Thrill Is Gone Thursday – Already?
by Phil - December 1st, 2011 8:11 am
Yesterday was very exciting, but now what?
David Fry summed up yesterday’s action perfectly, saying "Wednesday’s massive rally was prompted by sudden global central bank intervention adding (printing money) liquidity (reducing the lending rate overseas to zero basically) to shore up sovereign debt in the eurozone. They basically set up a swap facility to do the job in the future. Is it a cure or a bailout? No, this is a handout. And it doesn’t solve the problems the eurozone is facing."
"But, it must be said that the European leaders must have hit a dead end in talks and a potential financial panic must have seemed likely. Mind you, Mr. Bernanke is perfectly comfortable with reflation and money printing. He’s been at it for a long time. It will take years for the Freedom of Information Act to discover how much money and to whom the U.S. has given free money. Americans and others will see price increases in all products and services as a result of a weaker dollar negatively affecting purchasing power. Beyond Moral Hazard issues this is the cost you’ll see and perhaps even wonder why."
It’s the classic "stick save" that was clearly (to us) telegraphed by the very low-volume blow-off bottom last week and now, in retrospect, it is also clear that the market manipulators and their media hounds were pulling out all the stops to get retail investors to SELLSELLSELL.
As I mentioned yesterday, I’ve been railing against the market manipulation and the media nonsense that had been going on each month and today we learn that Wall Street execs did, in fact, meet privately with top Fed officials in September, according to Fed documents, and they "recommended" Central Banks make a joint effort to address the Eurozone debt crisis. Don’t forget that our Fed works for the Banksters, not vice versa! In addition to knowing well in advance this move was coming, their suggestions included boosting the global economy by buying securities, a move that may yet happen as many investors believe yesterday’s swap announcement was a prelude to additional coordinated action.
You see, it’s not enough for Lloyd Blanfein (allegedly and for example, of course, a fine man like Lloyd would never do this) to know that the Fed is going to make a massive move like yesterday – there’s much more money to be made if…
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DiggCEO Pick for J.C. Penney Sends Options Traders Into Overdrive
by Option Review - June 14th, 2011 4:11 pm
Today’s tickers: JCP, CROX, CSCO & KR
JCP - J.C. Penney Co., Inc. – Frenzied options trading ensued following reports that Ron Johnson, head of retail at Apple Inc., was named CEO of J.C. Penney Co. The news drove shares in the department store operator up 19.5% to $35.97by 1:40 pm in New York. The number of options in play on JCP today is approaching 171,000 contracts in afternoon trade, topping overall open interest on the stock of 160,338 contracts.Johnson’s appointment to JCP seems to have injected traders with a renewed sense of optimism on the department store owner. The previous four weeks were not kind to shares in J.C. Penney, which declined 27.3% since mid-May to $29.82 this past Friday.
Investors are exchanging roughly 1.6 call options on JCP for each single put option in action. June and July contract calls are the most active with in- and out-of-the-money call buying a seemingly popular strategy amongst traders. Investors who picked up calls a few hours ago at the start of the rally paid far less than the current asking price on the options in most cases. June $30 strike calls, for example, were purchased around 1,100 times earlier in the session for an average premium of $1.79 each. The now deep in-the-money calls currently tout a hefty price tag of $5.90 per contract. Trading traffic in options expiring this Friday ballooned during the session. Call volume at the June $32strike, the most at any single strike in the front month, is greater than 12,500 contracts against previously existing open positions of 3,818 contracts. Early-birds paid an average premium of around $0.46 per contract for those calls, which now have an asking price of $3.90 a-pop. July contract calls drew crowds, as well. The July $35 and $36 strike…
Thrilling Thursday – Can We Make Another Billion Today?
by Phil - June 2nd, 2011 7:42 am
Wheeeee!
