Trading in out of the money calls on OpenTable (Ticker: OPEN) this morning pushed options volume on the provider of online restaurant reservation services to more than twice the average daily level this morning, with upwards of 9,000 contracts changing hands in the early going versus an average daily reading of around 4,300 contracts.
The most traded options on OPEN are the 21Feb’14 $77.5 strike calls, with around 6,000 lots in play against open interest of roughly 1,200 contracts. It looks like traders quick enough out of the gate managed to pay as little as $0.10 apiece for approximately 1,500 of the calls. Gains in the price of the underlying, which spiked 4.0% near the open, coupled with an influx of buyers of the $77.5 calls pushed the premium on the contracts up to as high as $0.80 each at the same time that the stock price touched its intraday high of $77.85. The price of the underlying has since backed off those highs dragging down with it the prevailing premium on the contracts, which currently show a bid/ask spread of $0.05/$0.20 each. With expiration looming large and the price of the stock sitting decidedly lower than the $77.5 striking price, the morning purchase of these contracts may have generated transaction costs and little else by the looks of it. However, a review of time and sales data indicates some traders stepped in to sell the calls at an average premium of $0.27 each roughly an hour into the session. It’s difficult to say either way who is behind the selling, but perhaps buyers of the calls this morning were able to book quick profits on their positions at OpenTable this morning.
Looking out to options with more life left in them, the March expiry calls were also active during the first 30 minutes of the session. The Mar $80 strike calls traded roughly 1,000 times, with much of the volume purchased at a premium of $1.90 per contract. Traders long the calls stand ready to profit at expiration next month in the event that shares in OpenTable surge 7.0% over the current price of $76.50 to exceed the breakeven point at $81.90. Shares in the name last traded above $81.90 back on January 21st.
Chart – P&L of long Mar 80 Call Strategy in IB Option Strategy Lab
Current (solid line), At expiration (dotted line)
OPEN - OpenTable, Inc. – Shares in OpenTable are moving lower this morning, down 2.9% at $65.96 as of 11:10 a.m. ET, after analysts at Citigroup initiated a ‘sell’ rating on the stock with a price target of $58.00. Options on the provider of online restaurant reservations are more active than usual, with volume nearing 1,200 contracts versus the stock’s average daily volume of around 600 contracts. Front month put options are seeing the most action, specifically at the Jul $65 strike where more than 800 contracts have changed hands so far today. It looks like most of the $65 puts were purchased for an average premium of $1.13 apiece, thus positioning buyers to profit at expiration next week in the event that OpenTable’s shares dip 3.2% from the current price of $65.96 to breach the average breakeven point on the downside at $63.87.
FDO - Family Dollar Stores, Inc. – Upside call options are changing hands on discount retailer, Family Dollar Stores, Inc., today with shares in the name up as much as 4.6% in the early going to touch a six-month high of $66.90. The company reported better than expected third-quarter comparable store sales growth and higher than expected third-quarter earnings ahead of the opening bell. The Aug $67.5 strike calls attracted the most volume during morning trading, with upwards of 3,900 contracts in play against open interest of 138 contracts. It looks like most of the $67.5 strike calls were purchased for an average premium of $1.60 apiece. Call buyers stand ready to profit at expiration next month should shares in FDO rally another 3.3% over today’s high of $66.90 to surpass the average breakeven price of $69.10. Shares in Family Dollar Stores last traded above $69.10 in December of 2012.
Perhaps the the moves up in fellow 4-letter stocks like PCLN ($25Bn market cap), NFLX ($13Bn), OPEN ($2.5Bn), BIDU ($50Bn) and GMCR ($9.4Bn) don’t seem quite so crazy in light of the 40% reduction in AAPL ($314Bn) – take the money out of one bucket and you HAVE to fill up the others!
This does make me feel better as there may actually be a rational reason for NFLX having a p/e of 82 despite the fact that they have a completely indefensible service that already has competition from several on-line clones as well as big boys like AMZN, not to mention every cable and satellite company in America. Why does WFMI, a GROCERY STORE, trade at 41 times it’s projected 2011 earnings in the middle of the worst food inflation in US history? It’s not just because rich people are stupid and will overpay for anything because they hate to have people think they can’t afford stuff – it’s because their market cap is $11.4Bn and if you take 40% of AAPL’s $300Bn and distribute it around the Nasdaq – then WFMI get’s $1.2Bn of additional allocation.
That’s not exactly how it works but that’s the effect. A $1Bn Index fund who follows the Nasdaq has $205M of AAPL stock (20.49%) and, after the reweighing, they are to have $123M of AAPL stock. The other $82M does, in fact, get distributed to the other Nasdaq stocks according to the new weightings. Do you think that doesn’t distort the markets? Of course, that doesn’t "just" affect the Nasdaq – AAPL is a heavyweight in all the indexes.
