We discussed them way back in December as they faked their own GDP data, that it was nothing more than window-dressing to keep them from LOOKING like they were in default – even though they were clearly heading that way.
So it should come as no surprise that, as the deadline finally comes, there is no surprising rescue for the World's 26th largest economy ($477Bn vs $499Bn for Norway, $394Bn for Austria, $385Bn for Thailand and $248Bn for Greece). Since it's not a surprise, we took the opportunity this morning to go long in the Futures, as the 1% dip around 4am seemed overdone. I sent out a special Alert to all of our Members, saying:
Still, I like /TF for a bullish over the 1,130 line (testing now) and /YM at 16,700 and /ES 1,950 for bounces but VERY TIGHT STOPS if any of them fail.
Fortunately, they did not fail and already (8am) we have /TF 1,135 (up $500 per contract), /YM 16,732 (up $160 per contract) and /ES 1,955 (up $250 per contract) and our Egg McMuffins are paid for and those trades are now off the table (tight stops at least), as we expect more selling at the open!
Now, getting back to Argentina, ARGT is UP 32% this year and that is just silly so ARGT makes a nice short at $23.20 and you can, in fact, buy the Oct $23 puts for $1.45 and, if they give back that 32%, they'll be back to $19 and you'll have $4+ for a $2.55 gain (175%) – that's a fun way to play it.
I discussed other ways to play the market yesterday on Money Talk,…
EJ – E-House China Holdings Limited – Shares in the provider of real estate services in China are soaring on Thursday, up nearly 10% to a new 52-week high of $14.19 after the stock was raised to Conviction Buy from Buy at Goldman Sachs.
Options volume on the stock is more than three times the average daily level, with overall volume above 5,100 contracts versus the average reading of around 1,400 contracts. Roughly half of today’s volume is concentrated in far out of the money put options expiring in May 2014. It looks like more than 2,200 of the May $6.0 strike puts were purchased within minutes of the opening bell this morning at a premium of $0.25 each. Positioning in these far out of the money put options may be an outright bearish bet on the stock or perhaps disaster insurance to hedge a long position in the underlying shares.
The puts may be profitable at expiration next year in the event that shares in the name decline more than 60% to breach the effective breakeven price of $5.75 at expiration. Of course, shares need not halve in order for the value of the long put position to increase in value between now and May expiration. Shares in EJ last traded below $5.75 back in August.
LULU – Lululemon Athletica, Inc. – Investors in yoga and athletic apparel maker Lululemon Athletica are taking it on the chin-balance today, with shares in the name dropping as much as 11.4% to $60.55 during morning trading, the lowest level since the end of June. The stock plunged after the company forecast fourth-quarter earnings below the average of analysts’ estimates.
VRA – Vera Bradley, Inc. – A sizable trade in Vera Bradley call options today appears to be bullish on shares of the handbags and accessories retailer through November expiration. Shares in VRA, down roughly 20% since this time last year, slipped 2.4% to a fresh 52-week low of $18.67 today. The company reports second-quarter earnings after the close on Wednesday.
The most-traded contracts are the Nov $20 calls, with volume topping 3,400 contracts versus open interest of 505 contracts. Most of the volume traded in a block of 1,900 calls at an asking premium of $1.20 per contract. The position starts making money if shares in Vera Bradley rally 13% over today’s low of $18.67 to exceed the breakeven point at $21.20. Overall options volume of around 5,100 contracts traded on the stock today is more than 10 times VRA’s average daily volume of approximately 470 contracts.
LULU – Lululemon Athletica, Inc. – Shares in the maker of yoga and athletic apparel are on the rise today, up as much as 4.6% during the session to $72.71 after the stock was initiated with a ‘Buy’ rating and price target of $90.00 at Citigroup. The retailer reports second-quarter earnings ahead of the opening bell on Thursday.