$1,129,860,000! That’s how much money was made shorting 376,620 NYMEX contracts at $103 yesterday, as we planned! Congratulations to those of you who got your share playing along with us and, to the manipulators who got stuck with the bill – screw you bastards, we have your number and we’re going to ring it now! I called a cash-out at the $100 line in Member Chat as 2.9% was more of a drop than we expected in one day and we will re-load on the bounce as we cross back below the $100.50 line – as discussed in this morning’s Member Chat - assuming the Dollar has bottomed out at 74.35.
This isn’t complicated people – what’s the 2.5% line off of $103? $100.425. That’s where we’ll look for oil to consolidate but below that line we’ll be comfortable with our shorts again, looking for those next legs down to $98.88 (down 4%) and then $97.85, where we will once again look for a 20% retrace to $98.88 and then a nice short there when it fails. So come on – you can play along at home – don’t miss out on making the next $1.129Bn!
Meanwhile, what’s a 20% bounce off a $3 drop? 60 cents, right? Where did oil bounce to in the futures? $100.60? This is not rocket science folks… We teach these little tips to our Members every day at Philstockworld. Sure you may find it disturbing that the chart we drew up (above) in early April is hit almost to the penny on the NYSE yesterday (2 months later) as it halted right on our red line – but that just shows us that Bots are running this market (as we keep telling you) and it also means that we can rely on our ranges and that makes it EASY to make good trading decisions.
Also in Member Chat last night, I reviewed 8 short put ideas (bullish) that can net us over $3,000 in 15 days if we get a bounce and hold our "Must Hold" levels. This is the nice thing about hedging – we make money on the way up OR on the way down and, when we are trading in a range – like we hopefully will this summer – then we make money both ways on a regular basis! Let the market manipulators play their…
First-Mover Advantage Big for NYX Call Buyers Acting Before Trading Suspended
by Option Review - February 9th, 2011 4:30 pm
Today’s tickers: NYX, ATML, JCP & SWY
NYX - NYSE Euronext Inc. – Investors observed buying up call options on the global group of exchanges before trading in the name was halted this morning, are sitting pretty this afternoon with NYX shares trading up as much as 19.7% at a new 2-year high of $39.99. Reports that NYSE Euronext and Deutsche Boerse AG were in advanced talks to merge, lifted NYX shares before trading was suspended earlier in the session. Early-birds speculating that the rally was just getting started scooped up some 830 calls at the February $35 strike for an average premium of $0.56 each. These calls now tout an asking price of $3.65 apiece, an increase in value of around 550%. Other bulls picked up more than 2,600 calls at the higher February $36 strike for an average premium of $0.26 per contract this morning. The now deep in-the-money call options now cost $2.36 each, which is 808% more than first-movers paid earlier today. Investors who purchased the calls could potentially walk away with huge profits by selling the contracts in the span of just a few hours. Trading in NYX call options picked up significantly once trading in the name resumed. News of the merger-talks and rising demand for NYX options fueled a more than 53.1% rise in options implied volatility on the stock to 37.48% by 12:35pm in New York.
ATML - Atmel Corp. – The semiconductor manufacturer popped up on our scanners this morning after one trader reeled in profits on the sale of large block of call options that were originally purchased during the first week of trading in 2011. The same strategist extended and augmented bullish sentiment on Atmel Corp. by picking up calls in the May contract. Shares in Atmel are currently up…
Enormous Prints in Put Options on Tech. Select Sector SPDR Fund
by Option Review - October 27th, 2010 4:35 pm
Today’s tickers: XLK, ENR, IYR, ALTR, AVP, JCP & TQNT
XLK - Technology Select Sector SPDR Fund – One big options market participant traded a total of 524,600 put options on the technology SPDR ETF this afternoon. It looks like the party responsible for the massive transactions rolled a previously established debit put spread in the December contract forward to the longer-dated March 2011 contract. Shares of the XLK, an exchange-traded fund that mirrors the performance of the Technology Select Sector of the S&P 500 Index, are down slightly by 0.20% to stand at $24.19 as of 2:15 pm in New York. The XLK jumped to the top of our ‘most active by options volume’ scanner after the 112,300-lot December $23/$20 put spread was sold for a net $0.31 per contract. This spread appears to have been initially purchased for a net premium of $0.68 each back on October 7, 2010, when the price of the underlying fund was trading around $23.14. Today, the XLK-options player sold the massive spread in order to purchase an even larger one at the same strike prices in the March 2011 contract. The new put position involved the purchase of 150,000 lots at the March 2011 $23 strike for a premium of $0.96 each, and the sale of the same number of puts at the lower March $2011 $20 strike at a premium of $0.31 apiece. In isolation, the net cost of buying the longer-dated put spread amounts to $0.65 per contract and yields downside protection for the investor should shares of the XLK trade below the breakeven price of $22.35 by March expiration. Enormous trades such as these tend to be tied to stock. Perhaps this trader is augmenting the size of the put spread because he has increased his exposure to the technology sector. Around the same time the puts were bring traded, some 733,000 shares of the underlying were purchased for $24.12 each. We note, however, that at this time there is no way…
Call Options Fly Off the Shelves at Gannet Co.
