JBL - Jabil Circuit, Inc. – Shares in Jabil Circuit are down sharply on Thursday, off 4.7% at $18.57 just after midday on the East Coast, following the company’s second-quarter earnings report released after the close on Wednesday. Options activity on JBL today suggests some traders are positioning for shares in the name to rebound in the near term. The most active contracts on Jabil as measured by volume are the April $19 strike calls, with upwards of 3,000 lots in play versus open interest of 1,714 contracts. It looks like most of the calls were purchased for an average premium of $0.40 apiece, and may be profitable at expiration next month should shares in JBL rally 4.5% to settle above the average breakeven point at $19.40. The stock is down nearly 30% since this time last year, but has managed to rally 10% off a 52-week low of $16.89 set back in October.
HERO - Hero Offshore, Inc. – Trading traffic in HERO call options on Thursday indicates some traders are looking for shares in the provider of offshore drilling services to extend gains during the next few months. The stock, up more than 150% since June of 2012, trades 1.65% higher this afternoon at $7.38 as of 1:00 p.m. ET. Traders looking for the price of the underlying to push higher purchased around 3,100 calls at the May $8.0 strike for an average premium of $0.37 apiece during the first half of the session. Call buyers may profit at expiration in May in the event that HERO’s shares rally another X% over the current price of $7.37 to exceed the average breakeven point at $8.37. The May $8.0 strike calls were active on Wednesday, as well. Open interest in the $8.0 strike calls jumped to 3,528 contracts following the prior trading session, with much of the fresh interest purchased at a premium of $0.25 each. Overall volume in HERO options is greater than 5,700 contracts this afternoon, versus the stock’s…
CTXS - Citrix Systems, Inc. – Shares of the software company fell as much as 11.2% this morning to touch an intraday low of $62.16 following cautious words from the firm’s CEO regarding its new product launch. Citrix Systems’ shares are currently down 9.10% at $63.62 just before 12:00 pm ET. Initially, options investors reacted by initiating bearish transactions, but it looks like contrarian players swooped in to purchase bull call spreads in order to position for shares to reverse course ahead of December expiration. Bullishness on the stock may have followed Pacific Crest’s comment that Citrix’s third-quarter is likely to be ok. The company reports its results for the third-quarter after the market closes on October 21, 2010. Bears were quick to purchase put options and sell out-of-the-money calls in the October contract. Investors picked up 1,000 puts at the October $60 strike for a premium of $0.90 each. Put buyers at this strike make money if CTXS shares fall 7.1% from the current price of $63.63 to breach the effective breakeven point to the downside at $59.10 by expiration day. Traders also purchased 1,500 puts at the October $62.5 strike at an average premium of $1.39 a-pop, which yields an average breakeven price of $61.11. Pessimists sold some 1,100 calls at the October $67.5 strike for a premium of $0.76 each, and shed 4,700 calls at the higher October $70 strike to receive an average premium of $0.49 apiece. Call sellers keep the premium received on the sale as long as shares of the underlying stock fail to rally above the strike prices described through October expiration. Investors expecting Citrix Systems’ shares to recover by December expiration purchased call spreads, buying 5,000 calls at the December $65 strike for an average premium of $4.70 each, and selling the same number of calls at the December $70 strike at an average premium of $2.59 apiece. Average net premium paid to initiate the spread amounts to $2.11 per contract. Thus, the medium-term bullish players are poised to profit should shares surge 5.5% over the current price to surpass the effective breakeven point at $67.11 by December expiration day. Maximum potential profits…
As the guy in Airplane kind of said – "Looks like I pricked the wrong week to get bullish!" Of course, as I often tell people I am neither bullish nor bearish – I'm rangeish – and our range is the 5% band between around Dow 10,200 and S&P 1,070, which takes us as low as Dow 9,690 and S&P 1,016 and as high as Dow 10,710 and S&P 1,123 before I really "flip flop" my positions. Despite the fact that this is the range we predicted last October and is the range we've been in (other than a brief trip to 11,200, which we shorted the hell out of) all year – people still seem to find it necessary to call me either bullish or bearish as we navigate the channel.
I suppose I have been HOPEFUL for the month (now heading into day 14) that we will finally make a little progress and establish a higher floor at our usual mid-points while, at the same time, the MSM have decided that we are all going to die. That does make me kind of bullish by comparison doesn't it? We are mainly in cash and we are well hedged to the downside so, unless we are REALLY heading much, much lower, there is little profit in speculating to the downside, other than our quick trades. As PT Barnum once said:
"A man who is all caution, will never dare to take hold and be successful; and a man who is all boldness, is merely reckless, and must eventually fail. A man may go on "’change" and make fifty, or one hundred thousand dollars in speculating in stocks, at a single operation. But if he has simple boldness without caution, it is mere chance, and what he gains to-day he will lose to-morrow. You must have both the caution and the boldness, to insure success."
