Posts Tagged ‘ADM’

Three-legged Bull Eyes Archer-Daniels-Midland Co. Options

 
Today’s tickers: ADM, ETFC, VG & XLNX

ADM - Archer-Daniels-Midland Co. – A couple of weeks ago demand for call options on one of the world’s largest processors of corn, wheat, cocoa and other feedstuffs jumped after Warren Buffet said Archer-Daniels-Midland is the “kind of company we look at” in regards to the search for acquisition candidates. Today, ADM options appear to be popular with at least one strategist positioning for further upside movement in the price of the underlying shares through the end of 2011. Shares in the food products company increased as much as 1.4% this morning to $31.00 by 11:30 am in New York. The stock still trades at an 18.5% discount off its more than 3-year high of $38.02 attained in February. Bullish action in ADM options and the bump-up in shares follow a study released by Purdue University economists on Tuesday showing, among other things, that high food prices are expected to persist for the next one to two years. The U.S. government in February said U.S. farm income may reach $94.7 billion this year. Archer-Daniels-Midland is scheduled to report fourth-quarter earnings ahead of the opening bell on August 2. One options trader expecting shares to near multi-year highs by December expiration initiated a three-legged bullish transaction straight out of the gate this morning. It looks like the investor sold 1,000 puts at the December $28 strike for a premium of $1.16 each in order to finance the purchase of a 1,000-lot December $32/$36 call spread at a cost of $1.14 apiece. The sale of the put options more than offset the cost of the bull call spread, thereby yielding a net credit of $0.02 per contract to the investor. The trader adds to his gains in the event that shares in ADM rally another 3.2% over the current price of $31.00 to surpass the effective breakeven price of $32.00 at expiration. Maximum potential profits of $4.02 per contract, including the net credit received, are available to the investor should shares in the feedstuffs producer jump 16.1% to trade above $36.00 at expiration day in December. Shares in ADM last traded above $36.00 at the beginning of May.…
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Which Way Wednesday – Wherefore Art Thou QE3?

China is still rolling along and the Fed says "maybe" on QE3.

That was all it took to get us to yesterday’s highs but we took the money and ran at 2:24, when I told Members in Chat "DON’T BE GREEDY!"  As I had mentioned in yesterday’s post, our Morning Alert to Members put us long on Dow Futures (/YM) at 12,400 and Nasdaq Futures (/NQ) at 2,350, which made vast sums of money of course with the Dow up well over 100 points at the time.  During Member Chat yesterday, we took advantage of the early dip to go long on TBT, FAS, WFR and QQQ  while killing our short positions on USO, EDZ and FXI (see Monday’s post) as they had a great run and WE ARE NOT GREEDY!  

Of course we have our bull call spreads from last week so we’re pretty bullish BUT still cautious because our indexes are not holding their lines – especially the always-troubling NYSE, which did not hold the "Must Hold" line and when we name a line "Must Hold" well, it MUST be held!

The other thing I said to Members at 2:24 in yesterday’s Chat was:   

Keep in mind this rally has 100 Dow points to go just to get us back to Friday’s close (12,660) so don’t be impressed with less (S&P was 1,344, Nas 2,860, NYSE 8,411 and RUT 852).  

At the moment, we’re not even getting a 50% bounce of this morning’s bottom and Friday’s close was way below Thursday so it’s very easy to give us a "rally" by tanking the Dollar and floating rumors of MORE FREE MONEY but, for now – it does nothing to change the greater reality.  

That’s good advise for today as well.  A mere hint of QE3 does not change the cost of Italian debt, nor will it help our Treasury sell $21Bn worth of 10-year notes today at 2.9% (what kind of idiot would trust our Government to give them back Dollars with less than 3% interest to guard against inflation?), nor will it employ people and we ABSOLUTELY know that QE3, if done like QE2, is going to
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Options Traders Feed on Archer-Daniels-Midland Co. Calls

Today’s tickers: ADM, TRW, RDWR & BPAX

ADM - Archer-Daniels-Midland Co. – Warren Buffet’s comments that Archer-Daniels-Midland is the “kind of company we look at” in regards to hunting for acquisition candidates fueled heavier than normal activity in ADM options, bumped its shares up as much as 1.8% and pushed options implied volatility up 20.7% to 30.82% today. In an interview on Bloomberg Television this morning, Buffet also cited General Dynamics and Exelon Corp. as attractive, but options on those names remain relatively quiet. Shares in Archer-Daniels-Midland, one of the world’s largest processors of corn, wheat, cocoa and other feedstuffs, are up 1.00% at $30.75 just before 1:00 pm on the East Coast. ADM call volume jumped, with calls changing hands roughly 6 times on the stock for each single put option in play. Much of the put activity, though light in comparison to interest in calls, appears to be the work of bullish players selling the contracts to harvest available premium. Investors positioning for shares to extend gains scooped up out-of-the-money calls across several expiries. Call volume is heaviest out at the September $31 strike where more than 14,000 contracts changed hands against 3,476 previously existing open positions. While roughly half of the calls traded to the middle of the market, it looks like at least 5,400 of the contracts were purchased for an average premium of $1.13 a-pop. Call buyers profit if shares in ADM rally another 4.5% to surpass the average breakeven price of $32.13 by September expiration. Nearer-term optimists purchased August $32 and $33 strike calls for premiums of $0.57 and $0.28, respectively. These investors make money if shares climb around 6.0% and 8.2% by expiration next month. Fourth-quarter earnings from ADM are expected to hit the stands on August 2 ahead of the opening bell.…
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Fickle Friday – Google Up, Dollar Down, GE Down

The dollar is making new lows.