The stock attracted heavy volume in put options, with the put/call ratio dancing near 2.2 as of the time of this writing. Overall options volume on LULU is above 18,600 contracts just before 3:00 p.m. ET, roughly twice the stock’s average daily options volume of around 9,300 contracts. Some options traders appear to be bracing for the price of the underlying to pull back after earnings. Roughly 2,000 of the Sep 13 ’13 $72.5 strike weekly puts…
LULU - Lululemon Athletica, Inc. – Shares in athletic apparel maker, Lululemon Athletica, Inc., are bucking the trend today, with shares in the name up as much as 3.3% to $71.87 this morning, the highest level since mid-January, amid a down-day for stocks. LULU’s shares have rallied more than 16% since the company pulled its signature black Luon pants last month due to excessive sheerness, spooking investors and sending the price of the underlying to a six-month low. Positive comments and a price target increase to $77 from $71 at Janney Capital Management helped shares in LULU start the week with a bang, though the stock has since relinquished those gains to trade flat on the session at $69.60 as of 1:05 p.m. ET. Put activity on Lululemon this morning suggests one options trader is positioning for shares to potentially fall substantially during the next nine months. It looks like the strategist purchased more than 2,200 puts at the Jan. 2014 $65 strike for a premium of $7.10 each. The trader may profit at expiration next year in the event that LULU shares plunge 17% from the current price of $69.60 to breach the effective breakeven point on the downside at $57.90, the lowest level since August of 2012.
YHOO - Yahoo! Inc. – Upside calls are in play on Yahoo this morning, looking for shares in the name to add to the more than 60% rally in the price of the underlying since this time last year. Shares in YHOO today are down 2.4% to stand at $24.10 as of 1:20 p.m. ET. Traders initiating cheap bullish bets on the stock looked to the May $30 strike, where upwards of 4,100 calls changed hands versus open interest of 653 contracts. It looks like most of the calls were purchased earlier in the session at an average premium of $0.09 apiece. Buyers of the far out of the money call options may profit at expiration next month if shares in YHOO jump…
XLF - Financial Select Sector SPDR ETF – Heavy volume in February expiry call options on the XLF this morning may be the work of one or more traders positioning for shares in the financials ETF to get back to highs last seen in February 2011. The price of the underlying fund in the early going slipped 0.85% on Friday to a session and 11-week low of $15.06 before positive comments from Congressional leaders in Washington sparked a strong midday rally in equities. Shares in the XLF reversed earlier losses and now trades up 0.40% on the session at $15.24 as of 12:50 p.m. in New York. Traders exchanged nearly 100,000 call options at the Feb. $17 strike by 12:45 p.m. ET versus previously existing open interest of just 4,391 contracts. It looks like the bulk of the volume was purchased at a premium of $0.10 per contract, setting call buyers up to profit at expiration should XLF shares rally 12% during the next few months to top the effective breakeven price of $17.10. Upside call buyers are perhaps looking for financial stocks to move higher in the event that positive talk at the White House this afternoon translates into positive action from lawmakers in the months ahead.
V - Visa, Inc. – Stocks bounced off morning lows at midday after Congressional leaders meeting with President Obama to tackle the impending fiscal cliff made conciliatory and positive comments to members of the press at the White House today. Traders buying weekly calls on Visa, Inc. earlier in the trading session are seeing the value of their positions increase sharply intraday as the stock moves higher with the market. Shares in Visa are up 2.3% at present to stand at $143.21 as of 12:15 p.m. ET. Upside call buyers looked to the weekly Nov. 23 ’12 expiry options in morning trading, picking up a couple hundred of the $140 strike calls at an…
GME - GameStop Corp. – Shares in video-game retailer, GameStop Corp., increased as much as 6% this morning after the company forecast fourth-quarter earnings of $2.07 to $2.27 a share and posted better-than-expected third-quarter earnings ahead of the opening bell on Thursday. Reports the company sold more than 1 million copies of Call of Duty®: Black Ops II worldwide yesterday during a midnight launch of Activision-Blizzard, Inc.’s newest addition to their popular Call of Duty® franchise, also lifted shares in the name today. A down-day for U.S. equities took some of the wind out of GME’s sails by midday, however, with the stock currently up 2% on the session at $23.96 as of 12:35 p.m. in New York. A number of options traders appear to be selling December expiry puts on the stock, a strategy that pays off if the price of the underlying holds onto recent gains through year end. At-the-money Dec. $24 strike puts changed hands roughly 550 times versus previously existing open interest of 327 contracts, and it appears the volume was sold for a premium of $1.33 apiece. Put sellers keep the full amount of premium as long as shares in GameStop Corp. exceed $24.00 at expiration next month. Similarly, many of the 2,300 put options in play at the Dec. $23 strike this morning were sold by traders pocketing an average premium of $0.80 per contract. Heavier volume in excess of 5,000 puts changed hands at both the Dec. $20 and $22 strikes in the early going. Much of the volume traded to the middle of the market at premiums of $0.23 and $0.58 each, respectively.
