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…
Last week’s settlement between the Justice Department and five giant banks reveals the appalling weakness of modern antitrust.
The banks had engaged in the biggest price-fixing conspiracy in modern history. Their self-described “cartel” used an exclusive electronic chat room and coded language to manipulate the $5.3 trillion-a-day currency exchange market. It was a “brazen display of collusion” that went on for years, said Attorney General Loretta Lynch.
But there will be no trial, no executive will go to jail, the banks c...
763 followers 76 copiers A solid jump in both followers and copiers from the start of the month. This was in large part to my top-10 ranking in their People screener. Having said that, last week finished very poorly for me. Overtraded and wa...
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Understanding the new normal of a business model is key to the success of any company. The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place. Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.
Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants. This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales. However, in the c...
Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.
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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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Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.
On Monday, the Nasdaq (NDAQ) stock exchange said it would ...
Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching.
Phil writes: If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher. Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8. So, if anything, I think the pressure should be up, not down.
UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
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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