RGLD - Royal Gold, Inc. – The gold mining company’s shares are up 3.05% this afternoon to arrive at $60.11, but near-term options activity suggests some strategists are positioning for the price of the underlying stock to pull back ahead of May expiration. Investors may be taking cautious or even pessimistic stances on Royal Gold ahead of the company’s third-quarter earnings report, scheduled for release before the market opens on May 5, 2011. More than 3,400 put options changed hands at the May $55 strike on previously existing open interest of just 519 contracts. It looks nearly all of the puts were purchased for an average premium of $0.35 apiece. Investors are buying low-delta puts, perhaps as a relatively cheap form of near-term downside protection in case of an earnings disappointment or some unforeseen exogenous shock that sends markets, particularly gold mining companies, lower. Traders long the puts make profit at expiration if shares in Royal Gold plunge 9.1% off the current price of $60.11 to breach the average breakeven point at $54.65 by May expiration. Other bearish signals appeared shortly after the put activity took place in the front month. Investors sold approximately 1,500 now in-the-money calls at the May $60 strike to take in net premium of $1.90 per contract. Perhaps call sellers see shares in Royal Gold tapering off and trading below $60.00 at expiration, in which case, traders keep the full amount of premium received on the transaction. Alternatively, traders may be long the underlying, selling covered calls on the stock. Options implied volatility is currently up 5.8% at 27.61% as of 12:50pm in New York.
PENN - Penn National Gaming, Inc. – Shares in the owner and manager of casinos and racetracks surged 7.6% this morning to $40.19, their highest since June 2008, after the company raised its full-year earnings and sales projections. PENN reported better-than-expected first-quarter net income of $0.48 a share on revenue of $667 million ahead of the opening bell on…
Today’s tickers: GME, CHE, PENN, JPM, MED, SLE & WYNN
GME - Gamestop Corp. – Bullish options strategies were initiated on the video game retailer today despite the 0.70% dip in the price of the underlying shares to $19.86. One long-term optimistic individual employed the use of a three-legged combination, selling puts to buy a call spread, in order to prepare for a rebound in Gamestop’s shares by April expiration. The investor purchased 3,000 calls at the April 2011 $20 strike for a premium of $2.13 each, sold 3,000 calls at the higher April 2011 $24 strike for premium of $0.72 apiece, and shed 3,000 puts at the April 2011 $16 strike at a premium of $0.81 a-pop. Net premium paid to initiate the spread amounts to $0.60 per contract. Thus, the trader is poised to profit should GME’s shares rally above the effective breakeven price of $20.60 by April expiration day. Maximum available profits of $3.40 per contract are safe in the investor’s wallet if the video game seller’s shares jump 20.85% over the current price of $19.86 to exceed $24.00 by expiration. Finally, a 3,000-lot October $20/$24 strike call spread traded around the same time as the three-legged transaction. Open interest in the near-term calls is sufficient to cover today’s volume. The investor responsible for the October contract activity may be rolling the spread up to the April contract and adding the short puts to provide additional financing on the bullish stance.
CHE - Chemed Corp. – Shares of the provider of hospice care as well as various consumer services such as plumbing and sewer cleaning via its Roto-Rooter segment slipped 2.00% to $55.34 as of 3:40 pm ET. Investors with a near-term bearish view on the stock appear to have sold 2,000 calls outright at the November $60 strike to pocket premium of $0.55 per contract. Call sellers keep the full premium received on the trade as long as Chemed’s shares fail to rally above $60.00 by expiration day next month. Investors could…
Sam Antar makes a request to CFOs, Audit Committees, and auditors of public companies’ financial reports: study the SEC’s rules governing the calculation of non-GAAP measures such as EBITDA (earnings before interest, taxes, depreciation and amortization), and follow them. Correct the mistakes before the reports get filed so Sam doesn’t have to write an article and I don’t have to post it.
For example, Penn National Gaming (PENN) erroneously reported EBITDA as earnings before interest, taxes, depreciation, amortization AND charges for stock compensation, impairment losses, disposal of assets, losses from unconsolidated affiliates and the Empress Casino Hotel fire--that would be an "Adjusted EBITDA" or in PENN’s case, EBITDASCILDALUAECHFIRE.
To learn how to read a financial report and discover if the company you’ve invested in is calculating EBITDA properly or inflating this number, read Sam’s article. – Ilene
It’s pathetic that so many public companies miscalculate EBITDA (earnings before interest, taxes, depreciation, and amortization) and violate Regulation G governing the calculation of non-GAAP measures such as EBITDA. It seems that too many CFOs, Audit Committees, and auditors don’t take the time to thoroughly review compliance with all appropriate SEC financial reporting rules.
Starting in 2007, I reported improper EBITDA calculations by Overstock.com (NASDAQ: OSTK). After a brutal yearlong public battle, Overstock.com’s embittered CEO Patrick Byrne finally changed his company’s EBITDA calculation to comply with Regulation G. For additional details, please read Lee Webb’s Stockwatch article and Richard Sauer’s book.