As I've been saying all week(s) that is the story that is driving the market.  Still people interview me and ask me how high I think the markets can go which is kind of silly because, as I keep trying to explain, the markets aren't going anywhere, the only variable is the currency they are priced in.  Why do people not get this?  Why do other financial writers not get this?  Why do TA guys not get this?  Why does nobody talk about this in the MSM? 

Sure they talk about the weak Dollar or the strong Yen (but rarely the strong Pound or Euro, because it is contrary to the average viewer's vision of America and we don't want to upset the viewers, do we?) but who ever shows you a simple and obvious chart of the S&P or any other index priced in a foreign currency?  How hard is this to understand?   

 

So, if you are a Japanese investor, watching your US equities, THIS is how they are performing.  It's not much different from an EU perspective, where we FAILED the 200 DMA on 9/21 and the 50 DMA made a death cross last week.  Yet I still see chart guys running out on CNBC telling us their TA tells them we can go to the moon.  Sure, we can go to the moon.  Price your stocks in Hungarian Forints and suddenly the S&P is at 240,000 – all we have to do is ignore the fact that the currency has changed – JUST LIKE WE DO WITH THE DOLLAR – and we are rich, Rich, RICH!  

Yes, that would be ridiculous.  Almost as ridiculous as a bunch of grown men, who make a living analyzing the markets, acting as if the underlying value of the currency we are pricing things in doesn't matter.  Do you know what the World's hottest market was in 2007?  Zimbabwe!  That sucker would gain 500-1000% in a single day – invest over there and you made money hand over fist.  Howard Stern had a game called "Who Wants to be a Turkish Millionaire" and ho would give away a Million Turkish Lira and the joke was how excited the contestants were and how much they would be willing to humiliate themselves for…
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Contrarian Player Sees Visa Recovery Story Unfolding by Jan. 2012

Today’s tickers: V, EMC, MON, SAY, MJN, ADM, BBY, EDMC, EBAY & CHS

V – Visa, Inc. – Shares of the global payments company plunged 4.7% this afternoon to an intraday and new 52-week low of $64.90 following reports that said federal caps and pending litigation may limit Visa’s ability to increase prices. The price of the underlying was also helped lower by a downgrade to ‘market perform’ from ‘outperform’ at Sanford Bernstein, where analysts have a 12-month target price of $77.00 a share on the stock. The sharp decline in the price of the credit card issuer’s shares inspired near-term bearish options trading. More interesting, however, were the contrarian players seen initiating bullish positions in the longer-dated January 2012 contract. One optimistic strategist enacted a three-legged bullish combination play to position for a rebound in Visa’s shares. The investor appears to have sold roughly 2,500 puts at the January 2012 $50 strike for premium of $4.39 each, purchased about the same number of January 2012 $70 strike calls at an average premium of $8.37 a-pop, and sold approximately 2,500 calls at the higher January 2012 $90 strike for a premium of $2.50 apiece. The average net cost of the transaction reduces to $1.48 per contract. Thus, the contrarian player stands ready to make money should Visa’s shares jump 10.1% over today’s low of $64.90 to exceed the average breakeven price of $71.48 by expiration day. Maximum potential profits of $18.52 per contract are available to the investor should shares surge 38.7% to trade above $90.00 by January 2012 expiration. Visa’s shares last traded above $90.00 back on May 4, 2010. Options implied volatility on Visa, Inc. is up 10.8% at 33.75% with just over 20 minutes remaining ahead of the closing bell.

EMC – EMC Corp. – A large chunk of call options were purchased on EMC Corp. in early afternoon trading, however, it looks like the investor responsible for the transaction is taking a bearish stance on the stock rather than a bullish one. EMC’s shares rallied as much as 2.25% in the first half of the trading day to reach an intraday high of $20.43. The current 52-week high on the stock is $20.97, attained back on August 4, 2010. At first glance, the purchase of 20,000 calls at the January 2011 $21 strike at a premium of $1.00 each looks like a bullish bet by an…
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Bulls Board Continental Airlines As Shares Rise

