Posts Tagged ‘BNI’

Fall Down Friday – Stop the Week, We Want To Get Off!

Boy, when sentiment shifts – it REALLY shifts!

Suddenly nothing is good enough for this market.  A beat from GOOG send the stock plummeting, massive earnings at GS sent the stock lower even before Obama read them the riot act (now called the "Volker Rule").  On the one hand, it’s all an overreaction but, on the very large other hand, it’s about freakin’ time this market finally acted normally and pulled back a little because 10,700 was pretty irrational given the underlying fundamentals

On the whole, we’re loving it as we went to cash last week and played bearish into the drop.  Last week I detailed how we had a great time day-trading in both directions and this week we hit it again with our upside DIA play on Wednesday (a 26% winner on the day) and yesterday I sent out a morning Alert to Members at 9:50 saying: "I am for shorting into this morning spike as it’s nonsense, especially this run in the Nas – most likely it will reverse but I’d like to see a clear move back to resistance first.  QQQQ $45 puts give you great leverage at .56 and you can use $46.20 on the Qs as a stop out, looking for .70+ on the day."  We hit .85 by lunch and pulled it just off the day’s high for a nice 51% gain on the day. 

I point this out both to encourage you to subscribe to our Newsletter (all 19,000 subscribers got yesterday’s free Alert) as well as to emphasize that WE DO NOT CARE which way the market goes.  Yes, I am very bearish on the short-term economy as I feel we are overbought and due for a correction but I also think we are probably OK over the longer term and we are taking advantage of these dips to pick up some long positions.  We are opportunistic players and we are investing along the premise I laid out in my 2010 outlook, which was titled "A Tale of Two Economies" as we see a great divide forming between the top 10% and the companies that service them and the bottom 90% of our population who are in dire straights, as are the companies that rely on selling to the masses to make a living.  

For an example of "Rich Company/Poor Company" just look at the earnings of two ends of…
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Risk Reversal Pops Up on Biotech-Company, Life Technologies

Today’s tickers: LIFE, FL, VTR, WFC, RRI, WFR, CAR, FRX, SWK, BNI & WFR

LIFE – Life Technologies Corp. – Biotechnology company, Life Technologies, popped up on our ‘hot by options volume’ market scanner this morning after one investor initiated a risk reversal in the December contract. Shares are relatively flat on the day at $47.58. The reversal is most likely the work of a bullish individual positioning for a rally in shares of LIFE by expiration next month. It appears the trader sold 5,200 puts short at the December 45 strike for an average premium of 1.30 apiece to finance the purchase of the same number of call options at the higher December 50 strike for 1.20 each. The investor receives a credit of 10 cents per contract on the transaction. The 10 cent credit is money in the bank as long as shares remain above $45.00 through expiration. Additional profits on the trade require the stock to surge to a new 52-week high of $50.00. Shares must rally 5% from the current price before the investor begins to accumulate profits. The 10,400 contracts exchanged in the spread represent about 23% of the total existing open interest on LIFE of 45,963 lots.

FL – Foot Locker, Inc. – A long-term bullish play in the January 2011 contract pushed the global retailer of athletic footwear and apparel onto our ‘hot by options volume’ market scanner this afternoon. Shares are currently up nearly 1% to $10.25. It looks like the trader initiated a bullish risk reversal by selling 3,500 puts at the December 7.5 strike for 1.10 each, and by buying the same number of calls at the higher December 12.5 strike for 1.10 apiece. The investor put on the trade for free and hopes to see shares rise above $12.50 by expiration in 14 months. Profits begin to accumulate if the stock rallies 22% over the current price to surpass the breakeven point at $12.50. We note that shares of FL have traded beneath $12.50 since November 11, 2008.

VTR – Ventas, Inc. – Shares of the real estate investment trust edged slightly higher by less than 0.25% to $40.56 during the trading day. An investor expecting shares to appreciate by expiration in December put on a bullish risk reversal strategy. The trader sold 3,000 puts at the December 35 strike for 60 cents premium and simultaneously purchased the same…
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Testy Tuesday – Dow 9,650, Berkshire $60 Edition!

Wheee, this is fun!

