Bulls Scoop Up Sprint Nextel Corp. Calls
by Option Review - March 10th, 2011 4:33 pm
Today’s tickers: S, FTR, JTX & SBUX
S - Sprint Nextel Corp. – Medium-term bullish positioning is building up in Sprint Nextel Corp. options today with shares in the name trading 3.00% higher on the session at $4.84 as of 12:20pm in New York. Investors expecting shares in the provider of various communications products and services to extend gains through May expiration engaged in plain-vanilla call buying, purchasing the options out-right to position for shares to potentially reach a new 52-week high in the next couple of months. Volume is heaviest at the May $6.0 strike where 20,750 calls have changed hands versus previously existing open interest of 7,482 contracts. It looks like roughly 18,000 of the calls were picked up at a premium of $0.08 each. Call buyers make money if Sprint’s shares jump 25.6% over the current price of $4.84 to surpass the effective breakeven price of $6.08 by expiration day in May. Sprint Nextel Corp. is scheduled to report first-quarter earnings before the market opens for trading on April 28, 2011.
FTR - Frontier Communications Corp. – Put volume on the communications company jumped today after sizable trades were initiated in the May contract. It looks like investors responsible for the put activity may be purchasing the contracts to brace for bearish movement in the price of the underlying stock. Shares in Frontier Communications Corp. are currently down 0.90% to stand at $8.00 as of 12:30pm. The selection of the May contract put options could be coincident with the firm’s first-quarter earnings report, which is scheduled for release before the opening bell on May 5, 2011. One trader appears to have purchased some 3,000 puts at the May $8.0 strike for a premium of $0.40 each. The investor starts to make money on the put-acquisition if shares in FTR decline 5.0% from the current price of $8.00 to breach the effective breakeven point at $7.60 by May expiration day. Volume is greatest, however, at the lower May $7.0 strike where 15,000 put options…
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Testy Tuesday – Already?
by phil - July 13th, 2010 8:19 am
Wheeeee, this is fun!
It's only been a week since I called for "Turnaround Tuesday" and asked the question "Will CNBC Apologize to America" for their ridiculous, sickening parade of negativity that chased their poor viewers out of the market (now 600 points ago) by completely misrepresenting the economic outlook in order to protect the TERRIBLE advice given by Jim Cramer, the Fast Money Crew, their sponsors etc. etc. – it was all one national frenzy of media negativity designed to shove retail investors entirely out of the market while the cognoscenti went shopping.
It's not just CNBC, of course, it's a problem with the whole MSM but I ranted about corporate (top 0.01%) control of the media last week so let's move on as we wave bye-bye to all the beautiful sheeple who were kind enough to sell us their stocks at the bottom, despite my warnings. Our 500% upside plays are now well on their way to making 500% for us and our "9 Fabulous Dow Plays Plus a Chip Shot" are also looking good already. Even the trade ideas I mentioned right in last Tuesday's post are well on track as I said last week:
On Friday, I had said to Members right at 9:38, in the Morning Alert: "If we run up, then it will be prudent to get more neutral into the weekend but if we stay down and hold our levels, then saying a little bullish will be fine. Out of short-term short trades if you haven’t already. Keep in mind we have some great 500% upside plays you can still grab here if you think you are too short."
The latter was a reference to our 500% upside plays. We also went with EEM July $38 calls at .99, and a QLD $50/53 bull call spread for $1.30 (selling puts as well for more profits) as well as long plays on RIMM, AA, HOV, VLO and TASR. My optimism was based on the considered TA analysis I shared with Members at 2:39:
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After completing last month’s "Omega III" market pattern on the Trade Bots, it’s now time to spring the bear trap and run the "Apha II" into options expiration
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Looming Lululemon Earnings Lifts Implied Volatility – Puts in Demand
by Option Review - December 9th, 2009 4:06 pm
Today’s tickers: LULU, XLE, OIH, JPM, IOC, CYB, AMSC, MW, SVU & JTX
LULU – Lululemon Athletica, Inc. – Investors are hoarding put options on athletic apparel maker, Lululemon Athletica, ahead of the firm’s third-quarter earnings report scheduled for release after market close. LULU’s shares rallied as much as 3.8% to an intraday high of $27.84. The stock is currently up 2.75% to $27.56 with 45 minutes remaining in the trading session. Some analysts expect the Canada-based company will record earnings of 19 cents per share on revenue of $111 million. Option traders hedged against an earnings disappointment by purchasing puts. Approximately 6,800 put options were coveted by investors at the January 25 strike for an average premium of 1.23 apiece. Put-buyers are positioned to profit if shares fall through the breakeven price of $23.77 by January’s expiration day. Mounting investor anticipation for third-quarter earnings and the increase in demand for option contracts on the stock boosted option implied volatility throughout the session. Volatility rose 10.85% from an opening reading of 59.93% to an intraday high of 67.52%.
