Posts Tagged ‘CBST’

Energy ETF Options Portend Tough Times Ahead, but Smooth Sailing to Follow

 Today’s tickers: XLE, LIZ, NE & CBST

XLE - Energy Select Sector SPDR Fund – Two massive transactions in XLE options today suggest nearer-term pessimism on the energy sector and longer-term optimism. Shares in the fund started the session in positive territory, but the rally proved to be short-lived as shares are currently trading 0.60% lower on the day at $73.72 just before 12:50pm. The XLE, an exchange-traded fund that corresponds to the performance of the Energy Select Sector of the S&P 500 Index, jumped to the top of our ‘most active by options volume’ market scanner this morning after a huge bull call spread was purchased outright in the September contract. The transaction is a profitable one if shares in the XLE top recent highs to trade at levels not seen since mid-2008. The options player purchased 52,750 calls at the September $79 strike for a premium of $2.23 each, and sold the same number of calls up at the September $90 strike at a premium of $0.28 apiece. Net premium paid to initiate the spread amounts to $1.95 per contract, a price tag of more than $10.28 million. Profits are available to the trader should shares in the fund surge 9.8% over the current price of $73.72 to exceed the effective breakeven point at $80.95 by September expiration. Maximum potential profits implied by the spread’s parameters amount to $9.05 per contract if the price of the underlying fund jumps 22.1% in the next four months to trade above $90.00 at expiration. Meanwhile, a large put spread purchased in the nearer-term June ‘30 expiry suggests a less rosy outlook on the energy sector over the next seven weeks. The spread was likely purchased by the investor, although direction in this case is more difficult to determine as both legs of the transaction traded to the middle of the market. The pessimistic player appears to have purchased 33,330 in-the-money puts at the June $75 strike for a premium of $3.27 each, against the sale of the same number of put options at the lower June $65 strike at a premium of $0.52 a-pop. The net cost of the spread amounts to $2.75 per contract, thus yielding profits below…
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Bearish Player Paws at Cubist Pharmaceuticals

Today’s tickers: CBST, STJ, EFA & PEP

CBST - Cubist Pharmaceuticals, Inc. – A three-legged transaction involving Cubist Pharmaceuticals stock, as well as call and put options, appears to be the work of a bearish investor positioning for shares in the name to pullback ahead of August expiration. CBST shares are currently down 1.05% to arrive at $22.15 as of 11:55am in New York. It looks like the strategist initiated a delta neutral position, selling around 88,600 shares at $22.24 each, selling 2,100 calls at the August $30 strike for a premium of $0.80 per contract, and buying 2,100 puts at the August $17 strike at a premium of $1.45 apiece, on a delta of approximately 0.42. The parameters of the transaction prepare the trader to potentially amass substantial profits if shares in the biopharmaceutical company continue to trend lower in the time remaining to expiration. The value of the long put options will rise as shares fall, while the short calls will decline in value and become cheaper to buy back. Erosion in the price of the underlying shares is also favorable on the short stock leg of the transaction.

STJ - St. Jude Medical, Inc. – The medical devices manufacturer popped up on our scanners in early morning trade after a large number of call and put options changed hands in the January 2012 contract. It looks like one investor initiated a sizeable bullish stance on the stock in order to position for shares in St. Jude Medical to rise substantially by January of next year. Shares in the name increased as much as 2.2% today to secure an intraday- and new 52-week high of $44.95 in the first half of the session. The trader appears to have sold 5,900 puts at the January 2012 $40 strike for a…
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Brocade Options Hyperactive

Today’s tickers: BRCD, WYN, CAR, TGT, CBST & KMB

BRCD - Shares of the telecommunications equipment provider continue to rally today. The stock gained more than 6.5% during the session and reached a new 52-week high of $9.65. The BRCD ticker symbol catapulted to the top of our ‘most active by options volume’ market scanner as investors exchanged more than 235,000 option contracts on the stock by lunchtime. It appears one investor executed a massive bull call spread in the November contract. The transaction involved the purchased of about 65,000 calls at the November 12 strike for an average premium of 37 cents each, spread against the sale of approximately 65,000 calls at the higher November 13 strike for 20 pennies apiece. The net cost of the trade amounts to 17 cents per contract for an approximate total price tag of $1,105,000. The investor stands to make 83 cents per contract for maximum potential profits of $5,395,000 if shares of BRCD rise 35% to $13.00 by expiration in November. – Brocade Communications Systems, Inc. –

WYN - Shares at the hotelier broke nicely to the upside earlier in the week and stand 3% ahead of a congestion zone at $18.00. Yesterday Goldman Sachs raised the stakes with an upgrade and a 12-month price forecast of $26 per share. With earnings scheduled for October 28, it appears that one investor has used a call option combination to target a move higher in WYN today. Option implied volatility remains high at 67% but is not rising as the shares surge. There was an outright buyer of 15,000 November 22.50 strike calls purchased for 45 cents, while the 20/25 call spread traded about 9,000 times at a net of 75 cents. To break even the share price needs to accelerate by a further 15% to $20.75 ahead of expiration. – Wyndham Worldwide –