Last July, I reported apparently erroneous EBITDA calculations by Penson Worldwide (NASDAQ: PNSN) and Comtech Telecommunications (NASDAQ: CMTL).
In this blog post, I will report erroneous EBITDA calculations by five more public companies: A. H. Belo Corporation (NYSE: AHC), FirstService Corporation (NASDAQ: FSRV), Animal Health International, Inc. (NASDAQ: AHII), Schawk Inc. (NYSE: SGK), and Penn National Gaming Inc. (NASDAQ: PENN).
First, let’s review how EBITDA supposed to be calculated
PENN – Shares of the gaming and racing company have lifted 8% to $30.79 amid gains experienced by a number of casino operators today. PENN edged onto our ‘hot by options volume’ market scanner after one investor initiated a put spread in the October contract. The spread was established through the purchase of 6,550 puts at the October 25 strike price for 2.02 each against the sale of 6,550 puts at the lower October 20 strike for a premium of 79 cents. The net cost of the transaction amounts to 1.23 and yields a maximum potential profit of 3.77 if shares declined to $20.00 by expiration. Such a trade could represent downside protection by an individual who is long the stock. Or, it could potentially represent a medium-term bearish position by a trader hoping to profit in the event of a 22% decline in shares through the breakeven point at $23.77 by expiration. – Penn National Gaming, Inc.
CIT – The bank holding company’s shares have rallied nearly 7% to $3.38 today, attracting some bullish option players seeking to benefit from further gains in the stock. Call-volume at the near-term June 5.0 strike price ballooned upward by more than 48,000 as investors purchased at least 37,200 contracts for an average premium of 23 cents each. The calls will begin to yield profits to investors if the underlying shares can increase 55% from the current price and surpass the breakeven point at $5.23 by expiration. Optimism spread to the July 5.0 strike where 5,500 calls were coveted for 40 cents apiece. Finally, the October 5.0 strike attracted some bullish action as well as some 2,000 calls appear to have been bought for 65 cents per contract. Option implied volatility climbed as high as 192% during the trading day up from Friday’s closing value of 151%. – CIT Group, Inc.
EXPE– Shares of the online travel company have climbed more than 6% to $15.88 amid renewed takeover chatter reported by one source. Option traders on EXPE have braced themselves for bullish movement in the stock as some 2,300 calls were purchased at the near-term June 17.5 strike price for an average premium of 35 cents per contract. In order to profit from a long-call position by expiration shares of Expedia must double today’s rally in order to breach the…
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.
What is the single best indicator of the American Dream? Many would point to household income growth. The Census Bureau has now published some selected annual household income data in a new report: Income and Poverty in the United States: 2013. Last year the median (middle) household income was $51,939 -- a tiny increase of 0.3% 2012. Let's put the new release into a larger historical context.
My study of the Census Bureau's historical data shows a 627% growth in median household incomes from 1967 through 2013. The ride has been bumpy, but it equates to a 4.41% annualized growth rate. Sounds impressive, but if you adjust for inflation using the Census Bureau's method, that nominal 627% total growth shr...
Analysts at Credit Suisse upgraded shares of Tableau Software Inc (NYSE: DATA) from Neutral to Outperform and raised the price target from $87.50 to $100.00 Tuesday.
Philip Winslow is confident in Tableau’s ability to maintain healthy revenue growth.
Analysts also identify that the company has a technology advantage in its highly-intuitive, visual-based core BI capabilities. Winslow stated, “ Tableau's development strategy positions the company to (1) continue to expand the market for business intelligence software and (2) increasingly gain market share in large enterprise deployments.”
Tableau is also experiencing International expansion momentum. Analysts view Internet expansion for Tableau as “significant” given that 5...
If GOOGLE, the NSA, and Bill Gates all got together in a room with the task of building the most 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… they never got around to building it, but my colleagues at Market Tamer did.
Although the stock market displayed weakness last week as I suggested it would, bulls aren’t going down easily. In fact, they’re going down swinging, absorbing most of the blows delivered by hesitant bears. Despite holding up admirably when weakness was both expected and warranted, and although I still see higher highs ahead, I am still not convinced that we have seen the ultimate lows for this pullback. A number of signs point to more weakness ahead.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-r...
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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.
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The CBOE Vix Index is in positive territory on Friday morning as shares in the S&P 500 Index move slightly lower. Currently the VIX is up roughly 2.75% on the session at 13.16 as of 11:35 am ET. Earlier in the session big prints in October expiry call options caught our attention as one large options market participants appears to have purchased roughly 106,000 of the Oct 22.0 strike calls for a premium of around $0.45 each. The VIX has not topped 22.0 since the end of 2012, but it would not take such a dramatic move in the spot index in order to lift premium on the contracts. The far out-of-the-money calls would likely increase in value in the event that S&P500 Index stocks slip in the near term. The VIX traded up to a 52-week high of 21.48 back in February. Next week’s release of the FOMC meeting minutes f...
Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.
Opinions differ as to what constitutes "money."
The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...
Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
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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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.