Today’s tickers: CAL, RSH, FLEX & ADM

CAL – Continental Airlines, Inc. – Bullish options strategists initiated a couple of put credit spreads on Continental Airlines today with shares of the U.S. air carrier flying 4.35% higher to $24.00 as of 12:30 pm (ET). Investors populating CAL options are forecasting clear skies for the firm through September expiration and expect the price of the underlying shares to remain at least above $20.00 for the next few months. One of the bullish spreads involved the sale of 5,000 puts at the August $20 strike for a premium of $0.56 apiece, marked against the purchase of the same number of puts at the lower August $18 strike for a premium of $0.32 each. The investor responsible for the transaction pockets a net credit of $0.24 per contract, and keeps the full amount received today as long as CAL’s shares exceed $20.00 through expiration day next month. The trader receives the $0.24 credit in exchange for bearing the risk that shares crash and burn ahead of expiration. Losses on the position start to accumulate if Continental Airlines’ shares plunge 17.66% from the current price of $24.00 to breach the effective breakeven point to the downside at $19.76. The investor is slammed with maximum potential losses of $1.76 per contract should shares plummet 25% to trade below $18.00 ahead of expiration in August. An identical 5,000-lot put credit spread was established in the September contract. This transaction yields a net credit of $0.35 per contract to the responsible party if shares remain above $20.00, and results in maximum potential losses of $1.65 per contract if CAL’s shares slip beneath $18.00 by expiration day in September.

RSH – RadioShack Corp. – Call options on the retailer of consumer electronics goods and services are flying off the shelves this morning with RadioShack’s shares trading 3.95% higher on the day to stand at $22.37 as of 11:15 am (ET). Earlier in the session RSH shares rallied more than 7.6% to secure an intraday high of $23.16. Bullish options investors expecting continued appreciation in the price of the underlying stock this week picked up approximately 2,200 calls at the July $22.5 strike for an average premium of $0.60 apiece. Call buyers at this strike stand ready to amass profits should the retailer’s shares exceed the average breakeven price of $23.10 by expiration on Friday. Traders anticipating a more…
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Bank of America Bearish Option Position Closed – Shares Rally

Today’s tickers: BAC, MCD, ADM, XRT, CVS, STT, PFE, CVS, FSYS & AEO

BAC – Bank of America Corp. – One investor banked profits today by unraveling a massive bearish credit spread established back on October 28, 2009. The trader’s decision to take profits ahead of expiration could be a bullish sign for BAC. Shares are trading up 2% near the end of the trading day to stand at $15.00. The investor originally sold approximately 130,000 calls at the November 16 strike for an average premium of 49 cents apiece, spread against the purchase of the same number of calls at the higher November 17.5 strike for 15 cents each. The trader received a net credit of 34 cents per contract on the transaction. Today, the investor left money on the table by closing out ahead of expiration. It appears he sold the upper strike calls for 4 pennies and bought back the lower strike calls for 19 cents apiece. Net profits received for unraveling the spread amount to 19 cents per contract for a total of $2.47 million. One might interpret such a decision as a bullish signal for BAC because the trader decided to walk away with 19 cents – half of the maximum profit potential of 34 cents. The investor would only have been able to retain the full 34 cents if shares traded beneath $16.00 through expiration day in November.

MCD – McDonald’s Corp. – A bullish risk reversal in the January 2010 contract significantly reduced the price paid by one investor establishing an optimistic stance on the fast-food chain. Shares of MCD are trading 1.5% higher today to $61.20 despite yesterday’s downgrade to ‘hold’ by analysts at EVA Dimensions. The investor sold 13,000 put options at the January 60 strike for an average premium of 1.91 apiece to partially offset the cost of purchasing 13,000 in-the-money calls at the same strike for 2.51 each. The net cost of the reversal amounts to 60 cents per contract.

ADM – Archer Daniels Midland Co. – Food products company, Archer Daniels Midland, jumped onto our ‘most active by options volume’ market scanner this afternoon due to bullish activity in the March 2010 contract. Shares edged 0.5% higher to $32.37 during the trading session after the firm revealed better-than-expected first-quarter profits of 77 cents per share. One investor sold out-of-the-money put options to partially finance the purchase of a…
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Zero Hedge

Explosion Hits Russia's Largest Virus Lab Which Houses Plague, Smallpox, Ebola And Other Deadly Viruses

Courtesy of ZeroHedge View original post here.

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the "Vector Institute" located several miles from Novosibirsk - an emergency which was upgraded "from an ordinary emergency to a major incident," a...



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Phil's Favorites

The future of work will still include plenty of jobs

 

The future of work will still include plenty of jobs

Even though the future is unknown, Canada’s employment rate has risen steadily from 53 per cent in 1946 to more than 61 per cent today. (Shutterstock)

Courtesy of Wayne Simpson, University of Manitoba

There is now widespread anxiety over the future of work, often accompanied by calls for a basic income to protect those displaced by automation and other technological changes.

As a labour economis...



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Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

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Insider Scoop

New Relic Cuts 2020 Sales Guidance, Announces Changes In Management

Courtesy of Benzinga

New Relic (NYSE: NEWR) has reaffirmed its second-quarter guidance and cut its sales guidance for fiscal year 2020 from $600 million-$607 million to $586 million-$593 million.

The company’s chief technology officer, Jim Gochee, and chief revenue officer, Erica Schultz, have resigned. New Relic also named board member Michael Christenson as its chief operating officer. Christenson joins from his ...



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The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...



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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

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...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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