by Option Review - October 8th, 2010 4:13 pm
Today’s tickers: GCI, XRT, GCI, JCP, TSN, GG & CVS
GCI - Gannett Co., Inc. – Call options on the publishing giant are in high demand today with shares of the underlying stock rising as much as 8.3% to an intraday high of $13.64. Gannett’s shares took off after the Wall Street Journal reported the company, along with the New York Times and News Corp., are looking to offer software apps for Samsung’s Galaxy tablet. Investors have thus far exchanged more than 6.25 calls on the stock for each single put contract in play as of 3:15 pm ET in New York trading. Near-term bullish players picked up some 5,300 now in-the-money calls at the October $13 strike for an average premium of $0.58 a-pop. Investors long the calls make money if the USA Today publisher’s shares exceed the average breakeven price of $13.58 by October expiration. Optimism spread to the higher October $14 strike where more than 6,100 call options changed hands. At least 1,500 of those contracts were purchased for an average premium of $0.42 each, while the bulk of the remaining volume traded to the middle of the market. Uber-bulls looked out to the November $15 strike to purchase approximately 2,500 calls at an average premium of $0.41 apiece. Call buyers at this strike are prepared to profit if GCI’s shares jump 5.645% over today’s high of $13.64 to exceed the average breakeven point at $15.41 by expiration day next month. Options implied volatility on Gannet Co. jumped 16.6% to 60.43% in late afternoon trading.
XRT - SPDR S&P Retail ETF – A sizeable put spread initiated on the XRT, an exchange-traded fund designed to replicate the performance of the S&P Retail Select Industry Index, could be the work of an investor bracing for a pullback in the price of the underlying fund ahead of January 2011 expiration. Shares of the fund increased 1.45% during the final trading day of the week to touch an intraday high of $43.02. The put player purchased…
Bullish Strategists at Work Ahead of Arena Pharmaceuticals’ Earnings Report
by Option Review - August 3rd, 2010 5:03 pm
Today’s tickers: ARNA, GENZ, HL, CY, JCP, FR & XLB
ARNA – Arena Pharmaceuticals, Inc. – Options on the biotechnology company are active ahead of the firm’s second-quarter earnings report slated for release after the closing bell this afternoon. Shares rallied as much as 5.15% earlier in the session to an intraday high of $7.54, but are currently trading a lesser 1.95% higher on the day at $7.31 as of 3:35 pm ET. One optimistic investor hoping to see Arena’s shares appreciate ahead of October expiration enacted a bullish risk reversal. The trader appears to have sold roughly 9,000 puts at the October $7.0 strike for an average premium of $2.40 each in order to buy the same number of calls at the October $12.5 strike for an average premium of $0.60 apiece. The investor reels in a net credit of $1.80 per contract on the risk reversal, and keeps the full amount received on the transaction as long as Arena’s shares exceed $7.00 through October expiration. Additional, and potentially unlimited profits, start to accumulate for the trader if Arena’s shares surge 71% to exceed $12.50 by expiration day in October. The credit $1.80 credit pocketed by the investor provides limited protection against losses should Arena’s shares nosedive ahead of expiration. The trader starts to lose money if the price of the underlying stock falls 28.9% to trade beneath the effective breakeven price of $5.20 by expiration day. Options implied volatility on Arena Pharmaceuticals is up 5.5% to 197.15% ahead of earnings.
