Shares in Facebook Inc. (Ticker: FB), which fell during aftermarket trading on Wednesday following an announcement by the company that it has agreed to buy mobile-messaging startup WhatsApp Inc. for $4 billion in cash, $12 billion in stock and $3 billion in restricted shares, staged a midday comeback on Thursday. The turn around in the price of the underlying appears to have sent options traders scrambling and volume in FB options to roughly 200% of the stock’s average daily reading before 3:00 p.m. EST. Shares in Facebook declined as much as 3.4% during morning trading to touch down at an intraday low of $65.72 just after 10:00 a.m. EST, bounced off that level and haven’t looked back. The shares are up nearly 2.0% at $69.40 as of the time of this writing. Based upon the turnaround in the price of the underlying, one might expect less volatility to accompany the relief rally in Facebook’s shares, but the opposite appears to be happening. The closing reading of options implied volatility midweek of 34.8% has jumped to 38.3% today (+10%) despite the near 2% gain for the stock.
Average daily options volume on Facebook is an impressive 344,000 contracts, but overall volume in call and put options on the social media giant today has topped 675,000 contracts with roughly seventy minutes until the closing bell sounds. The most traded contracts on FB by volume are the regular March $75 and $85 strike calls, with upwards of 60,000 options changing hands at each and well in excess of open interest. The Mar $75 calls traded for an average of $0.84 each today while the Mar $85 strike calls traded at an average premium of $0.23 per contract. The sharp rally in the price of Facebook’s shares since the bulk of the volume printed has driven premiums on these call options up to $1.15 and $0.29 each, respectively as of 2:50 p.m. EST. Much of the volume at both strikes appears to have been purchased earlier in the day at premiums below current levels; as such, it seems likely that some traders positioning for further upside in the stock price by March expiration are generating quicker than anticipated gains on this view.
Chart – Facebook shares rebound to hit fresh highs
Our senior index finished the day at 1,358.04, just 0.96 under our 10% line at 1,359. Oddly enough, it never actually crossed the line that we had predicted would be the top of this run in April of 2009. It's a simple 2% overshoot of the 100% run from the S&P bottom at 666.
If the S&P can get over the line and hold it – we will be THRILLED to finally redraw our Big Chart but, if not, then this is just the blow-off top of the range, reeling in the suckers ahead of the big reversal that no one could have possibly seen coming (except this guy but he's like 100 and just got divorced, so he's bound to be in a bad mood).
Is there anyone who was born SINCE radio who is willing to still be bearish? As you can see from David Fry's chart, since December 19th, other than a few red days out of over 40 – it's been tough to be a bear. This is what it was like in 1999, when the experienced market players would be well-hedged and missing the rally while some kid who works for him quits because he bet his student loan money on Yahoo and now drives a Porsche.
Sure 9 months later the Porsche was repossessed and the kid was flipping burgers but WE WANT TO BE THAT KID – IT'S FUN TO BE THAT KID – until it isn't again. The funny thing is, we only gave those dot com companies Millions when they IPO'd – now we give out Billions because, of course, this time is different, it's a new paradigm, this changes everything, you have to understand the new metrics, sock puppets rule….
McDonald's was founded in 1940 by two brothers actually named McDonald. Ray Krok bought the chain from them and created the World's greatest franchise which now has over 26,000 franchise operations and over 6,000 company stores employing about 1.7M people worldwide selling $24Bn worth of food a year with a $5Bn net profit. Facebook has 3,200 people but they generate $1.2M in revenues per employee ($3.8Bn) and drops $1Bn to the bottom line. Facebook's assets are mainly IP and those are about as valuable as MySpace's assets now…
TED believes facebook and other modes of internet people connecting will change the form and nature of human interaction, and I agree, the changes are underway. Will it effect human nature or is it just a mechanism for revealing it in new ways? – Ilene
After all, Facebook, like Zuckerberg, is a paradox: a Web site that celebrates the aura of intimacy while providing the relief of distance, substituting bodiless sharing and the thrills of self-created celebrityhood for close encounters of the first kind. …
[Zuckerberg]’s a revolutionary because he broods on his personal grievances and, as insensitive as he is, reaches the aggrieved element in everyone, the human desire for response.
Part of the power and attraction of social media, in my opinion, is that it encourages and enables the creation of acquaintance, friendship, and even intimacy among individuals who would otherwise never be able to create or even desire such relationships in the real world. Culture, geography, distance, and existing socioeconomic ties are not insurmountable or even apparent obstacles to people commencing interaction and communication over the internet. This broadens the scope for both connection and misunderstanding to a far greater degree than has been possible to date in our local, non-virtual, geography- and time-constrained world. The potential degrees of freedom of human interaction have materially increased. While this has opened intoxicating vistas of personal possibility for millions, you can also imagine it is not always a good thing.
The other significant change embedded in these new interactions is that people can cultivate relationships over virtual social networks for months and even years without ever meeting in the flesh. Stable, long-lasting, and—it is not irresponsible to imagine it—even durable relationships of the deepest kind can be established and maintained between characters or personae that individuals adopt and present to each other. Is this wise? Is it responsible? Is it fair?
Does it matter?
Probably not, for we have already shipped ourselves out to a brave new world. An entire generation is constructing online identities—smarter, wittier, braver, and prettier than we are in the real world—and sending them out to interact and form relationships with similarly artificial simulacra. We are no longer Pygmalion in his studio, sculpting an image of female perfection according to our own desires
Here are headlines/links to Andy Borowitz’s recent satirical articles finding humor in current events. Funny, though potentially offensive. (So don’t blame me for not warning you – Palin fans, Tiger Woods fans, BP execs.) - Ilene
Are "businesses" which aggregate user-provided content in order to serve adverts to those users "innovative?" Are they serving a "need" or attempting to contrive a new "need"?
