Options On Cree Light Up As Shares Sprint To The Upside
by Option Review - March 5th, 2013 1:38 pm
Today’s tickers: CREE, SNDK & JPM
CREE - Cree, Inc. – Options on the maker of energy-efficient LED lighting products are buzzing today, with overall volume rising to more than twice the average daily level for the stock during the first half of the trading session. Shares in Cree are up more than 16% on the day at $52.15 as of 11:15 a.m. in New York. The stock gapped higher on the open after the company raised its guidance for third-quarter earnings and revenue, lifting the price of the underlying to its highest level since March of 2011. Traders positioning for further upside in shares of Cree, Inc. picked up bullish options on the stock straight out of the gate this morning. Weekly calls are attracting light volume, with notable fresh interest in the Mar. 08 ’13 $52.5 strike contracts. Traders appear to be buying the short-dated contracts at an average premium of $0.19 apiece. Call volume is substantial in the April expiry options, notably in the $52.5 strike contracts where more than 6,000 calls changed hands against open interest of just 86 contracts by 11:30 a.m. ET. One or more traders appear to have purchased the bulk of the volume for an average premium of $1.25 apiece within the first 10 minutes of the opening bell today. Initiating the bullish trades at the start of the session is paying off for buyers of the April $52.5 strike calls, with premium required to purchase the contracts having more than doubled since this morning to $2.59 by 11:35 a.m. ET.
SNDK - SanDisk Corp. – Shares in SanDisk increased 2.0% to $51.43 on Tuesday morning amid strong gains in U.S. equities and a price target increase to $70.00 from $55.00 at Susquehanna. Options activity on the provider of data storage products and solutions suggests traders are prepared for shares in the name to extend gains in the near term. Volume in SNDK options is concentrated in the weekly calls as of the time of this writing, with upwards of…
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Bulls Hungry For Domino’s Options As Shares Rise To All-Time High
by Option Review - December 27th, 2012 4:18 pm
Today’s tickers: DPZ, JPM & JWN
DPZ - Domino’s Pizza, Inc. – Shares in Domino’s are bucking the trend today, rising as much as 2.2% to an all-time high of $43.74 on Thursday morning, even as most stocks decline on weaker-than-expected consumer confidence data for the month of December and the failure of U.S. lawmakers to arrive at a budget compromise. Options traders hungry for fresh highs in Domino’s Pizza shares in the first few months of the New Year snapped up call options on the name today. Bulls picked up around 100 in-the-money calls at the Jan. $43 strike for an average premium of $1.11 apiece, and purchased 70 of the higher Jan. $44 strike calls at an average premium of $0.60 each. Like-minded strategists looked to the Mar. $45 strike calls as well, buying 150 of those contracts at an average premium of $1.65 a-pop. Traders long the $45 strike calls stand ready to profit at expiration in March 2013 should shares in DPZ rally another 6.7% to top a new record high of $46.65 by expiration. The stock has gained 40% during the prior six month period. Domino’s Pizza is scheduled to report fourth-quarter earnings at the end of February, several weeks prior to March options expiration.
JPM - JPMorgan Chase & Co. – Options traders positioning for shares in JPMorgan Chase & Co. to rally during the first week of the New Year snapped up weekly calls on the largest U.S. bank by total assets this morning. Shares in JPM are down 1.8% this morning at $43.17, moving lower along with the broader market on disappointing consumer confidence data and concern the U.S. may go over the fiscal cliff. Traders anticipating a strong start to the New Year for shares in JPMorgan appear to have purchased more than 1,000 calls at the Jan. 04 ’13 $44 strike for an average premium of $0.52 apiece during the first 20 minutes of the trading session today. Call buyers stand ready to profit at expiration next week should shares in JPM reverse course and gain…
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Weekly Options In Play On Intel
by Option Review - December 21st, 2012 3:41 pm
Today’s tickers: INTC, HALO & JPM
INTC - Intel Corp. – Shares in the chip maker are in negative territory this morning, trading lower with the broader market on signs budget talks are stalling and lawmakers may not reach a deal by year end. Intel’s shares are down better than 2% to stand at $20.59 as of midday in New York. Fresh interest in weekly call and put options on the name this morning suggests traders are preparing for volatility in the price of the underlying through the end of 2012. Options players bracing for Intel’s shares to potentially fall sharply during the next four trading session snapped up around 1,000 puts at the Dec. 28 ’12 $20 strike and another 550 puts at the Dec. 28 ’12 $19.5 strike at premiums of $0.07 and $0.04 apiece, respectively. Traders long the $20 and $19.5 strike contracts may profit in the event that Intel’s shares drop roughly 3.2% and 5.5% to settle below the effective breakeven prices of $19.93 and $19.46 by expiration next week. Meanwhile, strategists holding out hope that a deal gets done and lifts equities in the near term appear to be purchasing upside calls today. The Dec. 28 ’12 $21 strike calls saw the most volume, with upwards of 5,000 contracts in play during the first half of the session. Time and sales data suggests the bulk of the volume was purchased for an average premium of $0.15 apiece. Buyers of the $21 strike calls profit at expiration as long as Intel’s shares rally 2.7% to settle above $21.15.
