CZR - Caesars Entertainment Corp. – Shares in the casino entertainment company are soaring on Friday, up nearly 30% at $12.88as of 11:40 a.m. in New York trading, on reports that Las Vegas strip casino gambling revenue rose 13.49% in December. The operator of Caesars Palace, Harrah’s and other casino brands reports fourth-quarter earnings at the end of February. Options traders who placed bullish bets on the stock ahead of Friday’s big rally are seeing sizable overnight paper profits on their positions. The largest increase in call open interest yesterday was in the Mar. $10 strike call options. Time and sales data from Thursday suggests some 1,300 of the $10 strike calls were purchased yesterday for an average premium of $0.39 apiece. The last traded price on these contracts just prior to midday on the East Coast is $3.30 each, an eight-fold increase in value overnight. Bullish bets on Caesars were also established at the June $10 strike yesterday, with around 260 of those contracts purchased at a premium of $0.80 apiece. Premium to buy the June $10 strike call options today has jumped to $3.90 per contract of 11:55 a.m. ET on Friday. Overall options volume on CZR is upsharply versus the stocks average daily level, with upwards of 8,700 calls and puts in play on the stock compared to average volume of 819 contracts.
SD - SandRidge Energy, Inc. – A sizable bearish options trade initiated on SandRidge Energy this morning looks for shares in the oil and natural gas company to face limited declines during the first half of the 2012. The stock today trades down 1.2% on the session at $5.87 as of 11:30 a.m. ET. SandRidge reports fourth-quarter and full-year 2012 results after the closing bell on February 28th. The largest transaction in SD options today was the purchased of 12,500 in-the-money puts at the June $6.0 strike at a premium of $1.03 apiece, spread against the sale of 25,000 puts at the lower June $5.0 strike…
LVS - Las Vegas Sands Corp. – A number of options players hit the like button on Las Vegas Sands call options today ahead of the casino operator’s first-quarter earnings report after the final bell on Tuesday. Shares in the LVS increased as much as 2.6% this morning to secure an intraday high of $48.25, but currently stand just 0.60% higher on the session at $47.29 as of 12:50pm in New York. A number of pre-earnings speculators targeted the weeklies to position for the price of the underlying to extend gains ahead of expiration on Friday. Investors purchased around 2,250 calls at the May ’06 $48 strike for an average premium of $1.45 a-pop. Call buyers at this strike profit in the event that the stock rallies 4.6% over the current price to surpass the average breakeven point on the upside at $49.45 by expiration. Bulls paid an average premium of $0.77 per contract to pick up roughly 1,600 calls at the higher May ‘06 $50 strike price. Meanwhile, investors populating the May ’06 $52.5 strike sold 1,300 calls to receive an average premium of $0.28 each. Call selling at this strike may represent a near-term ceiling on shares in LVS for some investors. Traders keep the premium pocketed on the transaction as long as the price of the underlying stock fails to exceed $52.50 at expiration. Low-delta call buying occurred up at the May ’06 $55 strike where some 250 calls were picked up for an average premium of $0.09 per contract. More than 61,900 option contracts have changed hands on Las Vegas Sands as of 1:00pm. Options implied volatility on the stock is up 6.2% to arrive at 46.57% in early afternoon trade, one day ahead of earnings.
SFD - Smithfield Foods, Inc. – Shares in the hog producer and pork processing company rallied as much as 5.95% this afternoon to touch an intraday- and more than two-year high of $24.04 following an upgrade to ‘buy’ from ‘hold’ with a 12-month target share price of $28.00 at BB&T Capital Markets. Options on Smithfield Foods are more active than usual today, but investors are favoring puts over calls as of 12:40pm. More than 2.6 puts are trading on SFD at present for each single call in action. Put volume is heaviest at the July $23 strike where more than 4,340 contracts have changed hands on open interest of just 609 lots. Investors bought almost all of the put options at the July $23 strike for a premium of $1.50 apiece. Put buyers make money if shares in the packaged meat provider plunge 10.6% from today’s high of $24.04 to breach the effective breakeven price of $21.50 ahead of July expiration. Demand for puts on the stock spread to the lower July $22 strike where more than 1,750 puts were picked up at a premium of $1.10 each, versus previously existing open interest of 213 contracts. Traders long the puts stand prepared to profit in the event that Smithfield’s shares drop 13.0% in the next four months to trade below the effective breakeven price of $20.90 by expiration day. The closeness in the timing of the put transactions at these strikes suggest one investor could be responsible for most if not all of the put activity described. The trader or traders responsible for the put buying may be outright bearish on Smithfield Foods through July expiration, or are perhaps building up downside protection on a long position in the underlying stock. The pork producer is scheduled to report fourth-quarter earnings ahead of the opening bell on June 16, 2011.…
HGSI - Human Genome Sciences, Inc. – Shares in biotechnology company Human Genome Sciences are down 3.95% this afternoon at $25.23 as of 3:15 pm, but one options trader populating the December contract today is positioning for the stock to rebound ahead of a key FDA decision on its lupus drug treatment, Benlysta. A preliminary FDA review is set for release in one week, while an advisory panel with outside experts is scheduled to provide their input before the FDA provides a final ruling by December 9, 2010. The optimistic options player is well positioned to benefit from a strong rally in the biotech firm’s shares should approval of the lupus treatment become a reality. The trader purchased 5,000 calls at the December $26 strike for a premium of $4.30 each, and sold the same number of calls at the higher December $32 strike at a premium of $1.36 apiece. Net premium paid for the spread amounts to $2.94 per contract. Thus, the investor makes money if Human Genome’s shares reverse course and rally 14.7% over the current price of $25.23 to surpass the effective breakeven point to the upside at $28.94 by expiration day. The call-spreader stands ready to amass maximum potential profits of $3.06 per contract if shares jump 26.8% to trade above $32.00 by December expiration. Options implied volatility on the biotechnology company is up 12.1% at 141.59% as of 3:30 pm, and will likely continue to ascend ahead of the FDA’s critical ruling.
