TUMI - Tumi Holdings, Inc. – Shares in luggage and travel accessories maker, Tumi Holdings Inc., are moving higher for a third consecutive session, up 1.6% today at $20.77 as of 12:10 p.m. ET. The stock continues to rebound following a sharp pullback last week during the first trading session of 2013. Options activity on Tumi this morning suggests some traders are wary the stock could reverse gains in the near term. The most active options on the stock today are the Jan. $20 strike puts, with upwards of 1,200 lots changing hands versus open interest of just nine contracts. It looks like most of the puts were purchased for an average premium of $0.70 apiece, thus positioning buyers to profit in the event that Tumi’s shares slide 7% from the current level to breach the average breakeven price of $19.30 by January expiration. Shares in the luxury luggage company last traded below $19.30 back in August 2012. Tumi Holdings, Inc. is scheduled to present at the 15th Annual ICR XChange Conference in Miami next Wednesday.
TWC - Time Warner Cable, Inc. – The provider of video, high-speed data and phone services popped up on our market scanners this morning due to heavy volume in the February expiry put options. Shares in Time Warner Cable kicked off the week in positive territory, but have since reversed gains to trade down 0.60% on the day at $97.17 as of 12:25 p.m. in New York. One options trader appears to be placing a floor on the cable operator’s shares, selling 6,250 puts at the Feb. $90 strike for a premium of $0.60 apiece. The strategy makes maximum profits of $0.60 per contract as long as shares in TWC settle above $90.00 and the puts land out-of-the-money at February expiration. The put seller could wind up having 625,000 shares of the underlying put to him at expiration if shares in the name decline 7.4% to $90.00 during the next five weeks. Time Warner reports fourth-quarter earnings ahead of the opening bell on the…
RIMM - Research in Motion, Ltd. – Renewed takeover speculation lifted shares in beaten-down Blackberry-maker Research in Motion this morning, spurring fresh bullish activity in weekly call options and driving options implied volatility on the stock higher. RIMM’s shares earlier rallied as much as 5.1% to $18.77, but have cooled somewhat as of 11:50 AM ET to stand a lesser 2.5% higher on the day at $18.30. Investors placing immediate-term bullish trades targeted the Dec. ’02 $18 and $19 strike calls, which have one full day of trading left to expiration. Traders paid an average premium of $0.45 apiece to pick up more than 1,100 in-the-money calls at the Dec. ’02 $18 strike, and shelled out an average of $0.16 in premium per contract for some 3,500 calls at the higher $19 strike. Meanwhile, the newly available weekly options that expire next Friday attracted the attention of speculators as well. Options traders purchased calls at the Dec. ’11 $19, $20, $21 and $22 strikes to position for RIMM’s shares to extend gains. Investors purchased roughly 850 calls at the Dec. ’11 $19 strike for an average premium of $0.53 each, and snapped up nearly 700 of the Dec. ’11 $20 strike calls at an average premium of $0.39 apiece. Call buyers at these strikes may profit at expiration next week in the event that shares in Research in Motion surge 6.7% and 11.4% over the current price of $18.30 to surpass the average breakeven prices of $19.53 and $20.39, respectively. Roughly 88,000 option contracts have changed hands on RIMM as of midday on the East Coast, with calls trading more than 2.3 times for each single put option in play.
PIR - Pier 1 Imports, Inc. – The home furnishings retailer popped up on our ‘hot by options volume’ market scanner this morning after one strategist initiated a bullish stance in March 2012 contract calls. The specialty retailer raised its third-quarter earnings estimate from $0.18 a share to a range of $0.20 to $0.21 a share, and said comparable store sales increased 7.0%. Shares in Pier 1 Imports are down 2.05% in early-afternoon trade to stand at $13.31, but one investor is preparing for the price of the underlying to realize significant gains over the next four months. It looks like the trader purchased 1,060 calls at the Mar. 2012 $17 strike for a premium of $0.40…
TWC - Time Warner Cable Inc. – An investor expecting shares in Time Warner Cable to pop ahead of March expiration initiated a large stock and option combination play just before 12:30pm in New York. Shares in the TWC are currently down 0.80% this afternoon to stand at $70.53. It looks like the trader enacted a delta neutral position, selling 150,000 shares of the underlying at $70.60 each, and buying 10,000 calls at the March $75 strike at a premium of $0.25 a-pop, on a 0.15 delta. The risk profile of the transaction is such that the trader may benefit somewhat on the short stock leg of the transaction should shares in the name slip in the near term. But, the profit and loss parameters of the position dictate substantially greater gains if Time Warner’s shares surge ahead of expiration day next month. If shares rally, gains on the long calls, which represent a far larger stake in the underlying than the 150,000 shares of which the investor is short, will trump losses realized on the short stock. The investor is well positioned to benefit nicely should the price of the underlying react as he predicts it will. Time Warner Cable’s reading of options implied volatility is up 5.1% on the session at 21.26% as of 1:30pm.