GENZ – Genzyme Corp. – The biopharmaceutical company, which is currently knee-deep in merger negotiations with Sanofi-Aventis, attracted bullish options investors during the trading session. It looks like one trader initiated a plain-vanilla debit call spread in the January 2011 contract to prepare for the sharp increase in the price of Genzyme’s shares that’s likely to occur if Sanofi-Aventis winds up purchasing – or at least confirming plans to purchase – the drug maker before January 2011 expiration. Genzyme’s shares inched up 0.25% this afternoon to $70.52 as of 3:15 pm ET. The options player picked up approximately 6,000 calls at the January 2011 $70 strike for an average premium of $4.42 each, and sold the same number of calls at the higher January 2011 $75 strike for an average premium of $1.72 apiece. The net cost of putting on the bullish transaction amounts to $2.70 per…
Oracle Bulls Envision 10% Rally in Shares by June Expiration
by Option Review - March 23rd, 2010 4:06 pm
Today’s tickers: ORCL, KFT, CLF, JPM, JCP, MCD, ROK, HK, TIE & LXK
ORCL – Oracle Corp. – Options players are initiating bullish stances on software development firm, Oracle Corp., today ahead of the company’s third-quarter earnings report scheduled for Thursday after the closing bell. Oracle’s shares rallied 0.95% during the current session to trade at a new 52-week high of $25.80. Medium-term optimists scooped up 10,600 call options at the June $28 strike for an average premium of $0.37 per contract. Perhaps plain-vanilla call buyers foresee continued bullish movement in the price of Oracle’s shares through expiration in June. Investors long the calls accrue profits if shares of the underlying stock surge 10% from the current price to breach the breakeven point at $28.37 by expiration day.
KFT – Kraft Foods, Inc. – Voracious investor appetite for call options on Kraft Foods this afternoon pushed the KFT ticker symbol onto our ‘most active by options volume market scanner’ as shares of the U.S. food maker jumped 2.25% to a new 52-week high of $30.40. It looks like one particularly bullish individual satisfied his hunger for Kraft-calls by purchasing a large chunk of 16,000 contracts at the September $32 strike for a premium of $0.69 apiece. The investor holding the call options is prepared to reel in profits on the position if Kraft’s shares rally another 7.50% from the current value to surpass the breakeven price of $32.69 by expiration day in September.
CLF – Cliffs Natural Resources, Inc. – Shares of iron ore pellet producer, Cliffs Natural Resources, jumped more than 6.00% during the trading day to arrive at a fresh 52-week high of $69.34. Investors celebrated Cliffs’ new high by enacting a plethora of bullish options strategies on the stock. One such individual established a ratio risk reversal in order to cover the cost of taking a long position in Cliffs-calls. The optimistic trader sold 1,500 deep in-the-money put options at the July $75 strike for a premium of $11.50 per contract, and purchased 3,000 calls at the same strike for an average premium of $4.51 each. The reversal player pockets a net credit of $2.48 per contract on the transaction, which he keeps if shares of the underlying stock rally up to or above $75.00 by expiration. Additional profits also accumulate for the trader should shares breach the effective breakeven price of $75.00. Other bullish investors initiated…
Gold-Bull Buys Call Spread on Newmont Mining Corp.