While I usually present a specific thesis here, today’s topic is more a "work in progress" as I think through the paradoxes and connections between "needs" and contrived needs.
The two beginning data points are the South Pacific island nation of Vanuatu, formerly the New Hebrides, and an article from BusinessWeek on the dozens of Silicon Valley startups founded or funded by Google alumni: And Google Begat…The search giant’s former employees are seeding tech startups— and shaping another wave of innovation.
A friend’s son recently served a Peace Corps stint in a remote Vanuatu village. There is no electricity--illumination is provided by candles--and fresh potable water is a 2 kilometer walk away. The village pursues a generally traditional lifestyle apparently by choice; if you want to own a car and drive around in Western-style petroleum-based affluence, you can do so in the nation’s capital.
In the village, the women reportedly do most of the heavy lifting (agriculture, childcare, etc.) while the men have sufficient free time to brew up some hootch (kava) to enjoy in afternoon conviviality.
This "subsistance" is not poverty in the sense that people have enough to eat, shelter, some basic education, relative security from the predations of the State and/or external marauders (in our era, global Neoliberal Capitalism of the predatory/cartel variety).
This lifestyle is, with modest variations such as kerosene lamps or limited electricity, still lived by hundreds of millions of human beings. It is not to be romanticized or distorted by global-market, post-industrial definitions of "poverty." There are all sorts of poverty once you have enough to eat, a community and shelter, and definitions of a "good life" and a "better life" have to be carefully parsed.
We, on the other hand, are embedded in advanced, post-industrial Neoliberal Capitalism-- post-industrial in the sense that most of the nasty bits are performed elsewhere, so "we" get to live with high standards of environmental control, and Neoliberal in the sense that the Savior State is an active partner with global predatory finance Capitalism to exploit both foreign markets and domestic populations.
By the standards of our status quo, residents of Vanuatu are living at…
To save myself from answering this question repeatedly, these are the thoughts I have had about Trump since he became a presidential candidate, which were partly expressed in a Politico article over a month ago.
First of all, I think his support is firm and shows no sign of diminishing. He has already weathered storms such as his criticism of John McCain that would have doomed any other candidate. Anyone who thinks he is the current version of Cain, Bachmann, Santorum or other nutcase that briefly led the GOP field in 2012 is dead wrong.
The Fed's Beige Book is a summary and analysis of economic activity and conditions, issued roughly two weeks prior to monetary policy meetings of the Fed.
"Book" is an adequate expression. This month, the Beige Book is 50 pages long. It's prepared with the aid of reports from the district Federal Reserve Banks.
Don't bother reading the book. It's not worth the slog.
Beige Book Highlights
Bloomberg offers these Beige Book Highlights. The Beige Book, prepared for the September 17 FOMC meeting, is not underscoring any urgency for a rate hike. Eleven of 12 districts report only moderate to modest growth with the Cleve...
Markets continue their wild swings as investors consider the health of the world's two biggest economies. China set the tone on Tuesday with its official manufacturing gauge slumping to a three-year low. A U.S. factory report expanded at the slowest pace since May 2013, co...
The S&P 500 is now down around 7% on the year. Is the very long-term bull market still in play? Yes it is!!!
The chart below looks at the NYSE Composite on a monthly basis, dating back to 1965.
CLICK ON CHART TO ENLARGE
As you can see, since the mid 60’s, the NYSE composite has remained inside of rising channel (A). The last time the top of the channel was touched was in the late 1990’s and the last time the bottom of the channel was touched took place back in 2009.
Despite the quick down turn of late, this long-term rising channel remains in ta...
After the late recovery last week, sellers again made markets their home. Sizable losses were accompanied with higher volume distribution, although volume was down on earlier panic. Another pass at August lows looks likely.
The S&P is again heading to the 10% 200-day MA envelope. Relative performance is shifting away from Large Caps to more speculative indices, which is bullish in a rising market, but in a falling market suggests a lack of sanctuary.
The Nasdaq is also in the early stages of a retest of the August low. Technicals are weak, although stochastics crept above the bullish mid-line, but not enough to suggest ...
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The dark veil around China is creating a little too much uncertainty for investors, with the usual fear mongers piling on and sending the vast buy-the-dip crowd running for the sidelines until the smoke clears. Furthermore, Sabrient’s fundamentals-based SectorCast rankings have been flashing near-term defensive signals. The end result is a long overdue capitulation event that has left no market segment unscathed in its mass carnage. The historically long technical consolidation finally came to the point of having to break one way or the other, and it decided to break hard to the downside, actually testing the lows from last ...
With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.
Stock market sell off surprises some while others were prepared and are hedged prospering
Naysyers are warning that the recent plunge in Bitcoin prices - from almost $318 at its peak during the Greek crisis, to $221 yesterday - is due to growing power struggle over the future of the cryptocurrency that is dividing its lead developers. On Saturday, a rival version of the current software was released by two bitcoin big guns. As Reuters reports, Bitcoin XT would increase the block size to 8 megabytes enabling more transactions to be processed every second. Those who oppose Bitcoin XT say the bigger block size jeopardizes the vision of a decentralized payments system that bitcoin is built on with some believing ...
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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.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
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.
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