DIS - Walt Disney Co. – Front month call options changing hands on Disney today suggest some traders are positioning for shares in the name to break well above recent all-time highs in the near future. The stock, up some 50% since this time last year, increased 0.45% near the open this morning to touch a record high of $65.09 after Iron Man 3, produced by Marvel Studios, a division of the Walt Disney Co., earned more than $175 million in its opening weekend in North America. Traders betting the stock pushes to fresh highs snapped up roughly 2,800 calls at the May $67.5 strike for an average premium of $0.48 apiece during the first half of the session. Call buyers make money at expiration if shares in Disney surge 4.4% over today’s high of $65.09 to top the average breakeven point at $67.98. Walt Disney Co. reports second-quarter earnings after the closing bell tomorrow.
VMED - Virgin Media, Inc. – Big prints in Virgin Media put options on Monday morning indicates at least one trader is bracing for shares in the name to potentially pull back off recent record highs. Shares in Virgin earlier today rallied 0.40% to touch a fresh all-time high of $50.31. The stock has more than doubled since this time last year and is up roughly 1600% since touching down at a 2008 financial-crisis low of $2.96. The May $50 strike put contracts traded approximately 5,000 times by midday in New York versus open interest of just 15 contracts. It looks like most of the volume was purchased at a premium of $0.55 each, thus positioning buyers to profit in the event that VMED’s shares slip 1.7% from today’s high of $50.31 to breach the effective breakeven point on the downside at $49.45 by expiration next week.
MS - Morgan Stanley – Shares in Morgan Stanley are on the rise…
CS - Credit Suisse Group – Trading traffic in Credit Suisse options this morning suggests some traders are positioning for shares in the name to rally in the near term. The stock kicked off the final trading session of the week in rally-mode, helped higher by an upgrade to ‘overweight’ from ‘equalweight’ at Morgan Stanley. But, shares have since surrendered gains, trading flat at $28.16 as of 11:00 a.m. ET. The most active contracts on CS this morning are the Feb. $28 strike in-the-money call options, with roughly 5,000 lots in play versus open interest of 885 contracts. Traders shelled out an average premium of $1.11 per contract to buy the $28 strike calls, and may profit at expiration next month should shares in the financial services provider rally 3.4% to exceed the effective breakeven price of $29.11. Credit Suisse is scheduled to report fourth-quarter earnings on Thursday, February 7th, prior to the opening bell.
HUN - Huntsman Corp. – A big print in Huntsman Corp. put options pushed the maker of chemical products onto our ‘hot by options volume’ market scanner in the early going on Friday. Shares in HUN are currently down 0.70% on the day to stand at $17.57 as of 11:15 a.m. in New York trading. The single-largest transaction in options on Huntsman appears to be disaster insurance on the name, or protection against a sharp adverse move in the price of the underlying through May expiration. It looks like one strategist purchased roughly 18,000 puts at the May $12 strike for a premium of $0.20 apiece. The contracts make money at May expiration if shares in Huntsman Corp. plunge 33% from the current price of $17.57 to settle below the effective breakeven point at $11.80. Shares in Huntsman, up nearly 50% during the past six months, last traded below $11.80 in July 2012. The chemical company is scheduled to report fourth-quarter earnings in mid-February.
EXPR - Express, Inc. – Shares in clothing and accessories retailer, Express, Inc., are soaring on Tuesday, popping more than 21% to $17.03 during the first half of the session, after the company raised its forecast for fourth-quarter and full-year 2012 earnings and sales. Options on Express are more active than usual today, with volume approaching 13,000 contracts as of 10:55 a.m. ET versus the stock’s average daily options volume of around 3,800 contracts. Trading traffic is more heavily concentrated in near-term call options. Bullish players positioning for shares in Express to extend gains snapped up around 500 calls at the Jan. $17.5 strike for an average premium of $0.22 apiece in the early going. Traders long the calls stand ready to profit at expiration this week should shares in the retailer rally another 4% over today’s high of $17.03 to top the average breakeven price of $17.72. Like-minded strategists picked up roughly 575 calls out at the Feb. $17.5 strike for an average premium of $0.59 per contract, and may profit at expiration next month if EXPR shares settle above $18.09, the highest price since July 2012. Options traders long upside calls on Express ahead of the sharp move in the price of the underlying today are seeing strong gains in the value of some of those contracts. Call open interest on the retailer is greatest at the Jan. $15 strike, with 17,609 open contracts as of today. Time and sales data from December 31, 2012, through the end of trading yesterday on the Jan. $15 strike call options suggests most of the contracts were purchased for an average premium of $0.44 apiece. The sharp rally in Express shares today now finds premium on the $15 strike calls has more than quadrupled versus the average premium paid for the contracts during the prior 10 trading sessions. Express, Inc. is expected to report fourth-quarter earnings in March.
