Posts Tagged ‘MHP’

Bearish Options In Play As Monster Beverage Shares Sell Off

 

Today’s tickers: MNST, MHP & ANN

MNST - Monster Beverage Corp. – Monster Beverage Corp. shareholders have had a rough week; the stock fell 10% yesterday following the company’s second-quarter earnings report and fell nearly 10% today to as low as $55.30 after Monster disclosed a subpoena from a state attorney general. According to the firm’s 10-Q the subpoena was received in July 2012 “in connection with an investigation concerning the Company’s advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy® brand of energy drinks.” August expiry options activity suggests traders anticipate the stock may continue to selloff next week. The Aug. $55 strike put is the most heavily traded of the front month contracts so far today, with around 3,700 lots in play as of 12:10 p.m. ET. It looks like most of the $55 puts were purchased for an average premium of $1.01 apiece, thus positioning buyers to make money beneath the average breakeven price of $53.99. Traders betting on a more substantial pullback in Monster’s shares in the near term picked up around 1,000 put options at each of the Aug. $50 and $47.5 strikes, paying average premiums of $0.25 and $0.14 per contract, respectively. Traders betting against the likelihood of a rebound in MNST shares next week wrote call options at the Aug. $57.5 and $60 strikes, pocketing average premiums of $1.26 and $0.37 on the contracts. Call sellers keep the premium as long as the contracts are out-of-the-money at expiration. Overall options volume on the stock is well above the 90-day average daily volume, and roughly two puts are trading for each single call option in play.

MHP - McGraw-Hill Companies, Inc. – Trading traffic in far out-of-the-money call options on McGraw-Hill may be the work of an investor positioning for shares in the publishing giant and owner of Standard & Poor’s to rally to the highest since 2007. Shares in MHP are up 0.85% today at $49.12…
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Call Buyers Shrug Off $2 Billion Disaster, Position For UBS Recovery Story

Today’s tickers: UBS, MHP, ESRX & DGX

UBS - UBS AG – Switzerland’s largest bank said it may be unprofitable in the third quarter due to the staggering $2 billion in trading losses one of its employees racked up in unauthorized dealing. The news sent shares in UBS down as much as 11.6% to a two-year low of $11.21, but options traders appear to have largely shrugged off concerns and are betting on a rebound in the price of the underlying. Call buying and put selling on the stock appear to be the most oft-employed strategies of the day. Investors expecting shares to recover in the next five weeks picked up roughly 3,100 calls at the October $12 strike for an average premium of $0.73 each. Call buyers profit if shares in UBS rally 12.5% over the stock’s current price of $11.32 to exceed the average breakeven point at $12.73 by expiration day next month. Meanwhile, put sellers targeted the October $10, $11 and $12 strikes, suggesting some investors expect shares to exceed those levels through October expiration. Traders pocketed an average premium of $1.27 per contract on the sale of roughly 615 puts at the October $12 strike. Premium received is money in the bank for sellers of the options as long as the contracts expire worthless next month. Longer-dated calls drew some attention, as well. Investors snapped up around 2,000 calls at the December $12 strike for an average premium of $1.10 each. Traders may see the value of these calls appreciate if shares in UBS reverse course over the next few months to December expiration. The positions are profitable at expiration if shares exceed the effective breakeven price of $13.10.

MHP - McGraw-Hill Companies, Inc. – A burst of activity in McGraw-Hill call options minutes before 12:00 pm…
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S&P Downgrades US to AA+ – Tied With Belgium!

Uh-oh!

Officials at ratings firm, Standard & Poor’s, said U.S. Treasury debt no longer deserved to be considered among the safest investments in the World.  S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy long-term picture for America’s finances. It downgraded U.S. debt to AA+, a score that ranks below Liechtenstein

S&P said "the downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics." It also blamed the weakened "effectiveness, stability, and predictability" of U.S. policy making and political institutions at a time when challenges are mounting.

In other words, the ship is sinking and the captain and crew are doing nothing but rearranging the deck chairs.  S&P was supposed to release this report this afternoon (Friday) but the Treasury Department caused a delay by arguing the math the S&P was using (a $2Tn discrepancy).  At 8pm, the S&P decided the Treasury was wrong and went ahead and released the report, not only downgrading our Debt to AA+ but giving us a NEGATIVE OUTLOOK as well.  Now we have to contemplate what the effect of this change may be…

Let’s first keep in mind that this was expected.  In fact, it’s ridiculous how long it took for someone to downgrade us.  JPM estimates that $4Tn worth of treasuries are pledged as collateral by borrowers such as banks and derivative traders.  The change in status from one ratings agency is unlikely to trigger any immediate covenants (a primer on Sovereign Debt Ratings)  but it may take only one more before borrowers are required to come up with many, many Billions of Dollar of cash or securities to keep their creditors at bay – essentially – it’s a margin call on America!  