WMT - Wal-Mart Stores, Inc. – The world’s largest retailer forecast fourth-quarter profit and sales below average analyst estimates during the company’s third-quarter earnings report ahead of the open this morning, pulling stock indexes lower and sending the price of its own shares down nearly 5% to $67.85. Shares…
LVS - Las Vegas Sands Corp. – Weekly options on Las Vegas Sands Corp. are active this morning ahead of the release of July Macau gaming revenue data on Wednesday. Shares in the casino resort operator are off their highs of the session, but remain in positive territory, up 1% at $37.15 as of 12:15 p.m. in New York. Traders dabbling in LVS weeklies appear to be positioning for shares to extend gains in the near term. The most active contracts, the Aug. 03 ’12 $39 strike calls, traded upwards of 3,100 times in the first half of the session versus open interest of 636 positions. It looks like strategists purchased most of the options for an average premium of $0.36 apiece, thus positioning for a 6%-plus upside move in the share price by expiration. The Aug. 03 ’12 $40 strike call also saw traders step in to purchase around 700 contracts at an average premium of $0.16 each. Shares in LVS are down roughly 40% off the April 12th four-year high of $62.09, having fallen hard and fast in the most recent three month period to touch down at its lowest in nearly two years last week.
LULU - Lululemon Athletica, Inc. – The single-largest transaction in Lululemon options today may be a pre-earnings bet that shares in the athletic apparel retailer could rebound somewhat following the company’s second-quarter report on September 10th. Shares in the name are down more than 3% this morning to stand at $59.56 and have declined more than 25% off the May 3rd all-time high of $81.09. It looks like one strategist initiated a one-by-two ratio call spread to position for limited gains in the price of the underlying through September expiration. The trader likely purchased 3,000 calls at the Sept. $70 strike for a premium of $1.82 each and sold 6,000 calls up at the Sept. $77.5 strike at a premium of…
XHB - SPDR S&P Homebuilders ETF – Heavy call buying in the front month calls on the Homebuilders ETF this morning may mean some traders are positioning for the price of the underlying to extend gains through expiration next week. Shares in the XHB, an ETF comprised of positions in homebuilding-related stocks including Home Depot, Bed Bath & Beyond and Toll Brothers, are up 1.25% at $20.16 this afternoon. The Jun. $21 strike call saw the most action this morning, with more than 30,000 contracts changing hands against open interest of 20,554 positions. The single-largest trade, a block of around 21,440 call options, appears to have been purchased outright at a premium of $0.18 each. The call buyer stands ready to profit should shares in the XHB move up another 5.0% to top the effective breakeven price of $21.18 by June expiration.
LULU - Lululemon Athletica, Inc. – Props to the buyer of a large put spread on athletic apparel retailer, Lululemon Athletica, Inc., on Wednesday prior to the Canadian company’s second-quarter earnings report. The stock is down 9.5% this afternoon at $63.40 after Lululemon’s full-year earnings and sales forecasts fell short of analyst estimates. A 10,000-lot Jun. $60/$67.5 put spread, which was untied to stock but could be a hedge to insulate the value of an existing long position in LULU shares, cost a net premium of $1.30 per contract yesterday. As of 12:45 p.m. ET today, the same $60/$67.5 put spread costs a net premium of $3.86 per contract to purchase, a near 200.0% increase in the sticker price on the strategy overnight. Put volume hovering around 2,000 lots at each strike this afternoon indicates the position is still at least partially intact. Downside protection provided by the put play maxes out at $60.00 should shares in LULU continue to pull back ahead of June expiration.…
LULU - Lululemon Athletica, Inc. – Options on the athletic apparel retailer are changing hands at a feverish pace today ahead of Lululemon’s first-quarter earnings report prior to the opening bell on Thursday morning. Shares in the provider of high-end yoga pants and stylish gym accessories are off their intraday peak, but continue to trade 1.5% higher on the session at $71.76 as of 1:00 p.m. in New York. Roughly half of the 43,000 contracts in play on LULU in the first half of the session are part of a large spread in the June expiry. One strategist established a bear put spread ahead of the earnings report, perhaps to protect a long position in the underlying shares against adverse moves in the price of the underlying. Most of the 10,000 lot June $60/$67.5 put spread traded on the Amex and was purchased for a premium of $1.30 per contract. The spread establishes downside protection beneath a breakeven share price of $66.20 and extends down to $60.00. Shares in LULU would need to plunge 16.4% after earnings in order for the stock breach the $60.00 level. Lululemon’s shares are up nearly 50.0% year-to-date and last traded below $60.00 back on January 20, 2012.