CAR - The global car rental company’s share price contracted 4.5% this morning to $11.93 after firm announced the pricing of its offering of $300 million of 3.50% convertible senior notes due 2014. Despite the decline in shares, one investor utilized options in the January 2010 contract to take a bullish stance on the stock. It appears the trader financed the purchase of a call spread by selling out-of-the-money put options. The three-legged transaction involved the sale of 2,200 puts at the January 10 strike for 1.15 apiece, spread against the purchase…
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Cubist Calls Active As Shares Rise 10%

Today’s tickers: CBST, EFA, IYR, WFMI, PG, FXI, UNG & DVA

CBST – The biopharmaceutical company edged onto our ‘hot by options volume’ market scanner this afternoon amid bullish call buying activity. Shares of CBST have surged 10% higher to stand at the current price of $21.91. Near-term optimists hoping for continued gains picked up more than 4,700 calls at the August 22.5 strike price for an average premium of 42 cents per contract. Investors long the calls will begin to accumulate profits in the event that shares rise another 5% to surpass the breakeven point at $22.92 by expiration. Investors exchanged 16,125 lots on the stock today which represents 91.5% of the existing open interest on the stock of 17,594 option contracts. – Cubist Pharmaceuticals, Inc.

EFA– The implementation of a bearish put spread on the EFA this afternoon indicates that some see the price of the underlying shares slipping lower by expiration in January 2010. The exchange-traded fund is currently off slightly by less than 0.5% to $51.32. The spread involved the purchase of 7,500 puts at the January 50 strike price for 3.50 each against the sale of 7,500 puts at the lower January 43 strike for 1.40 apiece. The net cost of the transaction amounts to 2.10 per contract and yields maximum potential profits of 4.90 if the stock declines to $43.00 by expiration. – iShares MSCI EAFE Index ETF

IYR– Shares of the real estate exchange-traded fund have rallied more than 2.5% to $39.40 during today’s trading session. Despite the intraday gains, option traders initiated bearish plays on the fund. One investor anticipating significant declines in the fund established a long butterfly spread set to expire in September. The butterfly was constructed through the sale of 20,000 puts [the body] at the central September 34 strike price for 65 cents apiece. The body was then flanked by the purchase of two wings. The higher September 36 strike price had 10,000 puts picked up for 1.15 per contract and the lower September 32 strike had another 10,000 puts bought for 40 cents each. The net cost of the spread amounts to just 25 cents per contract and yields maximum potential profits of 1.75 if the stock declines to $34.00 by expiration. Profits will begin to accrue for the investor if shares fall 9% to breach the upper breakeven point at $35.75. If shares continue to
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Put sellers back General Electric

Today’s tickers: GE, TGT, XLI, CBST, HAL, DELL, XRT, CAL & JAVA

GE General Electric – Shares have enjoyed a 2% rally to $10.98. GE jumped to the top of our ‘most active by options volume’ market scanner after one investor took a bullish stance on the stock. The trader sold 82,800 puts at the April 10 strike price for a premium of 33 cents per contract. This implies that he does not think that shares are going to fall beneath $10.00 by expiration in a few weeks. He pockets 33 cents in exchange for bearing the risk that shares fall beneath the strike price, which would see him breakeven by $9.67 at which point his premium will have fully eroded. Should the 10 strike land in-the-money by expiration, this investor could have 8,280,000 shares of the underlying stock put to him at $10.00. Established open interest at the 10 strike is 77,000 lots and so this would appear to be the work of fresh interest in the contract today.

TGT Target Corp. – The retailer has had a slight share price rally of less than 0.5% to $36.18. Despite the modest rise today, a couple of investors were observed looking for a significant jump in shares heading into January of 2010. The first of two bullish trades was a sold straddle at the January 45 strike price. The sale of 2,600 puts for a hefty premium of 12.48 coupled with the sale of 2,600 calls for 3.08 yields the investor a gross premium of 15.56. He will retain the full 15.56 if shares can rally by 24% and settle at $45.00 by expiration. The second of the two trades was even more bullish. This investor established a bull call spread by purchasing 7,500 calls at the January 45 strike price for 3.10 each and by selling 7,500 calls at the January 55 strike for a premium of 1.02 apiece. The net cost to get bullish in the January contract amounts to 2.08 and yields a maximum potential profit of 7.92 if shares can rise to $55.00 by expiration. Shares would need to rally by 30% to the breakeven point at $47.08 in order for this investor to begin to garner profits.

XLI Industrial Select Sector SPDR – Shares of the industrials ETF have risen just under 0.5% to $19.93. The XLI ticker jumped onto our ‘most active by options…
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Phil's Favorites

Axios: 1 big thing: All the president's guilty men

The following is an excerpt from Axios PM. You can subscribe to this and other Axios' newsletters here.

