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…
A photo posted to Twitter last week by Ansar al-Din Front, an Islamic extremist brigade, clearly shows a Ford truck with a "Mark-1 Plumbing" decal on the door and a militant standing in the bed firing the anti-aircraft gun...
As Haaretz reports, the Texas plumber whose truck was photographed in Syria says he has no idea how it ended up thousands of kilometers away in the war-torn country...
Mark Oberholtzer, who has owned and operated Mark-1 Plumbing in Texas City for the p...
Analysts at Oppenheimer initiated coverage of Twitter Inc (NYSE: TWTR) Friday by issuing a Perform rating and setting a $36.00 price target. Twitter is a global social networking platform with over 280 million active users.
While Oppenheimer analysts fully recognize the strength in Twitter as a company, they believe that Twitter’s stock is appropriately priced at current levels. “While TWTR is the best Internet platform for real-time content discovery, we believe that the stock’s current valuation of 10x 2015E sales, a 52% premium to peers, fully reflects future prospects based on current growth rates.”
Between November and December 2014, Twitter insiders have sold more than $...
Those who took advantage of markets at Fib levels were rewarded. However, this looked more a 'dead cat' style bounce than a genuine bottom forming low. This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.
The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.
The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...
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
Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...
Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...
I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).
Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.
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...
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 email@example.com 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.
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 PSW Investments, 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.
Site owned and operated by PSW Investments, LLC. Contact us at: 403 Central Avenue, Hawthorne, NJ 07506. Phone: (201) 743-8009. Email: firstname.lastname@example.org.