Well, I say this was expected but I mean by us.  We cashed out today (see morning post) but Little Timmy Geithner, who blew his chance this week to resign with America’s credit rating intact under his watch, was on Fox News in April SPECIFICALLY stating that there was "NO RISK" that the US could lose it’s AAA rating.  Read the article or watch the video –…
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Bulls Bulk Up On DryShips Call Options

Today’s tickers: DRYS, PG, LCC, MHP, GDX, AMR, AMGN & GMCR

DRYS – DryShips, Inc. – A number of options players boarded the DryShips, Inc. bullish bandwagon this afternoon after the dry bulk carrier was upgraded to ‘equal-weight’ from ‘underweight’ and given a target share price of $5.50 at Morgan Stanley. DryShips’ shares jumped 9.95% in the second half of the trading day to touch an intraday high of $4.53. In- and out-of-the-money call options on the shipping firm were in high demand, particularly in the October and November contracts. Traders scooped up some 2,300 in-the-money calls at the October $4.0 strike for an average premium of $0.45 each. Optimists also picked up roughly 6,700 calls at the higher October $5.0 strike by shelling out an average premium of $0.05 apiece. DRYS’ shares would need to rally another 11.5% over today’s high of $4.53 in order for October $5.0 strike call buyers to make money above the average breakeven point at $5.05 by October expiration. Bulls looked to the November $5.0 strike to take ownership of some 4,000 call options at an average premium of $0.14 a-pop. Investors long the calls are prepared to profit should the price of the underlying stock increase another 13.5% in the next couple months to trade above $5.14 by November expiration. Options implied volatility on DryShips surged 10.9% to 48.14% by 3:40 pm ET.

PG – Procter & Gamble Co. – Shares of the consumer goods manufacturer edged 0.60% lower this afternoon to trade at $61.26 with 30 minutes remaining in the trading session. One pessimistic player appears to be building up downside protection on the stock through expiration in January 2012. The investor initiated a ratio put spread, buying 2,000 puts at the January 2012 $60 strike for a premium of $6.00 each, and selling 4,000 puts at the lower January 2012 $45 strike at a premium of $1.80 apiece. The net cost of the transaction amounts to $2.40 per contract. Thus, the investor starts to make money – or realize downside protection on a long position in shares – if the price of the underlying stock falls 6.00% to slip beneath the effective breakeven price of $57.60 by expiration day. Maximum potential profits of $12.60 per contract are available to the trader, but require PG’s shares to collapse down to $45.00. Options implied volatility on PG is up 7.3% at 14.78% as…
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Weekly Wrap Up – Double Up or Double Top?

Not such a good week!

Last week was FANTASTIC and we had 28 winning trades out of 36 with an average gain of 42% on the winners and an average loss of 12% on the losers – now THAT's A GOOD WEEK.  We were stopped out of most of our bearish trades on Monday but we took a lot of new ones, which I'll get into later…  Of course, since we are rangish and play both ends, the good news is we still had our "losers" and puts that we sold on long positions and those turned into huge winners in just 5 days:

  • AA at $13.30, out at $15 -  up 12.7%
  • AAPL Jan $165 puts sold for $7.40, now $4.70 – up 36%
  • BAC Oct $17 puts sold for .97, now .28 – up 71%
  • DIA Nov $92 calls at $5.40, now $7.30 - up 35%
  • MHP 2011 $25 puts sold for $5.20, now 5.10 – up 2%
  • RIMM March $100 calls at $1.45, now $1.25, down 13.7%

So, of the 6 that were not working last week, 5 are winners this week.  As I mentioned at the end of last week's wrap up, we were more than satisfied with our 5% drop that week and we did expect a bit of a bounce but we made the mistake of thinking The 250 points we gained by Tuesday morning was the end of it, but here we are at the end of the week, another 100 points higher and right back where we started from when we shorted into the rally in mid September. 

Last weekend we were at a great point in our range as all our put plays had just paid off, this will be an interesting contrast as we have serious problems with our new short plays and we have a little less conviction than we had in mid September that we will get our correction – not after such a sharp turn off the 5% line this week.  Nonetheless, we did stay 55% bearish into the weekend overall – still playing for our range.  But, I'm getting ahead of myself, so let's go back to Monday and see how we got here….

