Thursday Foolishness – More of the Same with One Trade
by Phil - January 5th, 2012 8:13 am
Our day is done, how’s yours?
That’s right, we already did our 3am trade where we caught the dead top of oil (and the dead bottom of the Dollar), where my 2:59 am comment to Members in Chat was:
Dollar at session low of 80.40 at 3am and oil back at yesterday’s high at $103.70 so oil (/CL) makes a nice short below $103.75 here but DANGEROUS pre-market trading as Iran could spout off at any moment and the trading is VERY THIN.
So that brings us back to the good old Dow (/YM) futures at 12,350 and they are just over that line at 12,351 but that’s the short of the moment as long as the Dollar is over 80.40 .
For the next hour, I did a blow by blow on the oil trade in Member Chat on the way down to $102.70 – a nice $1,000 per contract worm gotten by the early birds, where we took the money and ran ahead of likely morning manipulation back up to $103.50, where we can short it again on inventories (11am). The Dow slipped to 12,300 and paid a solid $250 per contract as well, paying for over 100 Egg Mcmuffins this morning by itself. If you want to see how we make decisions along the way down – it’s well worth going over this morning’s comments – there was also some good discussion of other topics this morning, including my pick for the best wide-screen TV.
We’re still just messing around with hit and run plays, waiting to see how the week pans out and next week we’ll be waiting to see how earnings pan out as well as what we expect will be a pretty major market pullback leading into the 10-year auctions next Wednesday at 1pm. Clearly the Fed freaked out and jumped in yesterday when TLT hit $118 so we are fairly comfortable with our prediction of a…
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DiggOracle Call Buyer Portends Big Bullish Moves Ahead
by Option Review - November 17th, 2011 1:40 pm
Today’s tickers: ORCL, CTCT, PLCE & KO
ORCL - Oracle Corp. – U.S. stocks are accelerating to the downside this afternoon as concerns over Europe once again sour a market that had welcomed better-than-expected economic data this morning. The sea of red includes Oracle Corp., which currently trades 3.45% lower on the day at $30.89, just before 1:00 PM in New York. The pullback in the software maker’s shares today has not deterred one optimistic trader from taking a bullish stance on the stock out in the March 2012 expiry. The investor appears to have purchased 10,000 calls outright at the Mar. 2012 $36 strike for a premium of $0.92 each. Profits are available to the trader at expiration next year in the event that Oracle’s shares jump nearly 20.0% to surpass the effective breakeven price of $36.92. Shares in Oracle hit $36.50 on May 3 of this year, their highest since 2000, but have not topped $36.92 in at least a decade. Options implied volatility on the stock is up 15.5% to stand at 41.3% this afternoon.
CTCT - Constant Contact, Inc. – Fresh prints in Constant Contact call options suggests at least one strategist expects shares in the provider of email marketing and online survey solutions to rally over the next few months. Shares in CTCT fell 3.6% in the first half of the session to stand at $22.55 just before 11:40 AM ET. It looks like more than 1,300 in-the-money calls changed hands at the Mar. $22.5 strike against previously existing open interest of 65 contracts. Call volume is hefty relative to open interest at that strike and in comparison to overall open interest on the stock of 4,157 positions. One investor appears to have purchased nearly all of the ITM calls this morning for an average premium of $2.80 apiece. The trader stands prepared to profit should shares in Constant Contact rally 12.2% over the current price of $22.55 to surpass the average breakeven point at $25.30 at March expiration. The Waltham, Massachusetts-based company is scheduled to report fourth-quarter earnings on February 2, 2012, well in advance of the March 16, 2012, expiration date on the calls.
PLCE - Children’s Place Retail Stores, Inc. – Shares in the specialty retailer of children’s apparel and accessories are up big today, rallying as much as 17.1% to an intraday high of $52.70, after the company posted better-than-expected third-quarter earnings of $1.33 a share and…
Options Portend Slump In Shares Of Dunkin’ Brands
by Option Review - October 6th, 2011 2:03 pm
Today’s tickers: DNKN, PFCB, DDD & PLCE
DNKN - Dunkin’ Brands Group, Inc. – A burst of activity in calls and puts covering Dunkin’ Brands Group may be one investor’s way of preparing for a less than savory third-quarter earnings report when the company reveals its performance on November 2. Shares in the operator of Dunkin Donuts and Baskin-Robbins fell 0.90% to $28.16 this afternoon, and are down roughly 11.8% off the company’s post-IPO high of $31.94. The options combo initiated in the November contract this morning yields maximum benefits to its owner if shares in Dunkin’ suffer a nearly 30.0% pullback in the next six weeks. It looks like the investor responsible for the trade sold around 500 calls at the Nov. $30 strike for a premium of $1.375 each, in order to cover the cost of buying a roughly 500-lot Nov. $20/$25 put spread at a net premium of $0.90 each. The trader pockets a net credit of $0.475 per contract on the three-way spread, which he keeps as long as shares in DNKN fail to rally above $30.00 through November expiration. Additional profits are available to the investor should shares breach the $25.00-level, while maximum possible gains of $5.475 – including the net credit – are realized by the trader in the event that DNKN’s shares plummet nearly 30.0% to trade below $20.00 at expiration day. As far as possible motives behind the three-legged spread go, the potential for a disappointing third-quarter report represents just one possible explanation, as performance in U.S. equities across the board has tended to turn on a dime on negative or positive headlines out of Europe. The investor responsible for the transaction may be taking an outright bearish stance on the stock, or may be using the position to hedge long stock in DNKN through earnings. The short calls at the $30.00 strike may require the trader to deliver approximately 50,000 shares of the underlying that he may or may not already own at expiration…
Thrill-Ride Thursday – Retail Sales and Maybe Some Jobs?