MFRM - Mattress Firm, Inc. – Bullish bets in Mattress Firm options cropped up today despite the near 25.0% post-earnings plunge in shares of the mattress retailer to an intraday low of $26.70. Shares in Mattress Firm dropped on lower-than-anticipated first-quarter revenue and a reduced sales forecast for the second quarter, but some traders appear to be positioning for MFRM’s shares to recoup losses during the second half of the year. Near-term bulls picked up around 120 calls at the June $30 strike for an average premium of $1.11 apiece, while longer-dated Oct. $30 strike calls were purchased some 150 times at an average premium of $3.38 each. Call buyers in the front month stand ready…
DJX - 1/100 of the Dow Jones Industrial Average – A massive vega trade initiated in the DJX today sent off ripples across major indices and single-stock names as market makers scrambled to hedge their sales of volatility that occurred due to the trade. The purchase of 30,000 Dec. 2014 $135 calls on the DJX, delta-hedged by a June 2014 $132 collar, is a pure volatility play that makes money if markets grow increasingly choppy going forward. Signs Europe’s crises may be coming to the fore once again could play a role in rising market volatility, which U.S. equities have largely been able to cast aside during the first quarter given positive domestic economic data and strong corporate earnings. The VIX has remained below 25 all year, passing much of its time just above or below the 17-level. For an investor anticipating rough seas up ahead, multi-year lows for the fear index provide an opportunity to lock in vega while it’s relatively cheap rather than wait for Nostradamus’ Armageddon, or more likely, continued turmoil across the pond, to blow volatility through the roof.
LNKD - LinkedIn Corp. – Shares in the social networking site for professionals are up 0.25% this afternoon to stand at $106.65 ahead of the Company’s first-quarter earnings report after the final bell today. Trading traffic in LinkedIn weekly calls suggests some traders are positioning for shares in the name to extend gains following the report. Notable bullish interest is building in the May 04 ’12 $115 strike options where more than 2,000 calls changed hands against open interest of 878 contracts by 12:15 pm in New York. It looks like most of the calls were purchased for an average premium of $3.07 apiece, thus positioning traders to profit…
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.
China eased purchase restrictions last month ending its four-year campaign to contain home prices. And what a ridiculous campaign it was. Prices are down less than 1% this month and less then 1% year-over-year.
Prices dropped in 69 of the 70 cities in September from August, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the data. They fell in 68 cities in August.
The central bank on Sept. 30 eased mortgage rules for homebuyers that have paid off existing loans, reversing course after a four-year camp...
In last weekend's update, only one the eight indexes on my watchlist posted a weekly gain. This weekend's numbers have reversed. Seven indexes closed the week with a gain and there were some substantial ones at that. Japan's Nikkei erased the previous week's -5.02% plunge with a 5.22% surge. The S&P 500 finished second with a 4.12% advance. China's Shanghai Composite was the sole loser, down 1.66%.
In fact, the Shanghai Composite remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. The index is down 33.68% from its August 2009 peak. See the table inset (lower right) in the chart below.
If you're following Valeant's proposed takeover (or merger) of Allergan and the lawsuit by Allergan against Valeant and notorious hedge fund manager William Ackman, for insider trading this is a must-read article.
Linette Lopez describes the roles played by key Wall Street hedge fund owners--Jim Chanos, John Paulson, and Mason Morfit, a major shareholder in Valeant. Linette goes through the con...
There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...
Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.
Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...
Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?
With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...
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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...
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