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 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.
The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through September 18. The headline number of 86.0 was a surprising decline over the revised August final reading of 93.4, an upward revision from 92.4. Today's number was well below the Investing.com forecast of 92.5. The current level is a four-month-low.
Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence retreated in September after four consecutive months of improvement. A less positive assessment of the current job market, most likely due to the recent softening in growt...
Those who read Zero Hedge regularly will be aware that for us no other regional US housing market is more important than that of the San Francisco. Recall from June:
When it comes to critical housing markets in the US, none is more important than San Francisco.
Courtesy of its location, not only does it reflect the general Fed-driven liquidity bubble which is the tide rising all housing boats across the US, but due to its proximity to both Silicon Valley and China, it also benefit...
Girls as young as 14 or 15 are travelling mainly to Syria to marry jihadis, bear their children and join communities of fighters, with a small number taking up arms. Many are recruited via social media.
The CBOE Vix Index topped 17.0 and the highest level since early-August on Monday morning amid declines in U.S. equities to start the trading week. The volatility index is off its earlier highs to trade 5.0% higher on the session at 15.65 as of 11:30 am ET. Options volume on the VIX is hovering near 360,000 contracts, or just more than 50% of the average daily reading of around 660,000 contracts. Calls are far more active than put options, as evidenced by the call/put ratio up above 4.2 in morning trading, perhaps as some traders position for volatility to stick around.
Large call spreads traded on the VIX today caught our attention as one big optio...
Yes, the market showed significant weakness last week for the first time in quite a while. In fact, the Dow Jones Industrial Average moved triple digits each day. But it was all quite predictable, as I suggested in last week's article, and certainly nothing to worry about. Now the market appears to be poised for a modest technical rebound, and longer term, U.S. equities should be in good shape for a year-end rally. However, I still believe more downside is in order before any new highs are challenged. Moreover, market breadth is important for a sustained bull run, so the challenge for investors will be to put together broader bullish conviction, including the small caps.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, re...
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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).
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Ebola is spreading too quickly for Ebola-vaccine makers to conduct typical studies of safety and efficacy on experimental vaccines. Instead, vaccines will be tested for basic safety, but then deployed with protocols devised now in order to test for efficacy essentially on the field. Testing has to be expedited because the situation in West Africa gets worse every day while there are no approved vaccines or other treatments.
The chart below is from a paper in the New England Journal of Medicine showing estimates of the virus's trajectory projecting out to November 1, 2014. If current trends continue...
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...
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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