Posts Tagged ‘PGR’

Ratio Put Spread Pops Up On Safeway

 

Today’s tickers: SWY, GM & PGR

SWY - Safeway Inc. – The North American retailer of groceries and consumer products reports fourth-quarter earnings five weeks from today, and it appears one options player may be locking in gains in Safeway’s shares should investors lose their appetite for the stock following the report. Shares today rose 1.25% to a six-month high of $21.82, on the heels of a more than 35.0% rally since the end of September. The largest transaction in Safeway options today was the one-by-two ratio put spread initiated in the March expiry in the first half of the trading session. It looks like the investor responsible for the spread purchased 4,100 in-the-money puts at the Mar. $22 strike for a premium of $1.09 each and sold 8,200 puts at the lower Mar. $20 strike at a premium of $0.37 apiece. Net premium required to establish the trade amounts to $0.35 per contract. The sale of twice as many lower-strike put options greatly reduces the cost of the directional play and suggests the investor expects limited bearish movement in the price of the underlying rather than a nosedive in the next couple of months. Profits – or downside protection – kick in if shares in Safeway decline 0.80% to breach the effective breakeven price of $21.65, while maximum possible gains of $1.65 per contract result in the event that shares drop 8.3% to settle at $20.00 at expiration in March.

GM - General Motors Co. – Shares in General Motors are up 0.80% at $24.70 after the Company revealed it sold 9.03 million vehicles globally in 2011, which could earn the Detroit, Michigan-based Company the title of world’s largest automaker by unit sales. One sizable options strategy on GM this morning…
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Testy Tuesday – How Many Times Will You Fall for the Same Thing?

Isn't this exciting!

The pre-markets are up 1% after a long weekend.  That hasn't happened since – two weeks ago!  Of course last Tuesday, we were jammed up as well and the Tuesday after Christmas, we were jammed up as well but THIS TIME – we're REALLY feeling it, right?  

The funniest thing is the way they have dozens of idiots saying all sorts of ridiculous things on CNBC and not one of them mentions even the vaguest hint of deja vu in what has been the most consistent pattern of late 2011, early 2012.

On this Dollar chart from Scott Pluschau, you can see the dives that are occasionally taken to goose the markets and we have another one this morning with the Dollar down 1%, making the 1% pop in the futures slightly less impressive when taken in context.  

This time may be different because, according to Friday's Legacy Commitments of Traders Report released by the CTFC, Commercial Traders are now net short on the Dollar to the tune of 59,023 to just 6,061 longs – about a 10:1 ratio that is EXTREME to say the least.  Non-Reportable, Non-Commercial Traders (ie. Speculators), on the other hand, are almost 10:1 the other way with 9,765 long contracts and just 1,390 shorts.  Reportable Non-Commercial Traders (Hedge Funds) fill out the rest of the longs with 52,644 long contracts against just 8,057 shorts.  

To some extent, hedge funds are also speculators and usually you would assume their bets are covered but that's kind of hard to see with a 7:1 long/short ratio.  Keep in mind that Commercial Traders are institutions with business reasons to hedge – they are not going to be flip-flopping their positions so they will NOT be buying Dollars just because they get cheaper.  So, if it all hits the fan and the Funds shift to short – we could get quite a tidal-wave of Dollar selling.

That's an odd sort of positions for the speculating class to be taking (super-long on the Dollar) considering the possibility of a highly dilutive quantitative event (QE3) in the very near future.   This is why we can't be gung-ho bearish – tempting though it may be and this is why every little rumor of Europe being "fixed" sends the Dollar flying down – there are no buyers – only nervous long Dollar holders.  

As you…
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Testy Tuesday – Already?

Wheeeee, this is fun!

It's only been a week since I called for "Turnaround Tuesday" and asked the question "Will CNBC Apologize to America" for their ridiculous, sickening parade of negativity that chased their poor viewers out of the market (now 600 points ago) by completely misrepresenting the economic outlook in order to protect the TERRIBLE advice given by Jim Cramer, the Fast Money Crew, their sponsors etc. etc. – it was all one national frenzy of media negativity designed to shove retail investors entirely out of the market while the cognoscenti went shopping.

It's not just CNBC, of course, it's a problem with the whole MSM but I ranted about corporate (top 0.01%) control of the media last week so let's move on as we wave bye-bye to all the beautiful sheeple who were kind enough to sell us their stocks at the bottom, despite my warnings.  Our 500% upside plays are now well on their way to making 500% for us and our "9 Fabulous Dow Plays Plus a Chip Shot" are also looking good already.  Even the trade ideas I mentioned right in last Tuesday's post are well on track as I said last week:

On Friday, I had said to Members right at 9:38, in the Morning Alert: "If we run up, then it will be prudent to get more neutral into the weekend but if we stay down and hold our levels, then saying a little bullish will be fine. Out of short-term short trades if you haven’t already.  Keep in mind we have some great 500% upside plays you can still grab here if you think you are too short." 