1 big thing: All the president’s guilty men

By Mike Allen at Axios 

President Trump's longtime personal lawyer and his 2016 campaign chairman each became felons during the 4pm hour this afternoon.

In New York, Michael Cohen accepted a plea deal to charges that include campaign finance violations, tax and bank fraud. His sentencing hearing will be on December 12.

  • "The plea agreement does not call for Mr. Cohen to cooperate w...


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ValueWalk

PepsiCo With Approval From Teleios Capital Plans To Buy SodaStream

By ActivistInsight. Originally published at ValueWalk.

PepsiCo announced plans to buy SodaStream for $3.2 billion and has already received public approval from activist investor Teleios Capital. The purchase price is a 32% premium to the company’s 30-day volume weighted average and a 420% premium to the share price at the date of Teleios’ initial 5.7% stake in November 2016.

Q2 hedge fund letters, conference, scoops etc

By Smannel (Own work) [CC BY-SA 3.0], ...



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Zero Hedge

China, US "Not Optimistic" Trade Negotiations Will Succeed: FT

Courtesy of ZeroHedge. View original post here.

Commenting on the upcoming, fourth round of trade talks between the US and China, which are scheduled to take place in Washington tomorrow ahead of the Aug.23 implementation of new China tariffs by the US, the FT reports that "neither side is optimistic that the meeting in Washington, between teams led by Wang Shouwen and David Malpass, can succeed where three earlier rounds failed."

There has been a resurgence in market optimism that the ongoing trade war between the two nations may be resolved after the WSJ reported last week that a November summit bet...



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Insider Scoop

38 Stocks Moving In Tuesday's Mid-Day Session

Courtesy of Benzinga.

Gainers
  • Koss Corporation (NASDAQ: KOSS) shares jumped 22 percent to $3.66.
  • Tonix Pharmaceuticals Holding Corp. (NASDAQ: TNXP) gained 18.4 percent to $1.48. The company is set to present trial results of Tonmya for military-related PTSD today at the 2018 Military Health System Research Symposium.
  • B Communications Ltd (NASDAQ: BCOM) rose 16 percent to $8.12.
  • GlobalSCAPE, Inc. (NYSE: ...


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Digital Currencies

Stop worrying about how much energy bitcoin uses

 

Picture via Pixabay

Stop worrying about how much energy bitcoin uses

Courtesy of Katrina Kelly-Pitou, University of Pittsburgh

The word “bitcoin” is as likely to garner feverish excitement as it is glaring criticism. The financial community sees speculative promise in the form of trade that currently has little to no regulation. Meanwhile, others argue that it’s a distraction that detracts from the overall longevity of U.S. financial institutions.

Bitcoin’s energy consumption has become a recent talking point in the debate. ...



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Kimble Charting Solutions

Doc Copper down 20%, sending a macro message?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Doc Copper has had a rough go of it over the past 7-years and especially of late.

Since the highs back in 2011, Doc Copper has created a series of lower highs and lower lows.

Since the lows in 2015, it has experienced a strong rally, creating a series of higher lows, as interest rates and several commodities did the same.

In June Doc Copper may have created a double top at (1), as it was testing last years highs. Since hitting 2017 highs at (1), Doc Copper has declined nearly 20% in the past 10-weeks.

The decline now has it testing potential dual support at (2...



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Biotech

Approval of first 'RNA interference' drug - why the excitement?

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

 

Approval of first ‘RNA interference’ drug – why the excitement?

Single strands of ribonucleic acid (RNA) are now being used to treat disease. By nobeastsofierce / shutterstock.com

Courtesy of Thomas Schmittgen, University of Florida

Small interfering RNA sounds like something from a science fiction novel rather than a revolutionary type of medicine. But this odd-sounding new drug of...



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Chart School

Weekly Market Recap Aug 19, 2018

Courtesy of Blain.

A good amount of volatility this past week, but once again indexes are just sort of hanging around as we work through some news items, specifically facing trade issues.  We ended last week with some hand wringing over Turkey – while nothing was really resolved, U.S. markets looked past that… however emerging markets continue their struggle.  The U.S. indexes have simply been range bound for weeks on end.

The Turkish central bank pledged in a statement Monday to provide “all the liquidity the banks need.” It also said banks would be able to borrow foreign-exchange deposits from the central bank at one-month and one-week maturities. Analysts said T...



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Members' Corner

There Are 3 Main Theories That Explain Trump's Approach to Putin and Russia-Which One Makes the Most Sense?

What do you think?

Thom Hartmann suggests that the "Manchurian Candidate theory" is the least likely explanation for Trump's pro-Russia behavior in "There Are 3 Main Theories That Explain Trump’s Approach to Putin and Russia—Which One Makes the Most Sense?" (below).  disagrees and suggests that Putin probably has "the goods" on Trump in "Trump’s Plot Against America". (To be fair, Hartmann acknowledges that his three theories are not mutually exclusive.) Jonathan Chait argues ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

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).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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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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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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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