XLE – Energy Select Sector SPDR ETF – Shares of the exchange-traded fund comprised of companies in the oil, gas, and energy equipment industries, fell 1% during the trading day to $54.30. A massive put spread by one investor indicates shares of the XLE may decline further by the time the quarterly December contract options expire on December 31st, 2009. It appears the bearish trader purchased 74,800 puts at the December 53 strike for 95 cents apiece, spread against the sale of 74,800 puts at the lower December 48 strike for 13 pennies each. The net cost of the pessimistic play amounts to 82 cents per contract. The investor likely holds a long position in the underlying stock. The puts serve to protect the value of the stock position in case shares continue to decline. Downside protection kicks in if shares of the XLE decline beneath the breakeven point at $52.18 by expiration on the final day of 2009.
OIH – Oil Service HOLDRs Trust – Shares of the OIH exchange-traded fund rallied 1.25% to $112.69 today. We observed bearish options activity on the fund despite the bullish movement in the price of the underlying. A put spread enacted in the January 2010 contract suggests some investors feel the need for downside protection through expiration next year. It looks like 1,500 puts…
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ACE Call Options in Demand – Option Implied Volatility Explodes
by Option Review - December 1st, 2009 4:17 pm
Today’s tickers: ACE, EFA, HAL, AMAT, WHR, DE, JTX & WCG
ACE – ACE Limited – The surge in demand for call options on the insurance company today drove option implied volatility up 19.75% to 28.67%, while shares gained more than 2% to $49.78 during the trading day. Investors populating the December contract exhibited bullish sentiment on ACE by selling puts and buying calls. Approximately 3,000 puts were shed at the December 50 strike for an average premium of 1.51 apiece, while some 2,100 calls were purchased at the same strike for roughly 89 cents each. Call volume at the January 50 strike sky-rocketed to 21,666 contracts – on previous existing open interest of just 1,402 calls – as traders scooped up about 20,000 lots for a premium of 1.42 per contract. Investors long the January contract call options are positioned to accrue profits if ACE’s shares trade above the breakeven price of $51.42 by expiration.
EFA – iShares MSCI EAFE Index ETF – The exchange-traded fund, which includes stocks from Europe, Australasia and the Far East, attracted bearish option players despite the 2.5% rise in shares today to $56.88. One investor, who may hold a long position in the underlying stock, unfurled a ratio put spread in the January 2010 contract. The trader purchased 10,000 puts at the January 55 strike for an average premium of 1.39 each, and sold 20,000 puts at the lower January 52 strike for about 70 cents apiece. The investor pockets a net credit of 1 penny per contract on the trade and establishes downside protection in case shares of the EFA decline ahead of expiration. The 1 cent credit is ‘free money’ for the trader as long as the shares remain above $55.00 through expiration in January.
HAL – Halliburton Co. – Options activity on the oil and gas company today suggests at least one investor is bracing for potential share price erosion through expiration in January. Halliburton’s shares rose 1% during the session to $29.57. The trader responsible for the bearish ratio put spread is likely holding a long position in the underlying stock. If this is the case, today’s transaction provides downside protection for the investor. It appears 5,000 puts were purchased at the January 29 strike for an average premium of 1.24 apiece, spread against the sale of 10,000 puts at the lower January 24 strike for 18 pennies each.…
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Buy Pick: Jackson Hewitt (JTX)
by David Ristau - June 30th, 2009 2:07 am
Buy Pick: Jackson Hewitt (JTX)
Courtesy of David at The Oxen Group
On Tuesday, The Oxen Group likes the prospects for Jackson Hewitt Tax Service Inc. (JTX). The company will benefit from the extremely bullish news that came from H&R Block in after hours as they beat earnings estimates with a positive earnings report. H&R Block reported better than expected profits, earnings over $700 million while last year the company only reported earnings of $543 million. The company beat Wall St.’s estimates, as well, earnings an EPS of 2.09, with The Oxen Group estimating an EPS of 2.06. The company saw better earnings with higher prices and more online processings. They did see less overall reports, but it appears that the tax services companies may fair better than expected. The company was not as optimistic as investors were as they sent the company up over 5% in after hours. The earnings rising 20% and Wall St. expectations will help JTX, tomorrow, as the company has a very similar business to H&R Block.
The market may make a move again, tomorrow. The futures are bullish currently, reflecting bullish news from Ford in after hours, as well as, expectations that consumer spending may reveal more positive results about the economy. If the market is bullish along with the HRB news, JTX will have a great day. The technicals, further, help the case for this stock. It is currently in an uptrend on stochastics, meaning more buyers are entering the stock than sellers. Further, the stock has lots of upper room on bollinger bands.
Watch for a pop and buy in on a pullback.
Entry: Recommend buying with first 10-25 minutes.
Exit: Exit on 2-4% increase
Resistance: Upper 7.00
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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...
Ilene is editor and affiliate program
coordinator for PSW.