Shares in Hewlett-Packard (Ticker: HPQ) popped more than 3.0% to a new 52-week high of $29.82 this morning on an upgrade to ‘buy’ from ‘neutral’ with a price target increase to $39.00 from $29.00 at Bank of America Merrill Lynch.
The stock rose almost 90% during 2013, starting the year at $14.79 and closing it out at $27.98. Activity in August expiry options today suggests one trader is positioning for the price of the underlying to soar again during 2014. It looks like the strategist purchased a 2,000-lot Aug $34/$38 bull call spread at an average net premium of $0.74 per contract. The trade starts making money if shares in HP rally 16.5% over today’s high of $29.82 to exceed the breakeven price of $34.74, with maximum potential profits of $3.26 per contract available on the spread in the event that shares jump 27% to $38.00 by August expiration. Shares in Hewlett-Packard last traded above $38.00 in May of 2011.
GES – Guess? Inc. – Shares in apparel and accessories retailer Guess are trading lower on Wednesday ahead of the company’s third-quarter earnings report after the closing bell. Options changing hands on the stock during morning trading indicates some traders are bracing for shares to potentially drop to the lowest level since early-October by December expiration. The stock currently trades down 2.0% on the day at $33.24 just before 11:30 a.m. EST.
Around 1,700 of the Dec $29 strike put options have changed hands on GES so far today, more than two times the open interest level at that strike of 780 contracts. Time and sales data suggests most of the $29 puts were purchased at a premium of $0.40 each, positioning buyers to make money if shares in Guess drop 14% from the current price of $33.24 to breach the breakeven point at $28.60 by December expiration.
Options volume on the retailer is roughly five times the average daily level ahead of the company’s earnings release, with volume currently up above 5,400 contracts versus average daily volume of around 1,060 contracts.
HPQ – Hewlett-Packard Co. – Options on HP are active today, with the price of the underlying stock climbing as much as 4.3% to a new 52-week high of $28.70 during morning trading. Overall options volume on Hewlett-Packard, currently hovering near 55,000 contracts as of the time of this writing, is more than 75% of the stock’s average daily volume of around 70,000 contracts. Trading in calls on the stock is far outpacing that of puts, with the call/put ratio hovering near 5.0 as of 11:20 a.m. EST.
HPQ – Hewlett-Packard Co. – Shares in HP are down roughly 1.8% at $20.87 on Monday amid a down day for U.S. stocks, as the partial U.S. government shutdown extends into its second week.
Trading traffic in weekly put options on the maker of printers and PCs indicates one strategist is positioning for the price of the underlying to potentially drop to the lowest level since April by expiration. It looks like the trader purchased a 2,000 lot Oct 11 ’13 $19.5/$20.5 put spread for a net premium of $0.19 per contract. The bear put spread starts making money below a breakeven price of $20.31, and could generate maximum potential profits of $0.81 per contract in the event that HP’s shares drop 6.5% from the current price of $20.87 to settle at $19.50 at expiration.
Shares in Hewlett-Packard are down roughly 25% since the beginning of August. The company will hold the HP Securities Analyst Meeting 2013 on Wednesday starting at 8:00 a.m. PT.
HPQ – Hewlett-Packard Co. – Options on Hewlett-Packard are among the most active as measured by volume on Wednesday, with heavy trading in upside calls on the stock. Shares in HPQ are currently off 0.10% on the session at $21.29 as of 1:00 p.m. ET, reversing an earlier gain of 1.4% that saw the stock touch an intraday high of $21.615.
The most traded options on HPQ today are the Oct 18 ’13 $22 strike calls, with upwards of 36,000 contracts in play against open interest of around 15,300 contracts. Time and sales data indicates most of the calls were purchased at a premium of $0.44 each; the single-largest print being 27,564 calls that traded just after 10:15 a.m. ET. The calls may be profitable at expiration if shares in HPQ rally more than 5.0% over the current price of $21.29 to exceed the effective breakeven point at $22.44. Shares in Hewlett-Packard last closed above $22.44 back on August 29th.