Just two weeks ago, on October 17th, I warned in the Weekly Wrap-Up that it was "Dow 10,000 or Bust" for the next week and we failed that one and last Wednesday we were looking to hold NYSE 6,900 and THAT failed too.  Now we enter into the second phase of our limbo game where the deep-voiced guy asks the question "how low can you go?" and we’ll be setting our next bar at our long-standing 9,650 target for the Dow,  which we are already hitting in pre-market trading.  If that fails, we’ll have to look down to S&P 1,000.  As you can see from Jesse’s Chart, we took a nice bounce off serious resistance yesterday but we’re just not feeling it yet, even though the market is now as technically oversold as it was in March

Yesterday was like a roller coaster and my first Alert to Members of the morning targeted 9,775 as the on/off line for our bullish/bearish posture on our DIA covers.  We whipped past that line right about 10 am as we got good reports from ISM, Pending Home Sales and Construction Spending but by 12:45 we had broken back down so I sent out an Alert calling to refocus back to 55% bearish by adding the DIA Jan $100 ($5) and Jan $102 puts ($6.20), already covered by the Nov $99 puts ($2.50). 

The reason we mess around with our covers is we don’t want to flip in and out of our option positions, which are generally either straight bearish or well-hedged long positions, is because options carry a relatively large bid/ask spread and cost you money every time you get in and out.  So, on the whole, we’d rather let our over-riding cover plays, like our DIA spread, adjust our stance as conditions change, making a single adjustment that keeps us balanced as we ride out the market waves. 

It’s been a couple of weeks since we had a good, old-fashioned stick save but we got a mother of one yesterday (as seen in Dave Fry’s chart) which was right on schedule as Kustomz bought it up in Member Chat at 3:09 and I agreed at 3:19 that "It does feel like a pre-stick move" and we grabbed VIX $25 puts at .85 to protect ourselves from a sudden surge in complacency.

By 3:33, my next comment to Members was: "The stick lives!" but…
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Wary Gold Investor Sees Limit To Price Gains

Today’s tickers: LEA, GLD, ALTH, MS, FXI, XHB, EEM & BNI

GLD – An investor was seen taking advantage of dollar weakness today by selling into the gold rally. Shares of the GLD are currently higher by less than 1% to $93.80. It appears that this individual expects to see healthier economic recovery and a subsequent decline in the demand for gold as a hedge through expiration in August. The trader sold short 8,500 calls at the August 100 strike price for a premium of 2.35 each in order to finance the purchase of 8,500 puts at the August 90 strike for 2.65 per contract. The transaction cost the investor 30 cents and yields a breakeven point to the downside at $89.70. Such a trade indicates medium-term bearish sentiment on gold and optimism for economic recovery. If investor-fear regarding possible catastrophic economic collapse can be assuaged over the next few months, we are likely to see a proportional decline in the demand for gold, as well. The trader also implies that the price of gold will not breach $1,000.00 by expiration. His short call position at the August 100 strike price leaves him exposed to potentially unlimited losses if shares were to rally sharply. – SPDR Gold Trust ETF

LEA – The designer and manufacturer of seating and electric automotive components has experienced a significant surge in shares, up more than 33% today to reach an intra-day high of $1.62. Apparently, interest in the severely bruised, broken, and beaten-down stock was ignited after a recommendation to get long of call options was released. Retail investors were likely first on the scene making small odd-lot plays and driving up call volume. By lunch-time some 24,000 calls had exchanged hands at the July 2.5 strike price for an average premium of 23 cents apiece. More savvy investors flocked to LEA after picking up the scent of fresh profits ready to be reined in. Thus, an insignificant gathering of traders buying call options quickly evolved into a feeding frenzy of investors buying and selling roughly equal numbers of calls. Investor churning increased the premium on the July 2.5 strike calls which now tote an asking price of 35 cents. Interest in LEA spread to the September 2.5 strike where approximately 11,500 calls were traded for an average premium of 50 cents per contract. Today’s activity generated option volume of more than
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Broadcom bears use put spread and call sales