MS - Morgan Stanley – Shares in the financial services firm, up better than 60% during the past six months, rose 1.4% to…
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).
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.
Nothing happened this weekend and I guess that's better than something because most somethings that are likely to happen are bad and the only something that MIGHT happen that would be good is not all that likely to happen – not soon anyway. So better to have nothing happen so we can hope that something will happen than to have something happen that turns out to be nothing after all, right?
Welcome to 21st Century Investing. Please do not make the mistake of discussing the actual BUSINESS PROSPECTS of the companies you buy and sell with an average hold time of 22 seconds – that's so 1900's. It's rumors, not earnings, that power the modern markets so you'd better have your ears on the ground and keep your nose out of the financial statements – making money is so passe' – especially since money isn't worth the paper it's printed on anyway. What matters is how much FREE MONEY our Central Banksters will give us to play with today. Then we can have fun, Fun, FUN 'till Bernanke takes our T-Bills away.
This morning "ECB Officials" said that the Central Bank could intervene and buy the bonds of struggling euro-zone countries without unanimous approval, raising hopes that a bond buying program is still a possibility, and offsetting the disappointment caused by the bank's President Mario Draghi on Thursday. This is not new information but it's treated as such by Uncle Rupert's WSJ, who need a strong market as they look to split the company so Murdoch and his paper have Billions riding on a positive market environment – not that that would influence their reporting of course – allegedly.
That was enough to get the Asian markets excited – again – and the Asian markets closing higher was enough to give the EU a good open (even though the reason the Asian markets went up was nothing that would have gotten Europeans to buy again but – they don't know that) and the EU markets going higher helps our Futures go higher and that allows Cramer to go on CNBC this morning and tell you to BUYBUYBUY because, as Cramer tells us, the market is going to go higher because it went higher and higher is higher than higher so we need to raise our targets to reflect the higher highs that we can…
So I'm trademarking .DEspair to consolidate all the anti-EU statements coming out of Germany this week as the rhetoric reaches a crescendo and goes up from there. .EU is, of course the EU domain and .EUphoria is where we will store all the glowing pro-EU rhetoric that makes the market rise (until someone in Germany says something).
It's a typical case of .DE said, SH.Eu said and all the kiddies can do is hide in their room until Mommy and Daddy stop fighting.
Things were getting silly enough on the plus side as we rallied for no reason at all that we added a very aggressive short position on the Russell using TZA. My 3:07 comment in Member Chat was:
Big RUT move makes TZA fairly cheap at $20 and the July $20/24 bull call spread is $1, which makes for a nice hedge and if the RUT pops, you can offset it with the July $18 puts, now .45, for $1 or better or, of course, there's always the TWIL List!
We had no long plays to make yesterday as we added them all when the market was much lower (told you so!) and now it has moved to the top of the bottom of our range and we pick up a short – this is not rocket science, folks. It's going to be a choppy, terrible market until either the EU saves us by tomorrow or we crash and burn horribly and my comment to Members in the Morning Alert at 10:24 was:
We still need the Dollar to go lower and this morning it's zooming higher (82.80) and keeping us from a better move up on the indexes. This will go on for the next few days with each syllable uttered by anyone of presumed authority in the EU so – if you can't stand the heat – stay in cash!
The Dollar had worked it's way down to 82.50 into the close but now (8am) it's been jammed back to 82.90 as the Euro plunges back to $1.2426 on whatever silly thing someone just said. Financials are dragging everyone down as they are DOOMED if the EU can't pull things together.