HALO - Halozyme Therapeutics, Inc. – Upside calls on biopharmaceutical company, Halozyme Therapeutics, Inc., are active today, with shares in the name rallying as much as 30% to $7.19 on Friday morning. The stock popped after Halozyme announced it will work with Pfizer to create up to six new injectable drugs. Options traders positioning for HALO’s shares to extend gains during the next four weeks purchased around 250 calls at the Jan. 2013 $7.5 strike for an average premium of $0.37 per contract. Call…
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Vertex Call Spread Eyes Big Gains In Drug Maker’s Shares
by Option Review - December 7th, 2012 1:37 pm
Today’s tickers: VRTX, ZQK & JPM
VRTX - Vertex Pharmaceuticals, Inc. – A sizable bullish position initiated in Vertex options this morning looks for shares in the drug maker to regain some of the steep losses realized during the past two months. Shares in Vertex Pharmaceuticals are trading flat on the session at $39.10 as of 11:20 a.m. ET, but have dropped 35% since the second week in October. One options trader who appears to have purchased a 3,500-lot April $42/$55 call spread for a net premium of $2.66 per contract stands ready to profit from a strong rebound in Vertex shares through expiration. The spread starts making money if shares increase 14% over the current price of $39.10 to surpass the effective breakeven point at $44.66, with maximum potential profits of $10.34 per contract available in the event shares jump 41% to hit $55.00 by expiration in April.
ZQK - Quiksilver, Inc. – Options on apparel and accessories retailer, Quiksilver, Inc., are more active than usual on Friday ahead of the company’s fourth-quarter earnings report next week. Shares in the maker of casual wear under its Quiksilver, Roxy and DC brands are trading up 2% today at $4.09 as of midday on the East Coast. Traders exchanged more than 7,500 option contracts on ZQK during the first half of the session, sizable volume versus the stock’s average daily options volume of around 1,300 contracts. The Dec. $5.0 strike calls are seeing the heaviest trading traffic, with more than 4,200 lots in play against zero open positions. It looks like most of these calls were purchased for an average premium of $0.05 apiece, perhaps by one or more strategists expecting the price of the underlying to pop after earnings. The stock posted double-digit percentage gains following the release of third-quarter earnings in September and after the second-quarter earnings report in April of this year. Buyers of the $5.0 strike front month call options on ZQK this morning may profit at expiration should shares in the name rally nearly 25% to top the breakeven price of $5.05.…
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Flowers Foods Options In Play As Shares Flourish On Hostess Brands Bankruptcy
by Option Review - November 19th, 2012 3:30 pm
Today’s tickers: FLO, JPM & SFD
FLO - Flowers Foods, Inc. – Shares in the provider of packaged bakery products are up nearly 7% this morning at $23.86 as of 11:35 a.m. after the stock was raised to ‘buy’ from ‘hold’ with a 12-month target price of $25.00 at Keybanc Capital Markets. Flowers Foods, Inc., which sells its products under a number of brands, including Sunbeam and Tastykake, has attracted far greater-than-usual options activity in recent trading sessions on speculation the Thomasville, Georgia-based baker may consider purchasing some of rival Hostess Brands, Inc.’s assets as that company enters bankruptcy proceedings this week. Flowers Foods shares are up nearly 30% since Monday of last week. Traders positioning for shares in the name to extend gains purchased upside calls on Flowers this morning. The Dec. $25 strike call was purchased 50 times for a premium of $0.15 apiece, while 140 of the Jan. 2013 $25 strike calls were picked up at an average premium of $0.33 each. These contracts make money if shares in the name hit fresh 52-week highs by their respective expiration dates. Meanwhile, strategists who established bullish positions last week are seeing sizable gains in the value of their option contracts as shares sprint to the upside. The purchaser of 90 calls at the Dec. $20 