Today’s tickers: BRCM, BNI, EMC, RIO, GM, VIX, XLF, BAC & ARNA

BRCM Broadcom Corp. Class A – Shares are currently off by 3% to $20.01 for Broadcom, which is engaged in semiconductors for wired and wireless communications. Options activity was largely contained to the May contract. One investor established a put spread by purchasing 7,500 puts at the May 20 strike for 2.00 each, and selling 7,500 puts at the May 18 strike for a premium of 1.15 apiece. The net cost of the trade amounts to 85 cents and yields a maximum potential profit of 1.15 if shares fall to $18.00 by expiration. Further evidence of investor bearishness on BRCM came in the form of 5,000 sold calls at the May 20 strike price for a 2.00 premium per contract. Apparently investors agree that, at least in the near-term, the current $20.01 share price is due for a decline. Option implied volatility has jumped from Friday’s reading of 64% to the current value of 70%.

BNI Burlington Northern Santa Fe Corporation – When you need your share price to rise in the face of a 4.3% equity market decline you could do one of two things. First, have Goldman Sachs upgrade the company or second, find someone to suggest out loud that your shares might be bought by legendary investor, Warren Buffett. Sadly, neither seems to have worked for the operator of one of the largest railroad networks in North America, which has seen its shares dip slightly by 2% to stand at $60.71. BNI was upgraded to ‘buy’ from ‘neutral’ at Goldman Sachs amid rumors about a possible purchase of the company by Berkshire Hathaway. Option traders reflected the bullish upgrade by purchasing calls in the April contract. At the April 65 strike price 3,300 calls were scooped up for an average price of 1.50, while at the higher April 70 strike more than 3,200 calls were bought for a 55 cent premium. In order for the April 70 calls to turn profits for optimistic traders, shares would need to rally by 16% to the breakeven share price of $70.55 by expiration.

EMC EMC Corporation – The IT support company has experienced a share price decline of about 3.5% to $11.17. EMC edged onto our ‘most active by options volume’ market scanner after some large volume trades were initiated in the April and May contracts. It…
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Phil's Favorites

Biden, Keystone XL and a Green New Deal could shake up Canada's energy industry

 

Biden, Keystone XL and a Green New Deal could shake up Canada's energy industry

Joe Biden has vowed to kill the Keystone XL pipeline if he is elected president in November. THE CANADIAN PRESS/Alex Panetta

Courtesy of Warren Mabee, Queen's University, Ontario

U.S. Democratic presidential candidate Joe Biden recently reiterated his desire to stop the Keystone XL oil pipeline project. “I’ve been against Keystone from the beginning. It is tarsands that we don’t need — that in fact is a very, very high pollutant,” he said.

This is just the latest mo...



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Biotech/COVID-19

How coronavirus contact tracing works in a state Dr. Fauci praised as a model to follow

 

How coronavirus contact tracing works in a state Dr. Fauci praised as a model to follow

Pairing widespread testing with fast, effective contact tracing is considered essential for controlling the coronavirus’s spread as the U.S. passes 100,000 deaths. AP Images/Rick Bowmer

Courtesy of Jenny Meredith, University of South Carolina

After weeks of keeping people home to “flatten the curve,” restrictions on U.S. businesses are loosening and the coronavirus pandemic response is moving ...



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ValueWalk

Don't expect a second round of stimulus checks in June

By Michelle Jones. Originally published at ValueWalk.

Lawmakers from both parties are finally starting to agree that a second round of coronavirus stimulus checks may be needed. However, they are still a long way from making a final decision that will actually result in another round of checks for everyone. Here’s the current status on a second round of stimulus checks.

Q1 2020 hedge fund letters, conferences and more

Coronavirus stimulus checks: second round status

The Democrat-led House of Representatives passed the Health and Ec...



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Zero Hedge

Futures Tread Water In Calm Before US-China Storm, Trump Twitter Crackdown

Courtesy of ZeroHedge View original post here.

The S&P's remarkable stretch of posting gains in the overnight session continued for another day, with the S&P rising as high as 3,053, and last trading 9 points higher at 3,044, tracking global stocks higher, with Europe's Stoxx 600 rising 1.3% to session highs as investors weighed again increased friction between America and China and the official passage of China's National Security Law in defiance of Trump, against fresh fiscal stimulus promised by the European Union. Treasuries edged up, while the dollar was modestly lower even as traders "treaded water...



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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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