Overall options volume on HPQ is approaching 69,000 contracts as of the time of this writing, which is more than twice the stock’s average daily volume of around 32,000 contracts. Heavy trading in calls on the stock finds the call/put ratio hovering above 7.5 in early afternoon trading.
HPQ – Hewlett-Packard Co. – Trading in January 2014 expiry put options on HPQ this morning suggests one strategist may be positioning for shares in the tech giant to weaken further during the next five months. Shares in Hewlett-Packard Co. are off their lows of the session, down 0.40% at $22.18 as of 12:10 p.m. ET. The stock has dropped 20% since the beginning of August, though shares are still up more than 50% year to date. One trader bracing for shares to move lower appears to have purchased 6,000 in the money put options at the Jan 2014 $24 striking price at a premium of $3.20 per contract. The puts make money at expiration if shares in HPQ decline another 6.0% from the current price of $22.18 to breach the effective breakeven point on the downside at $20.80. Shares in the name last traded below $20.80 at the end of May.
YHOO – Yahoo! Inc. – Weekly options changing hands on Yahoo today suggest some traders are positioning for a near term pop in the price of the underlying, while other strategists brace for selling pressure to persist during the next few trading sessions. Shares in YHOO are down 2.0% at $27.15 as of 12:30 p.m. ET. Options players looking for shares in the name to rebound appear to have purchased more than 400 in the money calls at the Aug 30 ’13 $27 strike for an average premium of $0.42 apiece. Call buyers may profit at expiration this week if shares in Yahoo rise 1.0% over the current price of $27.15 to settle above the average breakeven price of $27.42. Conversely, traders snapping up more than 750 of the Aug 30 ’13 $26.5 strike put options for an average premium of $0.08 per contract today are prepared to…
HPQ - Hewlett-Packard Co. – Bullish options are changing hands on PC and printer maker, Hewlett-Packard Co., this morning, with shares in the name up sharply on comments from CEO, Meg Whitman, at the company’s Discover Conference in Las Vegas. Shares are currently up the most in the Dow Jones Industrial Average, trading higher by 3.1% at $25.00 as of 11:50 a.m. ET. The stock earlier rallied more than 5.0% to touch a new 52-week high of $25.49. Traders positioning for shares in HPQ to extend gains during the next couple of trading sessions snapped up weekly calls on the stock straight out of the gate this morning. The most active weekly calls by volume are the Jun 14 ’13 $25.5 strike contracts, with around 3,200 calls traded before midday in New York. It looks like most of the calls were purchased, with roughly 1,000 of the total volume picked up by one strategist at a premium of $0.23 each. The trader stands ready to profit at expiration should shares in the HPQ settle above the breakeven price of $25.73. The Jun 14 ’13 $26 strike calls are also active today, with around 350 lots purchased at an average premium of $0.08 apiece.
VFC - VF Corp. – Shares in the owner of a portfolio of well-known apparel and footwear brands, including The North Face, Timberland and Seven for All Mankind, rallied 0.80% to a new all-time high of $189.60 this morning following the company’s Investor Day conference on Tuesday. VF Corp. yesterday outlined revenue and growth targets and strategic initiatives. Analysts at Janney Montgomery Scott maintain a ‘Buy’ rating on the stock and raised their target price to $210.00 from $188.00. Fresh interest in July expiry puts on VFC this morning suggests one or more options traders are bracing for the price of the underlying to potentially decline during the next five weeks. The most actively traded contracts today are the Jul $180 puts, with upwards of 1,000 contracts in play versus…
XLU - Utilities Select Sector SPDR – A large trade in XLU puts yesterday suggests at least one options market participant is preparing for the strong run in the price of the underlying to run out of juice in the near future. Shares in the Utilities Select Sector SPDR ETF are up 0.20% today at $41.00, on the heels of a 17% move to the upside since the end of 2012. The biggest print in XLU options yesterday was the purchase of a block of 50,000 Jun $40 strike puts at a premium of $0.51 each. The bearish strategy starts making money if the price of the underlying slips 1.2% from the current price of $41.00 to breach the breakeven point on the downside at $40.49.
