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…
For those unaware, China is conducting a massive military parade on Wednesday to commemorate the 70th anniversary of the end of World War II.
The event - which is accompanied by a three-day public holiday - is important for Xi Jinping, who is keen to project China’s strength to the world, especially in the wake of the country’s economic deceleration and highly publicized stock market meltdown.
Of course the parade also comes amid heightened tensions between Washington and Beijing.
China’s land reclamation efforts in the South China Sea - where the PLA has constructed nearly 3,000 acres of new sovereign territory atop reefs - has regional US allies on edge. The dispute came to ...
The Fed's Beige Book is a summary and analysis of economic activity and conditions, issued roughly two weeks prior to monetary policy meetings of the Fed.
"Book" is an adequate expression. This month, the Beige Book is 50 pages long. It's prepared with the aid of reports from the district Federal Reserve Banks.
Don't bother reading the book. It's not worth the slog.
Beige Book Highlights
Bloomberg offers these Beige Book Highlights. The Beige Book, prepared for the September 17 FOMC meeting, is not underscoring any urgency for a rate hike. Eleven of 12 districts report only moderate to modest growth with the Cleve...
The S&P 500 is now down around 7% on the year. Is the very long-term bull market still in play? Yes it is!!!
The chart below looks at the NYSE Composite on a monthly basis, dating back to 1965.
CLICK ON CHART TO ENLARGE
As you can see, since the mid 60’s, the NYSE composite has remained inside of rising channel (A). The last time the top of the channel was touched was in the late 1990’s and the last time the bottom of the channel was touched took place back in 2009.
Despite the quick down turn of late, this long-term rising channel remains in ta...
After the late recovery last week, sellers again made markets their home. Sizable losses were accompanied with higher volume distribution, although volume was down on earlier panic. Another pass at August lows looks likely.
The S&P is again heading to the 10% 200-day MA envelope. Relative performance is shifting away from Large Caps to more speculative indices, which is bullish in a rising market, but in a falling market suggests a lack of sanctuary.
The Nasdaq is also in the early stages of a retest of the August low. Technicals are weak, although stochastics crept above the bullish mid-line, but not enough to suggest ...
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The dark veil around China is creating a little too much uncertainty for investors, with the usual fear mongers piling on and sending the vast buy-the-dip crowd running for the sidelines until the smoke clears. Furthermore, Sabrient’s fundamentals-based SectorCast rankings have been flashing near-term defensive signals. The end result is a long overdue capitulation event that has left no market segment unscathed in its mass carnage. The historically long technical consolidation finally came to the point of having to break one way or the other, and it decided to break hard to the downside, actually testing the lows from last ...
With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.
Stock market sell off surprises some while others were prepared and are hedged prospering
Naysyers are warning that the recent plunge in Bitcoin prices - from almost $318 at its peak during the Greek crisis, to $221 yesterday - is due to growing power struggle over the future of the cryptocurrency that is dividing its lead developers. On Saturday, a rival version of the current software was released by two bitcoin big guns. As Reuters reports, Bitcoin XT would increase the block size to 8 megabytes enabling more transactions to be processed every second. Those who oppose Bitcoin XT say the bigger block size jeopardizes the vision of a decentralized payments system that bitcoin is built on with some believing ...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
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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