Posts Tagged ‘LUV’

LUV Options Active Ahead Of Earnings

There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock touched a more than 15-year high of $35.55.  Shares in LUV last traded near $39.00 in 1994.

Chart – Six-month chart of Southwest Airlines Co.


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Bullish Bets On Caesers Pay Off For Some Traders As Shares Race Higher

 

Today’s tickers: CZR, SD & LUV

CZR - Caesars Entertainment Corp. – Shares in the casino entertainment company are soaring on Friday, up nearly 30% at $12.88as of 11:40 a.m. in New York trading, on reports that Las Vegas strip casino gambling revenue rose 13.49% in December. The operator of Caesars Palace, Harrah’s and other casino brands reports fourth-quarter earnings at the end of February. Options traders who placed bullish bets on the stock ahead of Friday’s big rally are seeing sizable overnight paper profits on their positions. The largest increase in call open interest yesterday was in the Mar. $10 strike call options. Time and sales data from Thursday suggests some 1,300 of the $10 strike calls were purchased yesterday for an average premium of $0.39 apiece. The last traded price on these contracts just prior to midday on the East Coast is $3.30 each, an eight-fold increase in value overnight. Bullish bets on Caesars were also established at the June $10 strike yesterday, with around 260 of those contracts purchased at a premium of $0.80 apiece. Premium to buy the June $10 strike call options today has jumped to $3.90 per contract of 11:55 a.m. ET on Friday. Overall options volume on CZR is upsharply versus the stocks average daily level, with upwards of 8,700 calls and puts in play on the stock compared to average volume of 819 contracts.

SD - SandRidge Energy, Inc. – A sizable bearish options trade initiated on SandRidge Energy this morning looks for shares in the oil and natural gas company to face limited declines during the first half of the 2012. The stock today trades down 1.2% on the session at $5.87 as of 11:30 a.m. ET. SandRidge reports fourth-quarter and full-year 2012 results after the closing bell on February 28th. The largest transaction in SD options today was the purchased of 12,500 in-the-money puts at the June $6.0 strike at a premium of $1.03 apiece, spread against the sale of 25,000 puts at the lower June $5.0 strike…
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Which Way Wednesday – $3.5Tn Not Enough to Prop up Markets?

SPY WEEKLYUh-oh!

Wasn't it just 2 days ago that the EU was all set to pop the ESM to $1.25Tn and the IMF was going to add another Trillion and the Fed was talking about more QE in the $1.25Tn range, which plunged the Dollar to multi-week lows?  Shouldn't adding 6% of the entire planet's GDP in additional stimulus give us more than a one-day pop in the markets? 

As I pointed out in Monday's Morning Alert to Members – these are all just RUMORS and my conclusion in the Alert was: 

Despite the bullish turn of events (which we anticipated last week) we're more inclined to cash out our bullish trades into the excitement and press our bear bets and TOMORROW, if we're still over our levels – THEN we will scramble to add some aggressive bullish trades to our virtual portfolios.  Again, I cannot stress enough that CASH is my preferred position because this market is tough to call and you need to be very flexible and very nimble to trade it.

SPY 5 MINUTEWe proceeded as planned and, so far, we haven't had any reason to capitulate and get more bullish and that is both surprising and disappointing as this is the end of the first quarter of 2012 – if not now – when?  As David Fry notes

Monday’s rally was typical as we head toward the end of the quarter. Hedge fund performance fees are on the line and any way to boost these profits is job one. Top holdings for hedge funds include the usual suspects: AAPL, IBM, INTC, BAC, DIS, HD etc.

With little volume it’s easy for algos and hedge funds to prop stocks on little hard news. Tuesday we briefly saw more of this. Just as markets were weakening a story appeared using the Fed’s favorite oracle, the WSJ, as Fed governor Rosengren stated, “more stimulus is on the table”. Immediately HFT algos jumped and markets rose if only briefly. 