HPQ - Hewlett-Packard Co. – Weekly calls changing hands on Hewlett-Packard today look for shares in the name to rally in the near term. The stock is up 3.0% this afternoon to stand at $20.24 as of 12:25 p.m. ET. Shares in HPQ had been on a tear, rallying more than 60% during the first three months of 2013 to a six-month high of $24.05 on April 1st. Since then, however, the computer hardware maker’s shares have declined roughly 15% to reach the current level. Options traders positioning for shares to move higher next week appear to be buying the May 03 ’13 $20 and $21 strike calls this morning. It looks like traders snapped up 2,600 of the $20 strike calls at an average premium of $0.33 each and around 3,200 of the $21 strike calls for an average premium of $0.16 apiece. Call buyers stand ready to profit at expiration next week in the event that shares in HPQ exceed average breakeven points at $20.33 and $21.16, respectively. HPQ reports second-quarter earnings after the close on May 21st.
HPQ - Hewlett-Packard Co. – An upgrade to ‘Overweight’ from ‘Equal Weight’ with a price target of $27.00 at Morgan Stanley this morning is helping shares in Hewlett-Packard rise to the highest level since May of 2012. Shares in HPQ, up roughly 100% since touching down at a multi-year low of $11.35 in November, rallied 2.5% on Monday morning to trade at $22.72 as of 11:30 a.m. ET. Perhaps seeking to lock in HPQ’s strong gains during the past five months, some options traders appear to be snapping up protective puts on the stock. Notable volume in the May $23 strike put options changed hands during the first half of the trading day, with volume topping 5,400 contracts versus previously existing open interest of 297 lots. It looks like most of these in-the-money contracts were purchased in the early going at an average premium of $1.28 apiece. Profits, or downside protection, on the strategy kick in if shares in Hewlett-Packard drop 4.4% from the current price of $22.72 to breach the average breakeven point on the downside at $21.72 by May expiration.
EBAY - eBay, Inc. – Bullish options looking for shares in the online marketplace operator and payment services provider to reverse recent losses are active today. The stock is down 1.0% on the day at $49.90 as of 11:50 a.m. in New York, on the heels of a more than 12% pullback in the price of the underlying from the stock’s 52-week high of $57.27 set back in February. Trading traffic in weekly calls on eBay suggests some traders are preparing for shares in the name to rebound this week, with upwards of 2,600 lots in play at the Mar. 22 ’13 $52.5 strike versus open interest of 1,122 contracts. It looks like most of the call options were purchased earlier in the session at an average premium of $0.08 each. Call buyers may profit at expiration this week in the event that EBAY shares rally 5.4% over the current…
HPQ - Hewlett-Packard Co. – Shares in HPQ fell to their lowest level in a decade on Tuesday after the company announced fourth-quarter results that missed analyst expectations for sales and included an $8.8 billion impairment charge related to its Autonomy business. Options on the PC maker are seeing heavy volume amid an ugly selloff in the price of the underlying, currently trading down 11% at $11.84 as of 12:35 p.m. ET. Nearly 250,000 call and put options have changed hands on the stock versus the average daily options volume of 47,726 contracts. Calls are slightly more active than puts, with the call-to-put ratio hovering around 1.1 in early-afternoon trading. Weekly calls, specifically the Nov. 23 ’12 $12 strike contracts, attracted particularly heavy trading traffic today. It looks like some strategists are betting the stock could rebound somewhat off its post-earnings report lows by the end of the week. Upwards of 23,000 of the $12 strike weekly calls traded in the first half of the session today against open interest of just 696 contracts. It appears most of these contracts were purchased for an average premium of $0.10 apiece, and may mean some options market participants are placing cheap near-term bullish bets on the computer maker. Traders long the weekly contracts make money as long as shares in HPQ increase 2.2% over the current price of $11.84 to settle above the average breakeven price of $12.10 at expiration.