MDRX - Allscripts-Misys Healthcare Solutions, Inc. – Call options on the provider of clinical software, services, information and connectivity solutions to physicians and other healthcare providers are in high demand today ahead of the firm’s third-quarter earnings report, which is scheduled for release after the market closes on Monday. Shares in Allscripts are currently up 1.3% at $19.44 as of 2:15 pm. Plain-vanilla call buyers were the first to arrive on the scene, but the majority of the options volume…
SD – SandRidge Energy, Inc. – A bullish risk reversal on natural gas and oil exploration and development company, SandRidge Energy, Inc., suggests one investor may be positioning for a rally in the value of the underlying shares by expiration in June. SandRidge’s shares slipped 0.50% during the session to stand at $8.52. The trader sold 10,000 put options at the June $7.5 strike for an average premium of $0.53 apiece in order to offset the cost of buying 10,000 calls at the higher June $9.0 strike for $0.90 each. The net cost of the reversal play amounts to $0.37 per contract. Shares of the energy firm must rally approximately 10% over the current day’s price in order for the trader to break even on the transaction at $9.37. Profits are available to the upside beyond the breakeven point at $9.37 through expiration day in June.
DTV – The DIRECTV Group, Inc. – Investors sold strangles on the subscription television services company today amidst a 0.55% rally in the price of the underlying stock to $33.83. The use of the short strangle strategy implies traders anticipate reduced volatility in the price of DTV shares and expect the share price to remain range-bound through expiration in June. Throughout the trading session options traders sold approximately 15,000 calls at the June $35 strike for an average premium of $1.77 apiece in combination with the sale of 15,000 puts at the lower June $30 strike for a premium of $0.78 each. Strangle-sellers pocket a gross premium of $2.55 per contract, which they keep if Directv’s share price trades within the range of $30.00 to $35.00 through expiration. The premium received on the transaction provides limited protection against losses should DTV’s shares swing outside of the strike prices described. Stranglers accumulate losses if shares of Directv trade above the upper breakeven price of $37.55, or if shares decline beneath the lower breakeven point at $27.45, by expiration day.
YHOO – Yahoo!, Inc. – The slight 0.15% decline in the price of Yahoo’s shares to $15.55 today did not some options traders from establishing bullish stances on the stock. One individual initiated a bullish risk reversal to position for a rebound in shares by expiration in January of 2011. The investor sold 15,000 put options at the January 2011 $15 strike for…
Since the end of The Federal Reserve's money-printing machinations (otherwise known as QE3), something odd has happened to global asset markets. US equity markets have suddenly stopped going up, bonds have soared, and physical demand for precious metals is bleeding back into the paper-pricing markets. Furthermore, the ubiquitously suppressed volatility across every asset class has slowly but surely started to decompress.
It has been a while since something other than Central Banks have moved the market. This time, it was the turn of old fashioned Durable Goods to upset the party. The loss was big, but it's still noise within the bounds of the 'Santa Rally'. Consolidation breakouts remain in play, although volume climbed to register distribution.
The S&P crossed below its 50-day MA, but it's a flatlined moving average. Technicals are mixed.
The Nasdaq repeated the action of the S&P. The MACD edged a break of declining resistance, although there was a bearish cross between -DI and +DI.
Dan writes ... I was a soldier in the US Army for 23 years including four years in Special forces Stationed in Germany. I would agree that there is a strong likelihood that this is a US Special Forces soldier.
I can tell you that we were issued AK 74s and would use them on a mission such as this. That is about all I would really want to say at this point.
It is obvious to me that our strategy is the Balkanization of the various hot spots in the world, Syria, Ukraine, Iraq and so forth.
While other commodity prices have further softened recently, Gold rallied – rising from December low of $1,174/oz. to touch $1,300/oz. Joel Crane, an analyst at Morgan Stanley, expressed pessimism that...
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Last week, the S&P 500 put an end to its streak of weekly losses, despite giving back some gains on Friday. Thursday provided the big catalyst, with the ECB’s announcement of its bold new monetary stimulus plan. Investors were cheered and soothed for the moment. And U.S. fundamentals still look strong. But with Greece trying to turn back time, with volatility elevated (and likely to continue as such), and with the technical situation still dicey, the near term outlook is still worrisome.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart...
An interview with John Ehlers of Stock Spotter and Mesa Software
Ilene: John, in our last discussion about trading systems in general and yours in particular (Can trading be reduced to cycles, stresses and vibrations?) you mentioned Monte Carlo simulations and their use in measuring performance. Can you explain more about how you measure the performance of a trading system?
John: Let's start with comparing trading with gambling. The two have several things in common. In both ...
So as I was saying yesterday (Bitcoin: The Biggest Clown Show In History?), Bitcoin has several obstacles on the path to potential success as an alternative currency. But I forgot to mention hacking and theft at Bitcoin exchanges and other technical problems. This is related to the lack of government backing and the fact that the value of Bitcoins is based entirely on confidence.
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PSW Members - well, what a year for biotechs! The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down! The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months. What could go wrong?
Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.
Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies. A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...
Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...
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.
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