The latter was a reference to our 500% upside plays.  We also went with EEM July $38 calls at .99, and a QLD $50/53 bull call spread for $1.30 (selling puts as well for more profits) as well as long plays on RIMM, AA, HOV, VLO and TASR.  My optimism was based on the considered TA analysis I shared with Members at 2:39:

After completing last month’s "Omega III" market pattern on the Trade Bots, it’s now time to spring the bear trap and run the "Apha II" into options expiration


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Ford Motor Co. Calls Fly Off the Shelves

Today’s tickers: F, PGR, IBM, YHOO, SMH, LINTA, VALE, POT, LEN & RRGB

F – Ford Motor Co. – Call options on automobile maker, Ford Motor Co., are flying off the assembly line this afternoon with shares of the underlying stock soaring 4.5% higher to $13.36. Investors exchanged more than 381,000 option contracts on Ford by 3:25 pm (ET), and paid extra attention to call contracts, trading more than 3.7 calls to each single put option in action. The most heavily trafficked area of the Ford options arena today are call contracts at the September $14 strike where bullish players bought up approximately 86,000 lots for an average premium of $1.12 apiece. More than 99,100 calls changed hands at this strike, which puts the previously existing open interest of 22,831 contracts to shame. Call-buyers holding the September $14 strike call options are positioned to make money if the auto maker’s shares surge 13.2% over the current price to surpass the average breakeven price of $15.12 by September expiration. Ford’s overall reading of options implied volatility is up 14.5% to 39.48% with 30 minutes remaining in the trading session.

PGR – The Progressive Corp. – Bullish options investors dabbled in call options on the insurance holding company in late afternoon trading with shares of the underlying stock rallying up 5.55% to a new 52-week high of $20.55. One investor was prepared for the rally and banked profits on a previously established long call position today. It looks like the options optimist originally purchased 2,000 calls at the May $20 strike for an average premium of $0.35 apiece back on March 25, 2010, when shares of Progressive Corp. were trading at around $18.86 each. The subsequent surge in the value of Progressive’s shares prompted the trader to sell the calls today for a premium of $0.95 apiece, thus banking net profits of $0.60 per contract. Finally, the investor initiated a fresh bullish stance on the stock by purchasing 2,000 calls at the higher August $22.5 strike for a premium of $0.40 each. The trader makes money on the new call acquisition if the insurer’s shares increase another 11.45% to exceed the effective breakeven share price of $22.90 by expiration day in August.

IBM – International Business Machines Corp. – The computer services giant received a vote of confidence by one big bullish options player this afternoon amid a 1.7% increase in the…
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Testy Tuesday – Have the Markets Become Comfortably Numb?

"There is no pain you are receding
A distant ship's smoke on the horizon.
You are only coming through in waves.
Your lips move but I can't hear what you're saying.
When I was a child
I caught a fleeting glimpse
Out of the corner of my eye.
I turned to look but it was gone
I cannot put my finger on it now
The child is grown,
The dream is gone.
but I have become comfortably numb
." – Pink Floyd
 

I have a theory that the markets (and the American people in general) aren't irrational, they are simply shell-shocked after suffering a very traumatic group financial experience… 

To be shell-shocked is to be "mentally confused, upset, or exhausted as a result of excessive stress" and the most common symptoms are: Fatigue, slower reaction times, indecision, disconnection from one's surroundings, and inability to prioritize – That certainly sounds like our Congress doesn't it?  Combat stress disorder was first diagnosed in WWI, when 10% of the troops were killed and 56% wounded – far worse than had been experienced in previous wars.  Our current financial crisis has similarly affected more people than any previous crisis with almost everyone knowing someone who is bankrupt or lost their jobs or homes and almost no one escaped the carnage of the downturn without some financial damage. 

Combat fatigue may go a long way to explaining the severe drop-off in volume that has plagued the markets since March, with participation now down to 25% of where we were last January and that leaves us open to the blatant sort of market manipulation that Karl Denninger caught last week as well as the usual nonsense we get daily from HFT programs that drive the market with such precision that we are able to tell how the day is going to go by simply checking our hourly volume targets.  Here's a clip from CNBC where a floor trader discusses market manipulation as a fact of trading (2 mins in).  

As Nicholas Santiago points out on In The Money Stocks,   "January is usually a very high volume month, yet it has started off the New Year even lighter than the last two months of 2009.  Light volume markets are very difficult to
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Weekly Wrap Up – Double Up or Double Top?

Not such a good week!

Last week was FANTASTIC and we had 28 winning trades out of 36 with an average gain of 42% on the winners and an average loss of 12% on the losers – now THAT's A GOOD WEEK.  We were stopped out of most of our bearish trades on Monday but we took a lot of new ones, which I'll get into later…  Of course, since we are rangish and play both ends, the good news is we still had our "losers" and puts that we sold on long positions and those turned into huge winners in just 5 days:

  • AA at $13.30, out at $15 -  up 12.7%
  • AAPL Jan $165 puts sold for $7.40, now $4.70 – up 36%
  • BAC Oct $17 puts sold for .97, now .28 – up 71%
  • DIA Nov $92 calls at $5.40, now $7.30 - up 35%
  • MHP 2011 $25 puts sold for $5.20, now 5.10 – up 2%
  • RIMM March $100 calls at $1.45, now $1.25, down 13.7%

So, of the 6 that were not working last week, 5 are winners this week.  As I mentioned at the end of last week's wrap up, we were more than satisfied with our 5% drop that week and we did expect a bit of a bounce but we made the mistake of thinking The 250 points we gained by Tuesday morning was the end of it, but here we are at the end of the week, another 100 points higher and right back where we started from when we shorted into the rally in mid September. 