RVBD - Riverbed Technology, Inc. – Shares in Riverbed Technology increased as much as 4.0% this morning to secure an intraday- and new all-time high of $43.54. One big options player appears to be using call options in the name to position for the bullish momentum to continue through June expiration. It looks like the trader picked up 15,000 deep in-the-money calls at the June $39 strike for a hefty premium of $7.30 each, and sold the…
XRT – SPDR S&P Retail ETF – It’s not surprising that we are seeing bearish trading patterns emerge on the XRT, an exchange-traded fund designed to mirror the performance of the S&P Retail Select Industry Index, with shares of the fund trading 5.30% lower as of 3:20 pm (ET) to stand at $40.25. One long-term pessimistic individual initiated a three-legged bearish options combination play on the XRT using both call and put options. It looks like the investor partially financed the purchase of a debit put spread by selling twice as many out-of-the-money call options by volume. The trader purchased 5,000 puts at the September $40 strike for an average premium of $2.42 apiece, and sold the same number of puts at the lower September $34 strike for a premium of $0.84 each. Finally, the investor reduced the premium outlay required to establish the transaction by selling 10,000 calls at the September $48 strike for a premium of $0.73 per contract. The net cost of the options combination play is reduced to just $0.12 per contract. The investor responsible for the pessimistic play makes money if shares of the underlying fund slip beneath the effective breakeven point at $39.08. Maximum potential profits of $5.88 per contract are available to the trader should shares of the retail fund plummet 15.5% from the current price to breach $34.00 by September expiration. Options implied volatility on the XRT is up 15% to 34.80% with roughly 40 minutes remaining in the trading day.
MBI – MBIA Inc. – Investors who earlier in the session scooped up large numbers of put options on the insurance company are likely pleased as punch given the subsequent 10.4% decline in MBIA’s share price to $8.81 as of 3:25 pm (ET). Bearish investors purchased approximately 50,000 puts at the June $7.0 strike for an average premium of $0.75 apiece at around 11:40 am (ET) this morning when shares of the underlying stock were trading at $9.30 each. The decline in share price since this morning coupled with the 25.2% increase in the overall reading of options implied volatility on the stock to 136.22% inflated premium on the June $7.0 strike puts, which are currently up 200% on the day to reflect an asking price of $0.90 per contract. Put buyers in this case are poised to amass profits should…
There's an excellent post on Keep Talking Greece this evening on the simmering feud between Greek prime minister Alexis Tsipras and Spanish prime minister Minister Mariano Rajoy.
Tsipras made a claim that Rajoy's plan is to "wear down, topple or bring our government to unconditional surrender before our work begins to bear fruit and before the Greek example affects other countries… And mainly before the elections in Spain. ... for obvious political reasons".
Spanish foreign minister García Margallo, returned fire with a statement (a lie actually), that “Had Spain not given €32.744 billion to Greece, it could have increased the unemployment benefits by 50 percent or increase pensions by 38 percent.”
Theheart of the bickering is the rise of the Spanish political party Podemos to the top of the Spanish...
Note from dshort: Following up on yesterday's preliminary report on U.S. Light Vehicle sales, I've update the charts below.
For the past few years I've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series I focus on the population adjusted data. Let's now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 61.7%.
In a surprise move, the RBI just cut its main interest rates for the second time in two months, taking it from 6.75% to 6.50%, in what the central bank calls a “pre-emptive” policy move, but what is in reality merely a confirmation that so far in 2015 at least 20 central banks have lowered their interest rate.
From the statement:
The RBI notes that the rupee has remained strong relative to peer countries. While an excessively strong rupee is undesirable, it too creates disinflationary impulses…
...softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6 per cent in the second half. The fiscal consol...
Despite low trading volume, a strong dollar, mixed economic and earnings reports, paralyzing weather conditions throughout much of the U.S., and ominous global news events, stocks continue to march ever higher. The world remains on edge about potential Black Swan events from the likes of Russia, Greece, or ISIS (or lone wolf extremists). Moreover, the economic recovery of the U.S. may be feeling the pull of the proverbial ball-and-chain from the rest of the world’s economies. Nevertheless, awash in investable cash, global investors see few choices better than U.S. equities.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...
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Chris Kimble's chart for KOL shows a recently beaten down ETF struggling to pull itself up from the ashes. As the chart shows, KOL has recently drifted down to levels not seen since the financial crisis of 2008-9.
Bouncing or recovering with energy in general, coal prices appear to have stabilized in the short-term. Reflecting coal prices, KOL has traded between $13.45 and $19.75 during the past year. Bouncing from lows, KOL traded around 2% higher yesterday from $14.26 to $14.48 on high volume. It traded another 3.6% higher in after hours to $15, possibly related to ...
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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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