It's very exciting for us as PLCN (see Thursday's notes) went all the way up to $736 on Monday and sold off on some pretty heavy trading yesterday.  Slowly but surely, our negative premise is beginning to take shape as Piper Jaffray is finally catching up with us and noting "a sharp decline in unique visitors to Priceline's booking.com" from growth of 61 percent during the…
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Monday – Merger Mania Continues

It's another busy Monday for M&A activity

SNY announced a $18.5Bn CASH offer for GENZ ($69/share), INTC buy's INNNY's wireless unit for $1.4Bn in CASH and DELL and HPQ are still in a bidding war over PAR (and HPQ thinks their own shares are so cheap they are buying back $10Bn worth of them).  The biggest winner in this weekend's acquisition game is – ME!  I live in northern NJ and, with the merger of CAL and UAUA going through, Continental is forced to diffuse some of their concentration at Newark airport and that ends up giving LUV 18 slots, bringing some much-needed additional competition to Newark, which has been pretty much dominated by Continental for years. LUV is a great buy at $11.13 and a fun way to play is the Jan $10/11 bull call spread at .60, selling the Jan $10 puts for .55, which is net .05 on the $1 spread with a 1,900% upside and your worst-case scenario is you own LUV at net $10.05 – what's not to LUV?

Speaking of diffused concentration, the Glenn Beck rally was a bit of a disappointment with just 87,000 people showing up (Fox had a permit for 300,000 and keeps using that number as if that's how many came while Beck himself has been claiming between 300,000 and 650,000 were there and Michele Backmann (R-Minn) claims it was the biggest rally ever held in Washington, with no fewer than 1M people in attendance).  This has now backfired on Beck, Palin and the Tea Party as a "show of strength" becomes a show of apathy (to the people who can count, anyway) - it probably would have been smarter to hold the rally next weekend but Fox wanted to time the rally for the start of Jon Stewart's vacation, although it didn't stop him from commenting in absentia (where I hear Jon has a lovely bungalow).  For a more "fair and balanced" view of the rally, see the very nice coverage from Reason TV

During an interview on "Fox News Sunday," which was filmed after Saturday's rally, Beck claimed that Obama "is a guy who understands the world through liberation theology, which is oppressor-and-victim – People aren't recognizing his version of Christianity," Beck added.  Beck's attacks represent a continuing attempt to characterize Obama as a radical, an approach…
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Strangle Strategist Targets MSG Ahead of LeBron James’ Decision

Today’s tickers: MSG, MOS, LUV, ILMN, GHDX, FCN, KBH, LCC & CSX

MSG – Madison Square Garden, Inc. – Speculation as to which team will acquire the larger-than-life LeBron James continues to mount ahead of the basketball superstar’s Thursday night announcement on ESPN. One options investor put uncertainty in the marketplace to good use by purchasing a strangle on Madison Square Garden, Inc., the fully-integrated sport, entertainment and media business, which, among other things, owns and operates sports franchises including the New York Knicks. MSG’s shares are currently up 1.5% to $20.58 as of 2:50 pm (ET), but earlier surged 5.4% to an intraday high of $21.36. MSG edged onto our ‘hot by options volume’ market scanner after the trader purchased a long strangle in the July contract. The investor appears to be positioning for a dramatic shift in the price of the underlying shares ahead of July expiration. The options strategist purchased a 2,000-lot strangle, buying 2,000 calls at the July $22.5 strike for a premium of $0.60 apiece, and buying 2,000 puts at the lower July $20 strike for a premium of $0.50 each. The net cost of the transaction amount to $1.10 per contract and prepares the strangle-player to benefit nicely as long as MSG’s shares take off running in either direction. Profits are available to the investor if shares rally straight through the current 52-week high on the stock of $22.95 to trade above the effective upper breakeven price of $23.60. If LeBron James were to join the NY Knicks it has been said the value of the MSG franchise will increase significantly. The strangler will certainly benefit if the Knickerbockers turn out to be James’ new teammates because MSG shares are likely to soar. Conversely, the options strategist is poised to profit to the downside should shares trade below the lower breakeven price of $18.90 ahead of expiration day. Perhaps the investor is expecting shares of the underlying stock to suffer if LeBron ends up with a different team. Either way, the investor responsible for the strangle strategy is positioned to benefit from a wayward shift in the price of the underlying stock. But, the trader will lose the full premium paid, $1.10 per contract in this case, if shares trade within the confines of the strike prices described at expiration. Finally, the investor may profit if implied volatility on MSG, which is currently up…
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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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Oxen Pick (SHORT SELL): LUV

Courtesy of David at The Oxen Group

Oxen Pick (SHORT SELL): LUV

The Oxen Group is looking for a short sell on Southwest Airlines Co. (LUV) tomorrow. The market may move green or red, and it really comes down to Bank of America, Citigroup, and GE. Those three giants release earnings tomorrow. If all three are splendid, the market will really take off, even Southwest Airlines.