Monday Market Manipulation – Goldman's


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$100,000 Virtual Portfolio Update – Week 5

Well this has been annoying

After 30 days of trading our current virtual portfolio value is just $100,454.39 as we took quite a setback when we sold naked calls ahead of the move up.  Fortunately, we didn't lose our cool and rode it out.  In fact, we only made one trade in the past two weeks so there hasn't been much to report and there still isn't but the end of our first month is a good time for an update.  Of course, we do have a lot of outstanding October Premium to collect so the next two weeks are when we make our real money

We still have $92,315 in cash so plenty of buying power should we choose to deploy it but we are sticking with our plan of scaling into the postions we have, which means we're letting them run out through October 16th expirations and we'll see if we finally get the bargains we've been waiting for to set up our longer term bull plays.  For now, in this VERY conservative, low-touch virtual portfolio, we've been following Warren Buffett's Investing Rule #1:  Don't lose money!

Description Price Paid Last Price Qty Market Value Margin Req. Profit Loss %
AIG CALL 40 Oct 09 $6.30 $5.50 -1 $550.00 $1,196.20 $80.00 12.70%
On target with AIG at $43.40, this is typical of our outstanding sales with the VIX so high – we just have to wait.
AMZN CALL 90 Oct 09 $3.60 $2.80 -10 $2,800.00 $16,127.50 $800.00 22.22%
We wouldn't do this play if we needed the margin but a nice $2,800 to collect if AMZN stays below $90
BAC CALL 10 Jan 11 $8.60


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Weekly Wrap-Up, How to Make Money in a Down Market

Wow. what a fantastic week!

Well, not for the markets but for us as we totally nailed it.  It's hard to believe that it was just two weeks ago, on Monday, the 21st, after I posted the "Wrong Way Weekly Wrap-Up" as the Dow rose from 9,600 to 9,800, that I had to apologize to members, saying: "I’m sorry because I don’t like being bearish – I’m an optimistic guy usually but I can’t just sit here and tell people what they want to hear.  It’s just too irresponsible not to be cautious here.  We make plenty of bullish picks but I maintain a very wary outlook until we get some real fundamental improvements."

That's the funny thing about fundamentals, they don't matter until they do – and then they matter a lot.  It's funny how I get labeled a perma bear when I'm shorting the market at the top and a perma bull when I'm buying the maket at the bottom.  Gee, I always thought that's what you're supposed to do but it turns out that few people have the patience to work a market trading range and I don't blame them, I blame the mainstream media, who encourage this destructive herd mentality to investing that culminates in Jim Cramer and his sound-board, where all the complexities of the market are supposed to boil down to either BUYBUYBUY or SELLSELLSELL. 

It makes me seem downright wishy-washy when I said to members on the 21st: "I don’t have all the answers, but I do have a lot of questions – too many to get comfortable buying at these levels."  On the whole, as I explained in detail way back in late July, I am neither bullish nor bearish, I am Rangeish.  Yes, it's a made-up word and I have to make it up because no other analysts these days seem to believe the market can go up AND down, everyone seems compelled to stick to one or the other AND THEY DO IT TO THE DETRIMENT OF THEIR READERS – I WILL NOT DO IT!

There are strong stocks and there are weak stocks and I can't believe I even have to write this out but the best strategy is to short weak stocks and ETFs that have gone too high and buy strong stocks and ETFs that have gone too low.  As I explained in my LiveStock appearance back on March 6th (when I was called a "perma-bull" for…
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Weekly Wrap-Up – The Return of Fundamentals?

Fundamentals don't matter, until they do – then they matter a lot

We had a fantastic week because we stuck to the fundamentals and stayed short – even though it was a very painful path to follow.  In last week's wrap-up, facing the never-ending market climb on low volume I had said "I am trying to get bullish, really I am," and I was trying to find bullish plays for members - but we still ended up bearish for the week with a lot of bearish plays being added and thank goodness as it gave us a fantastic week this week!

Just following the plays I mentioned in last week's wrap-up would have been great as we had SKF bullish at $21 (now $26), DIA bearish at $98 (now $96.74), FAZ bullish at $16 (now $22.12), OIH bearish at $120 (now $114.75), SRS bullish at $8.50 (now $9.93) – and those were just from Thursday and Friday, last week was very active and very successful.  I had been quoting Samuel Jackson to highlight my difficulty joining the bullish analysts and I closed last week's comments by saying:  "It really is hard to be the shepherd in this market as I see wolves everywhere, waiting to pounce on the flock as the mainstream media leads them off to slaughter.  Or maybe (hopefully) I’m just being paranoid and everything’s fine…"   

Monday I led off the week with my concerns about the spread of the flu, as the season is upon us.  That gave us 4 bullish (but hedged) plays on SVA, BCRX and CAH (2), none of which are performing so far so all of which are still good entries, especially CAH who got whacked by a DB downgrade on Thursday yet paid back $1Bn in debt on Friday and still look very good long-term.  