KKD - Krispy Kreme Doughnuts, Inc. – It’s a sweet day for investors in Krispy Kreme Doughnuts, Inc., with shares in the name soaring 22.5% on the back of better-than-expected third-quarter earnings to the highest level in more than a year. Shares in the doughnut maker are off earlier highs, but continue to trade up approximately 20% on the session at $9.04 as of 11:50 a.m. ET. Buyers of bullish options on Krispy Kreme yesterday prior to the earnings report are enjoying sizable overnight…
As you can see from David Fry's SPY chart, we went up and finished down but the volume was a bit lower to the upside than the sell-off into the close. MSFT and INTC led us to the downside – no surprise really as we discussed both this weekend as Dow components to avoid in the current cycle.
There was no significant economic data, just the usual nonsense about Greece and, of course, the drumbeat of fear regarding the US fiscal cliff that the MSM is banging 24/7. "What's up with that fiscal cliff" is now how 90% of my conversations begin with anyone who knows what I do for a living.
I now find that it's easier to say "Oh, we're all totally doomed" than to explain why we're not because when, for example, I say this to one of my Mother's friends – they nod wisely and agree with me while, if I try to explain why they shouldn't worry so much – they get all confused and then say to my Mom – "I thought he was supposed to understand the stock market."
I guess I should have tried this with my children. Rather than sitting up for 15 minutes or so explaining why there are not monsters under their bed – I could have just agreed with them and said "Yep, big hungry ones!" Maybe they'd never sleep again but at least I'd sound knowledgeable about monsters and the imminent dangers they posed to sleeping children.
Stocks are now at 3-month lows and it's been a month since we strung together 2 up days in a row (Oct 15-17) with the S&P falling from 1,470 on Oct 5th to yesterday's low of 1,371 fir a 99-point drop in 25 trading sessions (6.8%) – losing an average of 4 S&P points a day with 1,360 being our Must Hold line on the Big Chart. The S&P and the NYSE are both, so far, holding their lines (NYSE is 8,000) and they are our broadest indexes but we're pretty close to having to layer our disaster hedges as we cross those -7.5% lines.
There’s so much negative real bad economic and financial news out there that it’s hard to choose a ‘favorite’, but I guess I’m going to have to go with what underlies and ‘structures’ it all, the IIF stating that for the first time since 1988 and the Reagan presidency, there’s more money flowing out of emerging markets than there’s flowing in. That is for sure a watershed moment.
And no, that trend is not going to be reversed either anytime soon. Emerging economies, even if they woul...
You have to risk money to make money. You have to make sure you don't risk so much money that you can lose your stake and go out of business as a trader. Bet too little and you never make a good return on your capital. Bet too much and you court career risks. So much of trading success boils down to taking intelligent risks.
Finally, one of the top republican candidates said something intelligent about Syria while the dreadful Fiorina explained how we need to defend our,...yes, OUR territory in the middle east by engaging Russia in a war. Yeah, something like that.
Opportunities are knocking at our door friends! I’ve been sharing the Power of the Pattern with customers for the past 20-years. In my humble opinion, some really nice opportunities (based on price, momentum and sentiment) are forming for investors around the world. Below is two of the dozens of rare patterns I am seeing, that I wanted to share with you today.
What would you do with this opportunity?
CLICK ON CHART TO ENLARGE
As shared above, this asset has fallen around 35% of late. The decline has taken it down to its 4-year rising channel support l...
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
The Fed’s decision to not raise the fed funds rate at this time was ultimately taken by the market as a no-confidence vote on our economic health, which just added to the fear and uncertainty that was already present. Rather than cheering the decision, market participants took the initial euphoric rally as a selling opportunity, and the proverbial wall of worry grew a bit higher. Nevertheless, keep in mind that markets prefer to climb a wall of worry rather than ride a crowded bandwagon, and I continue to envision higher levels for the markets after further backing-and-filling and testing of support levels (perhaps even including the August lows).
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
Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.
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.
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: email@example.com.