strike last Monday for a premium of $0.30 apiece now holds contracts that cost $3.90 apiece, or thirteen times as much, as of midday in New York. Similarly, traders who picked up 180 of the April 2013 $22.5 strike calls at $0.90 apiece on Friday, find the value of their contracts increased 120% to $2.00 since the prior trading session. Finally, put buying at the $22.5 strikes in January and April indicates some traders are establishing downside protection to hedge possible declines in the price of the underlying in the months ahead. Overall options volume on Flowers this morning is greater than 1,050 contracts versus the stock’s average daily options volume of 45 contracts.…
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Bullish Bets On The Rise In JPMorgan Weekly Call Options
by Option Review - October 1st, 2012 2:12 pm
Today’s tickers: JPM, IP & ATHN
JPM - JPMorgan Chase & Co. – Trading traffic in JPMorgan call options this morning suggests some traders are positioning for shares in the U.S. bank to rally to their highest level since May by the end of the week. U.S. stocks are moving broadly higher on Monday and JPM shares advanced 2.3% to $41.40 by 11:30 a.m. ET, after the ISM’s U.S. factory index rose to 51.5 in September. Traders snapping up weekly calls on the stock are well-positioned to benefit from further upside in the shares in the near term. More than 6,300 calls have changed hands at the Oct. 05 ’12 $42 strike against previously existing open interest of 2,750 contracts. It looks like most of the calls were purchased for an average premium of $0.10 apiece, thus positioning buyers to profit in the event that JPM shares rally another 1.7% to top the average breakeven price of $42.10 by expiration this week. Shares in JPM, up more than 30% since the first full week in June, last traded above $42.10 on May 7th. The company is scheduled to report third-quarter earnings ahead of the opening bell next Friday.
IP - International Paper Co.– Shares in global paper and packaging company, International Paper Co., rose 0.85% on Monday morning to $36.63, and may soar to their highest in more than five years in the near future. The stock has moved sharply higher during the past 52 weeks, trading up 70% versus the first week of October 2011. A large bullish options play initiated on IP in the first hour of the trading day suggests one strategist is prepared for shares to extend gains into 2013. The trader appears to have paid a net premium of $1.12 per contract to buy a 5,000-lot Jan. 2013 $38/$42 call spread. The bullish position starts making money if shares in International Paper rally another 7% to top the effective breakeven…
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McDonald’s Reports Aug. Same-Store Sales, Call Buyers Lovin’ It
by Option Review - September 11th, 2012 2:10 pm
Today’s tickers: MCD, INTC & JPM
MCD - McDonald's Corp. – Traders hungry for bullish options on McDonald’s Corp. purchased upside calls on the stock this morning, with shares in the world’s largest restaurant chain rising as much as 0.90% to $92.10 at the start of the session on better-than-expected August same-store sales growth in its Asia Pacific, Africa and Middle East region. Options players positioning for shares in MCD to extend gains during the next five weeks snapped up Oct. $92.5 and $95 calls. The Oct. $95 strike call is the most heavily traded at present, with around 3,700 contracts in play as of 12:15 p.m. in New York. It looks like most of the $95 calls were purchased for an average premium of $0.51 apiece, thus preparing buyers to profit at expiration next month should the price of the underlying rally another 3.7% to exceed the average breakeven price of $95.51. Bullish activity spread to longer-dated contracts expiring in December, where around 2,600 of the Dec. $95 strike calls were purchased for an average premium of $1.21 each. These contracts may be profitable at expiration if the Big Mac maker’s shares rally 4.5% to top $96.21, the highest since May. McDonald's is scheduled to report third-quarter earnings ahead of the opening bell on October 19th, the last session available to trade the October options before they expire.
