and even desirable) that Greece will default on all its sovereign debt, withdraw from the euro, and severely devalue its domestic currency (Drachma?). This will allow them to operate a balanced budget while pumping cash into growth initiatives, rather than suffer the ravages of Germany-mandated austerity.
Some say, so what? Greece makes up only about 2% of the Eurozone’s overall economy. Nevertheless, you might say that t...
Markets died and then rallied to flat again as European leaders “prepared contingencies” for a possible Grexit
Markets died hard and fast earlier today as major indexes registered as much as 1.5% of losses after news that Euro zone officials were unofficially “preparing contingencies” for a Greek exit from the Euro. Unofficial statements were not enough to keep markets down however, as major indexes rallied back to flat levels by the end of the day.
So the world continues to wait on Europe, as the SPDR S&P 500 ETF (NYSEACA:SPY) gained .05%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:...
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
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think.
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big reward...
My last weekend update is dated from January 30 so after a long hiatus, here is an update of our virtual portfolio. Since the last update, we have closed the AA Money portfolio due to a lack of enthusiasm (and activity) and I have stopped tracking the FAS strangle as the low VIX makes it hard to get rewarded for the risk! But we have added a small $5KP virtual portfolio which does not use any margin.
FAS Money
We have had to recover from a big move up by FAS and a low VIX which keeps option prices low. But the portfolio has gaine about 10% since the last update.
Last update P&L - $5499.00
IWM Money
Not a lot of activity in this portfolio where the main focus is on the large IWM BCS. But the portfolio has grown over 20% since the last update.
Last update P&L - $1998.00
$5KP Portfolio
This is the virtual portfolio that replaced the AA Money portfolio. It does not use margin and we will keep holdings under $5K.
AAPL $50K P...
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...
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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
(