The issue for Southwest is that even if that does occur, this stock is going to come down. In after hours today, Moody’s Investor Ratings commented that they were putting LUV on a possible credit downgrade due to the weak demand and market for airfare. The airline industry has been struggling, but Southwest Airlines always seems to be a step in front of the competition. This news of a likely downgrade spells bad news for Southwest, especially because the stock has really no upside right now.

What will Southwest do?  If the market is looking to trend down after the earnings reports, LUV will drop right away and continue to trend down on a red day. If, however, the market jumps out of the gate and looks bullish, LUV will most likely have some type of small gains into the day, but it will not be able to sustain those gains and move backwards. Further, one has to wonder even if the earnings are positive, how much more this market has to go with four straight days in the green and a lot of quickly overvalued stocks. Additionally, if CIT goes bankrupt it could add more fuel to a downward market. LUV technically is, outside of its upper bollinger band, way overbought. So, its technicals all point towards downward movement.

Entry: Recommend selling 15-30 minutes into session if earnings are good, right away if bad. 
Exit: We recommend exiting after a 2-4% increase.
Stop Loss: We recommend a 3% stop loss on all entry in prices
Upper Resistance: 6.60 (lower)
Oxen Rating*: 5

 

 


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Thursday Morning

Is today the day we break the pattern?

I predicted a wild week on Monday morning and we have been having a fabulous time as it only took me until 12:51 on Monday afternoon to point out to members that we were following a virtually identical pattern to the previous week.   That enabled us to anticipate the gap down on Tuesday morning, as well as yesterday’s stick save.  In fact, I predicted the Dow would close at 8,050 and missed it by 7 points.  Our short plays that day were MA (which we cashed in yesterday with a huge gain), BIDU and FSLR.  The last two are still trading up and I really like BIDU as a proxy for a possible disappointment from GOOG this evening.  Also, we got a downward revision to China’s GDP today to "just" 6.1% growth

I often say to members "We don’t care if the markets are fixed, as long as we know HOW they are fixed" and yesterday was a great example of that as we digested the Beige Book report and, at 2:53, with the S&P spiking down to 839, I was able to post a reminder "20 minutes until stick save" and put up a trade idea for the FAS $6 calls at $2.15 (because they had almost no premium), which closed out at $2.90 an hour later (up 34%). 

We did not, however, change our overall cover stance at the close of 55% bearish.  I would have been more bullish if we had NOT moved past 848 on the S&P, there was a sort of frenzied overkill to the "rally" that made me think we would not get the follow-through that we got last Thursday.  Also, we had to take into consideration that last Thursday closed the week so we have an extra day (and it’s options expiration day!) to play with so, as I said to members in yesterday’s chat, it pays to error on the side of caution – just in case.

Today we have the usual 650,000 people losing their jobs (yawn) along with anemic Building Permits and Housing Starts (550K each expected) and the Philly Fed at 10 am.  The Philly Fed is our biggest worry as it is almost certain to be worse than the -32 expected because it says right in yesterday’s Beige Book: "Third District manufacturers reported further declines in shipments and new orders, on balance, from
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ValueWalk

These Are The Top Ten Biggest Mutual Funds

By Aman Jain. Originally published at ValueWalk.

Mutual funds are among the most reliable asset classes. It pools money from investors and then invests it in different securities, such as stocks, bonds and more. Investors buy units of mutual funds, giving them a part ownership of the fund and in the income that it generates. Mutual funds are a good way for investors to invest in stocks that are otherwise out of their reach. If you are also planning to invest in this asset class, then detailed below are the top ten biggest mutual funds.