Balance is the key to long-term success and we've had many conversations about that in Member Chat. Our goal is to be neither bullish or bearish but rather to sell premium to both the bulls and the bears when conditions permit us. As Ravalos said Friday in Member Chat:
"Ever since I became member (actually before I became member I
Like any good car race, the lead changes often in the markets. Yesterday the bears took the lead as the combination of Hungarian debt issues and a disappointing jobs number were like a tire blow-out for the bulls, who were forced to pull in for a pit stop. Fortunately, we had our seat belts on and had assumed the crash position as I had warned Members on THURSDAY Morning at 10:04:
Watch that 666 line on the RUT – we don’t want to lose that or even show weakness there… ISM a bit disappointing, now we’ll see what holds but I’m out of short-term, unhedged, upside plays here.
I felt strongly enough about it that we also posted it on Seeking Alpha, to warn as many people as possible, under the heading: "Phil Calls Short-Term Top." I don’t post live trade ideas on Seeking Alpha but in Premium Member Chat (and you can subscribe here) I followed right up at 10:17 Thursday morning with the following trade idea:
BGZ (large-cap bear) is at $15.27 and I like them as a hedge here with the (June) $14/16 bull call spread at .75, selling the July $14 puts for .95 and that’s a net .20 credit on the $2 spread with about $2.70 in margin so you can do a 10 contract spread for a $200 credit and $2,700 in margin (according to TOS standard) with a $2K upside if the market even twitches lower. Worst case is you own BGZ as a hedge to a dip below Dow 10,600 (your put-to area) at net $13.80 (9% lower than current price).
That’s what hedged trade ideas look like in our Member Chat. At PSW, you need to put some time in LEARNING how to trade and, more importantly, how to hedge. This is a fairly complicated options play but we take it BECAUSE IT WORKS! There are many, many simpler ways to play that don’t work (or carry far more risk) but we prefer to teach our Members how to do the things that do work. As it stands, just 48 hours later, BGZ is up 10% on Friday to $16.89 (so the spread is now 100% in the money) and June $14/16 bull call spread is now $1.50 while the July $14 puts are Down to .60 so net .90 already on the spread that already paid…
“For they have sown the wind, and they shall reap the whirlwind”?—?Hosea 8:7
It may be surprising to hear, but it is a plain historical fact that modern international jihad originated as an instrument of US foreign policy. The “great menace of our era” was built up by the CIA to wage a proxy war against the Soviets.
A 1973 coup in Afghanistan installed a new secular government that, while not fully communist, was Soviet-leaning. That was a capital offense from the perspective of America’s Cold War national...
As you’re probably aware, the Fed has a hard time spotting asset bubbles. Just as there was no housing bubble in 2006 according to the honorable and exceptionally “courageous” Ben Bernanke, there’s no bubble in equities today and certainly no ZIRP-induced fixed income bubble either.
The other thing the Eccles cabal has trouble spotting - and this is of course inextricably linked to an inability to spot speculative excess - is inflation.
This year has been a wild ride for Chinese stocks, something that long-time investors have come to expect from a country that's seen 55 bull and bear markets since the ruling Communist Party first allowed equity trading in 1990. As the Shanghai Stock Exchange celebrates it's 25th anniversary on Thursday, here's a look at some of the key milestones on China's path from equity-market upstart to $7 trillion behemoth.
Holiday trading kicked into gear, although volume for the S&P managed to push into a technical accumulation day. Things are likely to remain quiet through to next week and any sharp moves at this stage have a high risk of failure.
The top performing index on the day was the Russell 2000. It managed to add another decent gain o keep the string of higher closes running. It didn't quite close above 1,200, but it may do so Friday (with the aforementioned caveat of holiday trading). Overall action in this index has been positive, and relative performance to other indices continues to improve.
Some weeks when I write this article there is little new to talk about from the prior week. It’s always the Fed, global QE, China growth, election chatter, oil prices, etc. And then there are times like this in which there is so much happening that I don’t know where to start. Of course, the biggest market-moving news came the weekend before last when Paris was put face-to-face with the depths of human depravity and savagery. And yet the stock market responded with its best week of the year. As a result, the key issues dominating the front page and election chatter have moved from the economy and jobs to national security and a real war (rather than police ...
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I've decided to build our startup - Veritaseum, a peer-to-peer financial services platform, directly on top of the Bitcoin Blockchain. Many queried why I would voluntarily give up a lucrative advisory and consulting business to chase virtual coins in cyberspace. That's exactly why I decided to do it. That level of misunderstanding of what is essentially the second coming of the Internet gave me a fundamental advantage over those who had deeper connections, more capital and more firepower. I was the first mover advantage holder.
You see, Bitcoin is not about coins, currency or price pops. It is a massive computing net...
1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:
The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
I think this is the beginning of the end for the company.
My price target for the stock a year from now is $3, so I shorted more yes...
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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.
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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