by Option Review - March 2nd, 2010 4:15 pm
Today’s tickers: NEM, EWZ, ZION, JCP, PCX, TSL, NTRI, TIVO, SQNM & KR
NEM – Newmont Mining Corp. – Shares of the gold mining company are up 2.90% to $51.74 this afternoon as gold stocks across the board rallied along with the price of the previous metal. Newmont’s shares recovered significantly since reaching a low point for the year 2010 of $42.87 back on January 29, 2010. The current price per NEM share of $51.74 represents an impressive 20.65% rally over its January low of $42.87. One options trader populating our screens today expects the good times at Newmont Mining to continue through March expiration. The investor purchased a debit call spread by picking up 5,000 calls at the March $55 strike for a premium of $0.52 apiece, marked against the sale of 5,000 calls at the higher March $57.5 strike for $0.17 each. The net cost of the transaction amounts to $0.36 per contract. The trader is prepared to pocket maximum potential profits of $2.14 per contract should Newmont’s shares rally another 11.15% to $57.50 by expiration day. Shares of the underlying stock must increase at least 7% from the current price in order for the call-spreader to breakeven on the trade at $55.36 per share.
EWZ – iShares MSCI Brazil Index ETF – Bearish options positioning on the Brazil exchange-traded fund, which generally reflects the price and yield performance of securities in the Brazilian market as measured by the MSCI Brazil index, indicates one investor is bracing for a pull back in the price of the underlying shares by April expiration. Shares of the underlying fund are trading 1.85% higher to $70.97 with approximately forty-five minutes remaining in the session. The trader sold 10,000 calls at the April $72 strike for a premium of $2.55 apiece in order to partially offset the cost of purchasing 10,000 put options at the lower April $70 strike for $2.73 each. The investor paid a net premium of $0.18 per contract for the bearish risk reversal transaction. The pessimistic play yields profits to the trader if shares of the EWZ trade beneath the breakeven price of $69.82 ahead of expiration in April. We note that shares traded as low as $62.79 on February 8, 2010, and failed to rally above $70.00 until the current session’s breakout.
ZION – Zions Bancorp. – A bullish options player celebrated the 2.80% rally in ZION’s share…
Investor Removes Comcast Strangle to Bank Profits
by Option Review - February 19th, 2010 4:33 pm
Today’s tickers: CMCSA, HSY, GLD, ORCL, XRT, ERTS, FXI, PFE, SII & JCP
CMCSA – Comcast Corp. – A large-volume short strangle established at the beginning of the month on the entertainment and communications services firm was unraveled today, yielding one investor a nice chunk of change heading into the weekend. Comcast’s shares are up 1% to $15.89 in afternoon trading. It appears the trader originally sold roughly 35,000 calls at the July $17 strike for a volume-weighted average premium of $0.74 apiece in combination with the sale of 35,000 puts at the July $14 strike for a premium of $0.74 each. The original transaction likely occurred on February 4, 2010, and yielded a gross premium of $1.48 per contract to the trader. Today the investor purchased-to-close the short strangle, buying back the calls at a reduced premium of $0.60 each, and buying the put options for $0.56 apiece. The trader paid a gross premium of $1.16 to close out the short stance. Therefore, the investor walks away with net profits of $0.32 per contract for a grand total of $1.120 million. It is important to note, however, that the trader left a great deal of money sitting on the table. Comcast’s shares are still trading within the boundaries of the $14/$17 strike prices required for maximum profit potential. The investor would have accumulated profits of $1.48 per contract – a total of $5.180 million – if CMCSA shares remained range-bound and if the trader held the position through expiration. Perhaps this individual unraveled the strangle in anticipation of greater volatility in the price of the underlying stock going forward.
HSY – The Hershey Company – Bullish investors satisfied sugar cravings this afternoon by devouring Hershey call options. Shares of the chocolatier rallied 2.70% to $39.88 today. Option traders picked up 1,600 calls at the March $41 strike for a premium of $0.47 apiece. The higher March $42.5 strike attracted greater volume with more than 5,300 calls purchased for a premium of $0.23 per contract. Higher-strike call buyers are positioned to accumulate profits if Hershey’s share price exceeds its current 52-week high of $42.25, attained back on July 23, 2009, by expiration next month. These optimistic individuals profit if shares increase 7.15% from the current price to surpass the effective breakeven point on the calls at $42.73.
GLD – SPDR Gold Trust ETF – Shares of the gold exchange-traded fund,…
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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
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