INTC - Intel Corp. – Shares in the chip maker are on the mend today, up 1.3% at $23.57 as of 12:25 p.m. ET, reversing some of the declines suffered during the prior two trading sessions. A large bullish risk reversal initiated on INTC this morning suggests one big options market participant is positioning for further gains in the price of the underlying this year. It looks like the strategist sold around 25,000 puts at the Dec. $21 strike at a premium of $0.45 each in order to partially offset the…
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JPM Calls Active As Shares Hit Highest Since May
by Option Review - September 6th, 2012 4:18 pm
Today’s tickers: JPM, JNY & MW
JPM - JPMorgan Chase & Co. – Financial stocks are on a tear today after the ECB released details of its bond-buying plan amid a better-than-expected ADP report that showed private-sector employers added 201,000 jobs in August. Shares in JPMorgan earlier rallied to their highest level on an intraday basis since May 10th, climbing 4.7% to touch $38.87 in the first half of the session. Options traders positioning for shares in the name to extend gains in the near term pounced on the newly issued weekly contracts expiring one week from tomorrow. Call volume is on the rise at the Sep. 14 ’12 $38.5, $39 and $39.5 strikes. Roughly 1,400 calls changed hands at the $38.5 strike by midday, with much of the volume purchased for an average premium of $0.56 apiece. Traders long these in-the-money call options stand ready to profit next week should JPM’s shares exceed the average breakeven price of $39.06. Trading traffic spread to the Sep. 14 ’12 $39 strike where more than 3,100 contracts are in play. Overall options volume of 166,735 contracts as of 12:40 p.m. ET on JPMorgan is well above the stock’s average daily options volume of around 70,500 contracts. Calls are more active than puts, with the call-to-put ratio hovering around 1.6.
JNY - The Jones Group, Inc. – Apparel and accessories retailer, The Jones Group, Inc., is seeing heavier than usual options activity today, with shares in the name rallying 3.5% to an intraday- and new 52-week high of $13.38 in the first half of the trading day. The company was scheduled to present at the Goldman Sachs 2012 Global Retailing Conference ahead of the opening bell this morning. One options trader appears to be positioning for shares in the name to potentially rise to their highest level since April 2011 by October expiration. It looks like the strategist purchased a 657-lot Oct. $12/$15 call spread for a net…
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Will We Hold It Wednesday – Euro $1.25 Edition
by phil - August 29th, 2012 8:38 am
Would you pay $1.25 for a Euro?
Would you take $125,000 of your Dollars and convert them to 100,000 Euros and put them in your safe until Christmas? The Euro topped out (non-spike) at $1.45 in April (when the markets topped out) and then plunged to $1.31 (10%) before bouncing back to $1.41 (66% retrace) and then fell all the way back to $1.27 (10%) came back to $1.34 (66% retrace) and then down to $1.21 (10%) and is now back at $1.25 (33% retrace).
Fibonacci would be very proud to see his numbers still ruling the markets 800 years later but it certainly doesn't make us feel warm and fuzzy about the Euro's chances of getting back to $1.30, since $1.29 would be that 66% retrace before we'd expect a drop back to $1.06.
From the point of view of our 5% Rule, we've got a 25-point drop from $1.45 to $1.20 and our "weak bounce" is a 20% retrace to – $1.25 and $1.30 would be a "strong bounce" 40% retrace but a failure here would be a very bad sign and, as you can see from Dave Fry's chart, the 22 week moving average crashing down to $1.25.57 doesn't make it seem all that likely.
In fact, $1.256 was our shorting spot for the Euro yesterday and there easy money to be made there several times already. We don't usually bother with currency trades but that one seemed pretty obvious… This morning obvious Futures trade I highlighted for our Members in an earlier note was going long on gasoline (/RB) off the $2.90 line as we head into oil inventories tomorrow and the hurricane makes landfall and knocks out a couple of refineries (they don't have to be damaged, someone always at least "trips" on the plug and shuts them down for 2 or 3 days to jack up gas prices – especially ahead of holiday weekends).
Gasoline makes a nice, bullish offset to our generally bearish bets – including oil shorts, because we still have way too much of it – despite 4 consecutive weeks of heavy draws, which were caused by a drastic reduction in imports and a drastic increase in imports to fake the impression of US demand over the summer.
How much of a reduction? Thanks to the manipulation of our nation's strategic resources for…
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More Monday Morning Foolishness – Playing a Rigged Game
by phil - August 13th, 2012 8:29 am
Think Mcfly, THINK!
Forget the rhetoric, forget what Cramer says – or any of the other idiots on what used to be accurately called "the idiot box." Just look at this one, simple chart (thanks Doug Short) and tell me – why on earth would the Fed step in and take emergency action when the market is at a multi-year high?
Have they EVER done this before? EVER? Has ANY Central Bank EVER taken emergency liquidity measures when their stock market was at or near their all-time highs? And look at the interest rates (the red line) – there's nowhere to go folks – not unless the Fed is going to start PAYING US to borrow money. In which case – sign me up for $10Bn…
This is the point that was made this week on the cover of Stock World Weekly, and my comments in "The Week Ahead" section were:
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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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