The special rebalancing of the NASDAQ-100 Index will be enacted based on index securities and shares outstanding as of March 31 – now it is very clear why the MoMo stocks were jacked up like crazy into the end of Q1 – now the market manipulators have guaranteed bagholders for their stocks come May 2nd! On…
No man born with a living soul
Can be working for the clampdown
Kick over the wall ’cause government’s to fall
How can you refuse it?
Let fury have the hour, anger can be power
D’you know that you can use it?
The voices in your head are calling
Stop wasting your time, there’s nothing coming
Only a fool would think someone could save you
In these days of evil presidentes
Working for the clampdown
But lately one or two has fully paid their due For working for the clampdown – The Clash
Portugal said in September it would cut the wage bill by 5 percent for public workers earning more than 1,500 euros ($2005) a month, freeze hiring and raise value-added taxes by 2 percentage points to 23 percent to help reduce a deficit that amounted to 9.3 percent of gross domestic product last year. The measures are included in the government’s 2011 spending plan, which faces a final vote in parliament on Nov. 26. “The strike arises in a context of a set of measures that are quite significant and have social impact,” said Carlos Firme, a director at Lisbon-based Banif Banco de Investimento SA. “It’s natural that there are demonstrations of discontent.”
I’m sure King George’s Bankster buddies told him the same thing when the American colonists expressed their "discontent" – Don’t worry my King, there’s sure to be some grumbling from the peasants but your stimulus package is working wonderfully – now come outside and check out the golden horseshoes I put on my carriage team!
We were able to add a little bling to our own rides as those QQQQ $53 puts I told you about in yesterday’s morning post, which we picked up in Member chat on Monday at .45, opened at .75 and flew on up to $1.25 (up another 110% from Monday’s entry) and pulled back to finish the day at .98. We were, of course, very happy to take a daily double off the table because that’s all you need to stay ahead of the game. Even if you are just playing with $450 (10…
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.
The more I’ve thought about potential solutions to the gigantic mess we have found ourselves in as a species, the more I have come to believe we need to break apart into a vast multitude of city-states. The revolutionary concept of America in the first place was this idea of “self-governance,” something we do not posses an iota of in this day and age. As was noted recently in an ...
It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular and Premium both dropped another four cents, matching last week's decline. Regular is up 40 cents and Premium 39 cents from their interim lows during the second week of last November.
According to GasBuddy.com, three states (Hawaii, Alaska, and California) have Regular above $4.00 per gallon, unchanged from last week, and three states (Oregon, Washington and Connecticut) are averaging above $3.90, unchanged from last week. South Carolina has the cheapest Regular at $3.28.
How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer....
Despite a highly eventful week in the news, not much has changed from a stock market perspective. No doubt, investors have grown immune to the daily reports of geopolitical turmoil, including Ukraine vs. Russia for control of the eastern regions, Japan’s dispute with China over territorial waters, Sunni vs. Shiite for control of Iraq, Christians being driven out by Islamists, and other religious conflicts in places like Nigeria and Central African Republic. But last Thursday’s news of the Malaysian airliner tragically getting shot down over Ukraine, coupled with Israel’s ground incursion into Gaza, had the makings of a potential Black Swan event, which in my view is the only thing that could derail the relentless bull march higher in stocks.
Nevertheless, when it became clear that the airline...
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Dunkin’ Brands Group, Inc. (Ticker: DNKN) put options are active on Friday as shares slip on a downgrade to “Neutral” from “Buy” (with a 12-month target price of $45.00) at Janney Montgomery, and perhaps ahead of the company’s second-quarter earnings report next Thursday. Shares in the name are down 1.2% just before midday to stand at $43.36 and off the lows of the session. The stock has dropped nearly 20% since reaching a 52-week high of $53.05 in March.
The most traded contracts on DNKN today are the Aug 40.0 strike put options, with nearly 5,700 contracts in play against open interest of just 452 contracts. Mos...
We tried holding up stock prices but couldn’t get the job done. Market Shadows’ Virtual Value Portfolio dipped by 2% during the week but still holds on to a market-beating 8.45% gain YTD. There was no escaping the downdraft after a major Portuguese bank failed. Of all the triggers for a large selloff, I’d guess the Portuguese bank failure was pretty far down most people's list of "things to worry about."
All three major indices gave up some ground with the Nasdaq composite taking the hardest hi...
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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...
I just wanted to be sure you saw this. There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.
If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.
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