I had an early look at the G20s "Framework for Sustainable and Balanced Growth," and our conclusion was that, although a good plan, it sure wasn't something the markets should be all pumped up about as stability was not going to grow us into the bullish valuations that our stocks had already risen to.  I warned members that the media was misinterpreting/misrepresenting this report saying: "You can bet though, that "THEY" are acting on this information and they will be SELLSELLSELLING, as they did on Friday
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Friday – If Our Goods Are Not Durable, Our Markets Won’t Be Either

mhp,We have our Durable Goods report for August today at 10am.

There are many indications that Durable Goods may miss the high expectations of a 1.2% increase, especially the anticipated 0.7% mark ex-autos (Cash for Clunkers) and, no matter what, it will be a far cry from the 5.1% increase we posted in July, when the car-buying frenzy began.  We've been discussing shipping issues – unless they have found a way to have major appliances walk to your home on their own, there simply isn't enough shipping and trucking activity to support a big number.  Also, the GDP report, retail sales report, consumer surveys and BBY earnings all indicated that people were just not all hyped up about getting a new washing machine this year

It was a strong July Durable Goods report that launched this leg of the rally on September 2nd.  We at Philstockworld, who actually read the damn reports, noticed that virtually the ENTIRE gain for the month of July was due to a MASSIVE 107% increase in aircraft orders for the month but apparently none of the other analysts seemed to care and those same analysts will be shocked today when pretty much the exact same thing happens as happens after every other major spike in durable goods.  I don't have to tell you, we have a chart:

 

See – this stuff isn't hard…  How many times in the past two years have we had two big up months in a row?  Zero (0).  How many times have we had reversals that were as large or larger than the prior positive month?  Five (5).  If I were a betting man (and we are, since we play the markets),  I'd have to put my money on a miss, contrary to the 26 "expert" analysts polled by Bloomberg who forecast more growth.  I could be wrong – gosh, I hope I'm wrong because that would be great for our economy – but after a 10% move up in the markets since our last Durable Goods report, I think I'll error on the side of caution.  WHR makes a fun short here as you can buy the Jan $80 calls for $3.10 and sell the Nov $75 calls for $3 so it's net .10 on the spread and, if WHR doesn't
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Zero Hedge

The Disturbing Rise Of Modern Monetary Theory (MMT)

Courtesy of ZeroHedge. View original post here.

Authored by Mark Jeftovic via Guerilla-Capitalism.com,

Lately, we’ve suddenly been hearing a lot about Modern Monetary Theory (“MMT”) in the mainstream media. It could be that with the election of Alexandra Ocasio-Cortez to congress, MMT’s star will rise with hers as she is reportedly an adherent and possibly views MMT as a means to fund her Green New Deal.

...



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Phil's Favorites

Martin Luther King Jr., union man

 

Martin Luther King Jr., union man

Dr. Martin Luther King Jr. on the picket line at the Scripto plant in Atlanta, Ga., December, 1964. AP

Courtesy of Peter Cole, Western Illinois University

If Martin Luther King Jr. still lived, he’d probably tell people to join unions.

King understood racial equality was inextricably linked to economics. He asked, “What good does it do to be able to eat at a lunch counter if you can’t buy a hamburger?”

Those disadvantages have persisted. Tod...



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Chart School

Weekly Market Recap Jan 20, 2019

Courtesy of Blain.

After entering the week quite overbought, indexes took a small retreat Monday before hurling back upwards.  This is typical of the “V” shaped moves up after any significant selloff, we’ve seen most of the past decade and watching them unfurl is quite amazing actually.  Thought maybe this time would be “different” but not so much.  So two week’s ago we asked “Has the Fed solved all the market’s problem in 1 speech?” – and thus far the market has answered resoundingly yes.  The word of the year thus far in 2019 is “patience” as that simple insert into a speech change the whole complexion of everything.

China has also been busy stimulating; on Tuesday:

An announcement from the People’s Bank of China that ...



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ValueWalk

Everyone Else Is Selling Stocks, So Is It Time To Buy?

By Michelle Jones. Originally published at ValueWalk.

After a difficult few trading days in the beginning of the year, U.S. stocks are bouncing back with meaningful gains on Monday following Friday’s strong rally. The S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up by more than half a percent by midday. It looks like investors could be taking advantage of the end-of-the-year declines, but is this a wise time to be buying?

Trying to time the bottom of the market will almost always be a fool’s errand, but one firm suggests equities could have much farther to fall before they hit bottom in 2019.

...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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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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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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