Q4 2020 hedge fund letters, conferences and more

Top Ten Biggest Mutual Funds

Our list of the top ten biggest mutual ...



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Phil's Favorites

Highlights from Janet Yellen's Confirmation Hearing for Treasury Secretary

Courtesy of Pam Martens

Senator Ron Wyden at Senate Finance Committee Hearing, January 19, 2021

The mood among Democrats in Washington was captured at the Senate Finance Committee’s confirmation hearing on Tuesday for former Fed Chair Janet Yellen to become the new Treasury Secretary. Senator Ron Wyden, Democrat of Oregon and the Ranking Member of the Committee (who is expected to become the new Chair), said this in his opening remarks:

“This is the second time in 12 years that a Republican President leaves office with the economy in ruins. Today there’s also a surging pan...



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Kimble Charting Solutions

A Repeat Of The 2000 Dot.com Highs In Play?

Courtesy of Chris Kimble

Since the 2000 tech bubble and crash, tech stocks have regained their leadership form. Especially large-cap tech stocks.

Headlines have varied in focus from the “4 horseman” to “FANG” and “FANGE”, but one thing remains: Large-cap tech stocks have been the bull market leader.

So what about when large-cap tech lags the market? Not so good.

In today’s chart, we look at a “monthly” chart of the performance ratio of the Nasdaq 100 Index to the Nasdaq Composite. It’s basically a look at how large-cap tech stocks perform against the broader tech stocks world.

As you ca...



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Zero Hedge

Barrage Of New Countries And Airlines To Adopt Vaccine Passports

Courtesy of ZeroHedge View original post here.

Authored by Steve Watson via Summit News,

Several more countries have indicated that they are to adopt vaccination passports, meaning anyone crossing their borders will need to be able to prove they have been inoculated against coronavirus.

...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 11 July 2020, 05:26:16 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: This is lack of liquidity means support is likely to break if it is tested hard!



Date Found: Saturday, 11 July 2020, 09:51:58 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: Nasdaq losing momentum.



Da...

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Politics

What is the 'boogaloo' and who are the rioters who stormed the Capitol? 5 essential reads

 

What is the 'boogaloo' and who are the rioters who stormed the Capitol? 5 essential reads

Rioters mass on the U.S. Capitol steps on Jan. 6. Samuel Corum/Getty Images

Courtesy of Jeff Inglis, The Conversation

In the wake of the insurrection on Jan. 6, the U.S. is bracing for the possibility of additional violent demonstrations and potential riots at the U.S. Capitol and state capitol buildings around the nation. W...



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Biotech/COVID-19

The simple reason West Virginia leads the nation in vaccinating nursing home residents

 

The simple reason West Virginia leads the nation in vaccinating nursing home residents

By mid-January, only about a quarter of the COVID-19 vaccines distributed for U.S. nursing homes through the federal program had reached people’s arms. Paul Bersebach/MediaNews Group/Orange County Register via Getty Images

Courtesy of Tinglong Dai, Johns Hopkins University School of Nursing

The urgency of vaccinating nursing home residents is evident in the numbers. The COVID-19 pandemic has claimed the lives of mo...



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Mapping The Market

The Countries With The Most COVID-19 Cases

 

The Countries With The Most COVID-19 Cases

By Martin Armstrong, Statista, Jan 12, 2021

This regularly updated infographic keeps track of the countries with the most confirmed Covid-19 cases. The United States is still at the top of the list, with a total now exceeding the 22 million mark, according to Johns Hopkins University figures. The total global figure is now over 85 million, while there have been more than 1.9 million deaths.

You will find more infographics at ...



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Digital Currencies

Bitcoin: why the price has exploded - and where it goes from here

 

Bitcoin: why the price has exploded – and where it goes from here

B is for blast-off (but also bubble). 3DJustincase

Courtesy of Andrew Urquhart, University of Reading

Bitcoin achieved a remarkable rise in 2020 in spite of many things that would normally make investors wary, including US-China tensions, Brexit and, of course, an international pandemic. From a year-low on the daily charts of US$4,748 (£3,490) in the middle of March as pandemic fears took hold, bitcoin rose to ju...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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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

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

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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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. Contact Ilene to learn about our affiliate and content sharing programs.