by Phil - January 7th, 2010 7:50 am
Beware the data!
The first thing you will hear this morning is that COST had a 9% rise in sales, with International sales up a whopping 25%. What you are less likely to hear is that COST sells a lot of gasoline, which has doubled in price since last December and, excluding inflation in gas prices, same-store sales are up just 2%, a tremendous miss of the 7.9% expected. Out of the 25% increase in International sales, 15% is attributable to currency exchange so up 10% is the real number.
This is nothing against Costco, I like that company, but it’s a caution sign to look carefully at the retail numbers we’re going to be seeing today as there are several outside factors that are skewing the results drastically – to the point where the numbers, whether good or bad, are almost meaningless. It’s also good to keep in mind that we are comping sales to the WORST CHRISTMAS EVER so anything less than double digit gains over last year is still pretty sad.
Mish did a good job yesterday of pointing out the statistical nonsense known as the Non-Farm Payroll Report, where "Birth/Death" model revisions that were as much as 356,000 a month last year (January) make the data beyond useless for any kind of serious analysis. Nonetheless, analyze it they will and if we manage to avoid posting our 24th CONSECUTIVE month of losses, surely they will be pouring champagne on CNBC and acting like Capitalism has once again triumphed over evil (evil being people without money who still want to live with dignity).
Speaking of dignity – if you know 100 people in Nevada then, statistically, 3 of them went bankrupt this year, up 61% from last year as our economy "recovers". In Tennessee, Georgia and Alabama, just 2 of your 100 friends filed while California, surprisingly "only" had one in 66 households file for bankruptcy so you can go almost a whole day and not run into someone who lost everything in California – too bad the same can’t be said for the State overall! California needs $21Bn over the next 18 months to keep the lights on. This doesn’t seem so bad, GMAC is losing $13Bn this quarter and we’re bailing them out but if we bail out CA then NY, NJ and 47 other states will come knocking to the tune…
Just Another Manic Monday – Retail Edition
by Phil - November 16th, 2009 8:17 am
![[Growth and Deflation chart]](http://s.wsj.net/public/resources/images/NA-BC020B_JECON_NS_20091115220414.gif)
Good morning!
Japan had a huge GDP beat (+1.2% for the Q, 4.8% annualized)) and they leaked it early (to oil executives!) but, strangely, deflation is accelerating at the same time. That’s great news for stimulus watchers as the government can continue to pump money into the economy, even while it’s growing and, of course, the carry trade can continue.
Despite the robust third-quarter report, Japanese officials said they were still concerned about the economy’s strength going forward, and didn’t intend to pull back plans for further spending to ensure continued growth.
"There is no change in the severe condition of the country’s economy," Naoto Kan, the deputy prime minister, told reporters after the report’s release. "We are concerned about whether the economy falls into a deflationary situation," he added.
The domestic demand deflator — a measure of changes in prices of goods and services, excluding exports and imports — plunged 2.6%, the fastest pace since 1958. It was the third straight quarter of falling prices.
Another sign of concern in the report: The contribution of private consumer spending to growth slipped in the third quarter, suggesting measures to convert Japan from export-led growth to domestic-demand-led growth were facing limits. In the third quarter, private consumer spending, rose 0.7%, compared with a revised 1% climb in the second quarter.
It’s all stimulus but there’s no sign stimulus is stopping so party on markets. Japan also got a huge benefit from the Chinese auto sales – more stimulus! The Nikkei itself isn’t thrilled and is up just 0.25%, barely hitting Friday’s high on a stick-save into the close but that didn’t stopping the futures from jumping up more than half a point and gold from hitting $1,130. I sent out an Alert to Members at 2:24 this morning saying:
"Once the Nikkei closes (2am EST) the Hang Seng will have an hour to themselves and that should top out our futures (the Hang Seng is up at 22,900 (+1.5%). The shorting move on gold futures is to short them as they cross below $1,130 with zero tolerance for holding gold above that line. The same can be done with the S&P futures at 1,100, the Dow at 10,316 and the Nas at 1,800 and you can even use the 2 out of 4 rule to short one of the laggards only AFTER two others break down to be a little…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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