Financials are also hurting as the NY Times Dealbook Blog is reporting that JPM's Trading losses "may reach $9Bn." I'm a little…
A bit more violent than we expected but now you can see why we went to cash on Wednesday. We even took a bullish bet on the Qs at the end of the day as we were hoping for a bounce this morning and we had really cleaned up with DIA July $124 puts from the morning Alert to Members, which came in at .95 and ran all the way to $1.85 but we took the money and ran at $1.40 for a nice 47% gain on the day.
We also picked up AAPL weekly $570 puts for .50 and those made a quick 40% as well, closing at .70 at the day's end.
In the afternoon, we took our winnings and played the QQQ next weekly $63s for .75 and they dropped a dime to .65 but we're playing with house money and a stop at .50 on the hopes there will be a rumor of stimulus that spikes the market back up.
We were too scared to play the Financials bullish with the Moody's downgrade looming but we will be restarting our FAS Money Portfolio today in the hopes that this will be a bottom for the Financials (about $14 on XLF) that we can begin to makes some bets on. Fas Money was, by far, our most profitable portfolio in the first half of the year, cashing in Wednesday with a virtual $12,175 profit with almost no cash in play (but using margin to sell FAS puts and calls on a regular basis).
There are still rumors that MS will suffer heavy margin calls. I say rumors because The Street reports $6.8Bn as a fact but, since Cramer is behind it, I don't believe a word they say.
Moody's lowered its long-term senior unsecured debt rating for Morgan Stanley to Baa1 from A2, with a negative outlook, while cutting its short-term rating for the firm to P-2 from P-1 but this move was a long time coming and MS stock has already plunged from $21.13 in March to $12.26 in early June and that's very close to the $10 line they hit in 2009 – which they tripled off by June.
We don't trust MS enough to bet on them directly but, if they DON'T blow up, XLF should do quite well and, even if…
MS - Morgan Stanley – JPMorgan’s trading loss troubles, which brought the shares down nearly 10.0% this morning, weighed heavily on Morgan Stanley as well. Shares in the financial services firm earlier fell 5.8% to an intraday and four-month low of $14.70. Options traders expecting MS to bounce back next week picked up cheapened upside exposure in the form of May expiry calls. The bullish plays may be winning propositions in the event of a near term recovery in the price of the underlying. Traders purchased around 2,100 of the May $14 strike calls for an average premium of $1.05 apiece, and picked up more than 4,800 calls at the higher May $15 strike at an average premium of $0.36 each. Premiums on the $14 and $15 strike calls have moved higher during the session as shares in the name recovered off the morning lows. Strategists holding in-the-money contracts with one week remaining to expiration face average breakeven prices of $15.05 and $15.36, respectively.
EWZ - iShares MSCI Brazil Index Fund – Shares in the EWZ, currently up 0.75% on the day at $57.53, may extend gains in the near term by the looks of bullish positioning in the June expiry options this morning. Call options on the fund are most active out at the June $60 strike, where more than 36,000 contracts changed hands against open interest of 9,244 positions. Most of the calls appear to have been purchased for an average premium of $0.80 apiece. The single largest stake, a block of 29,707 calls, was picked up just before 11:00 a.m. ET this morning. Call buyers stand ready to profit at expiration next month in the event that shares in the Brazil ETF rally 5.7% to top the average breakeven…
WFC - Wells Fargo & Co. – Financial stocks were among the weakest performers as trading got underway this morning, spurring bearish activity in options on the largest banks. Shares in Wells Fargo are down 1.3% at $32.73 as of midday in New York, having surrendered a total of 5.4% since reaching a more than three-year high of $34.59 on April 2nd. Weekly put buying on San Francisco, California-based Wells Fargo & Co. suggests some traders anticipate the stock may continue to sell off through the end of this week. The May 11 ’12 $32 strike put saw the most action, with more than 2,600 of the contracts purchased for an average premium of $0.16 apiece this morning. Put buyers may profit at expiration if shares in WFC decline another 2.7% to breach the average breakeven point on the downside at $31.84.