Last weekend we were at a great point in our range as all our put plays had just paid off, this will be an interesting contrast as we have serious problems with our new short plays and we have a little less conviction than we had in mid September that we will get our correction – not after such a sharp turn off the 5% line this week.  Nonetheless, we did stay 55% bearish into the weekend overall – still playing for our range.  But, I'm getting ahead of myself, so let's go back to Monday and see how we got here….

Monday Market Manipulation – Goldman's


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Zero Hedge

Let Them Eat Cake: Venezuela Celebrates Chavez' Birthday With $100,000 Cake, While Citizens Starve

Courtesy of ZeroHedge. View original post here.

Nothing describes socialism more aptly than baking a 4 feet tall cake weighing 90 kilos for Hugo Chavez’s birthday (a dead man) while the rest of the country starves, cannot find basic necessities

...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Struggling U.S. Economy Propped Up by Gain in Consumer Spending (Bloomberg)

The U.S. economy stumbled in the first half of 2016 as companies retrenched, leaving consumers to shoulder the burden of sustaining growth heading into the presidential election.

The stock market's ridiculously boring streak won't last (Business Insider)

The s...



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Phil's Favorites

Crisis Actors and a Reichstag Fire

 

Crisis Actors and a Reichstag Fire

Courtesy of John Mauldin

This week your Outside the Box is from my friend Ben Hunt, who writes his letter under the title Epsilon Theory. This edition is a little darker than usual, and certainly more of a think piece. A central argument that Ben makes in Epsilon Theory is that it is Narrativethat is the driver of politics, economics, and social interaction generally. The Narrative is what we all (mostly) believe and act upon. Investors generally believe that quantitative easing is going to result in a rising stock market, so they act as if another round of QE and continued low or negative rates are good for the equity markets; and thus the game...



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Chart School

S&P 500 Snapshot: Weak GDP? No Worries!

Courtesy of Doug Short's Advisor Perspectives.

The potential mover and shaker this morning was the surprisingly weak Advance Estimate of GDP for Q2, not to mention the downward revisions to the two previous quarters. But no worries for the market! The S&P 500 hits its -0.30% intraday low about 30 minutes into the trade and then bounced to its 0.32% intraday high during the lunch hour -- a record intraday high for that matter. A bit of zigzagging in the afternoon cut the closing gain in half to 0.16%, just a tad shy of a record close.

The bond market took a somewhat different view. The yield on the 10-year dropped six basis points to close at 1.46%. That's nine BPs off its all-time closing low and 11 BPs below its close on July 22, when the S&P 500 set its latest record close.

He...



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ValueWalk

NetSuite Inc Stock Soars On Oracle Corporation Bid

By Jacob Wolinsky. Originally published at ValueWalk.

NetSuite Inc (NYSE:N) is soaring this morning as Oracle Corporation (NASDAQ:ORCL) has made a bid to buy the company for $9.3 billion. This deal has been rumored for some time but obviously few expected such a large premium or did not think the bid was certaintly coming as the stock is up about 18 percent at the time of this writing which is a lot for a tech giant. Here is what the sell side is saying.

NetSuite – analysts react

Nomura

Should the transaction take place, Oracle would pay about 9x NTM EV / revenue (based on consensus estimates for NetSuite), above the average multiple paid in our precedent SaaS Software acquisitions analysis of 6.8x . Additionally, Oracl...



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Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



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Digital Currencies

Judge Rules Bitcoin Isn't Money Because It "Can't be Hidden Under A Mattress"

Courtesy of ZeroHedge. View original post here.

By Everett Numbers via TheAntiMedia.org

In a landmark decision, a Florida judge dismissed charges of money laundering against a Bitcoin seller on Monday following expert testimony showing state law did not apply to the cryptocurrency.

Michell Espinoza was charged with three felony charges related to money laundering i...



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Kimble Charting Solutions

Junk Bonds at important inflection point, should impact stocks!

Courtesy of Chris Kimble.

Junk bonds have been quality at sending Risk On and Risk Off message to the broad stock market. Below looks at Junk Bond ETF JNK over the past decade.

JNK finds itself at an important price point below and what it does in the upcoming couple of weeks could become a big influence on the Risk On/Risk Off trade.

CLICK ON CHART TO ENLARGE

...

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OpTrader

Swing trading portfolio - week of July 25th, 2016

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 ...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

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Help One Of Our Own PSW Members

"Hello PSW Members –

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 jennifersurovy@yahoo.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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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