MS - Morgan Stanley – Investors in Morgan Stanley are feeling more pain today, with shares in the name down 0.50% at $15.76 in early afternoon trading on the heels of a more than 25.0% move lower since the end of March. Options traders looking to benefit from further potential weakness in the shares snapped up more than 3,200 puts at the May 11 ’12 $15 strike for an average premium of $0.13 apiece. Traders long the weekly $15 puts on the financial services firm stand ready to profit in the event that shares in Morgan Stanley drop another 5.6% to trade below the average breakeven price of $14.87. Shares in MS last traded south of $14.87 back in December 2011.…
FOSL - Fossil, Inc. – A sizable bearish spread initiated in watchmaker, Fossil, Inc., this morning suggests it may be the right time to pick up some downside protection on the stock ahead of the Company’s first-quarter earnings report due out Tuesday before the open. Shares in Fossil are currently down 1.15% at $127.71 as of 11:15 am in New York. The ratio put spread could be an outright bearish stance on the stock, or may be a hedge to protect the value of a long position in the underlying. Shares in Fossil are up big time year-to-date, having soared approximately 60.0% in the first four months of the year. Downside protection to lock in some of the stock’s gains may prove a prudent move should a disappointing report on Tuesday morning send shares sharply lower. It looks like one trader purchased 1,125 puts at the May $120 strike for a premium of $3.80 each and sold 2,250 puts at the lower May $105 strike at a premium of $0.90 apiece. Net premium paid to establish the spread amounts to $2.00 per contract, with profits – or downside protection – available in the event that shares drop 7.6% to breach the effective breakeven price of $118.00. Maximum potential profits of $13.00 accrue to the downside if the watchmaker’s shares plunge 17.8% to settle at $105.00 at expiration in less than two weeks. Fossil’s shares last traded below $105.00 back in February.
MS - Morgan Stanley – Selling of weekly call and put options on Morgan Stanley this morning suggests shares in the financial services firm may luff around the $16.00 level through expiration. Shares are currently up 1.0% on the day at $16.16 just before midday in New York. It’s been a…
American investors might be extremely disappointed with the recent performance of the gold price as the yellow metal is once again trading below $1200/oz. This causes a lot of people to frown their eyebrows but the reality is that the gold price expressed in other currencies is actually showing signs of a break-out.
Indeed, when looking at the gold price in other currencies, the charts look extremely different. Let’s back this up with four charts of the yellow metal, expressed in different currencies. And indeed, all four charts (with the gold price expressed in respectively Canadian Dollar, Euro, Japanese Yen and Russian Ruble) show a considerable increase...
The US dollar traded higher against most of the major currencies over the past week. No thanks to Yellen's testimony before Congress. Market participants took away from her a reduced chance of a mid-year rate hike.
We disagree with the interpretation, seeing her comments as 1) playing down lowflation as transitory and 2) seeing the global influence being overall balanced as the decline in oil prices and interest rates offset the dollar's appreciation. We continue to expect the FOMC to drop its "patient" forward guidance at its mid-March meeting.
The S&P 500 closed February with a monthly gain of 5.49%, the largest one-month gain in 40 months. All three S&P 500 MAs and four of the five the Ivy Portfolio ETF MAs are signaling "Invested". In the table below, monthly closes that are within 2% of a signal are highlighted in yellow.
The Ivy Portfolio
The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I've also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.
For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick a...
Chris Kimble's chart for KOL shows a recently beaten down ETF struggling to pull itself up from the ashes. As the chart shows, KOL has recently drifted down to levels not seen since the financial crisis of 2008-9.
Bouncing or recovering with energy in general, coal prices appear to have stabilized in the short-term. Reflecting coal prices, KOL has traded between $13.45 and $19.75 during the past year. Bouncing from lows, KOL traded around 2% higher yesterday from $14.26 to $14.48 on high volume. It traded another 3.6% higher in after hours to $15, possibly related to ...
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
Stocks are hitting new highs across the board, even though earnings reports have been somewhat disappointing. Actually, to be more precise, Q4 results have been pretty good, but it is forward guidance that has been cautious and/or cloudy as sales into overseas markets are expected to suffer due to strength in the US dollar. Healthcare and Telecom have put in the best results overall, while of course Energy has been the weakling. Still, overall year-over-year earnings growth for the S&P 500 during 2015 is expected to be about +8%.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 cha...
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
PSW Members - well, what a year for biotechs! The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down! The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months. What could go wrong?
Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.
Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies. A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...
Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...
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.