Sizable Trade In Sirius XM Radio Options
by Option Review - June 25th, 2013 9:35 pm
Today’s tickers: SIRI, C & TSM
SIRI - Sirius XM Radio, Inc. – Satellite radio provider, Sirius XM Radio, popped up on our ‘most active by options volume’ market scanner on Tuesday morning due to heavy volume in long-dated put options on the stock. The largest trades in SIRI options suggest one trader expects shares in the name to at least exceed their lowest levels of the past 52-weeks through January of 2015. Shares in SIRI are currently flat on the session at $3.22 as of midday in New York, but earlier rallied as much as 1.9% to $3.28. The stock is currently up 80% since this time last year. Volume in SIRI options is concentrated in the Jan 2015 $2.0 strike puts, with upwards of 50,000 contracts in play versus open interest of 29,386 contracts. It looks like one trader sold the puts to pocket premium of $0.15 per contract. The seller keeps the full amount of premium at expiration in 2015 as long as shares in Sirius XM Radio settle above $2.00. Shares in SIRI last traded below $2.00 in July of 2012. The stock was reiterated with a ‘buy’ recommendation and a price target of $4.00 at Bank of America Merrill Lynch yesterday.
C - Citigroup, Inc. – Bullish traders positioning for shares in Citigroup to rebound this week following four consecutive sessions of declines snapped up weekly call options on the stock this morning, with shares in the name up 3.3% on the day at $46.93. The Jun 28 ’13 $47 strike calls are the most active by volume of the weekly contracts available on Citi today, trading more than 6,200 times against open interest of 3,220 contracts. Time and sales data suggests most of the contracts were purchased this morning for an average premium of $0.59. Call buyers stand ready to profit at expiration this week should shares in the name rally another 1.4% over the current price of $46.93 to exceed the average breakeven point at $47.59.…
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Thank Jobs It’s Friday!
by phil - July 2nd, 2010 8:23 am
Do I know what the jobs data will be at 8:30? Nope.
Then why would I title a post "Thank Jobs It's Friday!" – what if the report sucks and we go down? Well, at this point, even if that does happen, I think that will be the end of it. We've been building up to this "terrible" jobs number all week and we got a rotten ADP Report and a rotten Unemployment Report so everyone is expecting a rotten Non-Farm Payroll report. When everyone expects the same thing, we like to bet against it. Sometimes we're wrong and sometimes we're right but you make some amazing money when you are right. The magnitude of the short squeeze that would follow a significantly BTE NFP Report could send up up 300 points or more on the day, likely with a big finish this afternoon and some follow-through on Tuesday as the rest of the world plays catch-up.
A bad report, on the other hand, is already baked into the cake and we have yet to test S&P 1,000 so we can expect support there. It wouldn't be pleasant, but we should be able to scramble and protect ourselves if we head lower so the smart move is to play for the mega-move higher, and that's where we are. Of course, it's also a balance issue. In our last Weekly Wrap-Up, we had the following open trade ideas going into June 21st (we had gotten bearish at the end of the previous week):
- APOL July $40 puts spread at .46, now .60 – up 30%
- BBY Jan $37 puts sold for $4, now $3 – up 25%
- BP July $30/32 bull call spread at $1, now .70 – down 30%
- YRCW at .21, now .15 – down 28%
- BP Oct $33/July $33 ratio backspread (3:5) at net $225, now $524 – up 132%
- TZA July $7 calls .08 (net of spread), now $1.50 – up 1,775%
- SIRI 2012 $1 puts sold at .33, still .33 – even
- USO July $33 puts at .51, now $1.08 – up 131%
- GLL July $37 puts, sold for $1.30, now .35 – up 70%
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$100K Virtual Portfolio Update – April Expirations
by phil - April 15th, 2010 4:18 am
Our $100K Virtual Portfolio is not doing so well.
Staying in cash after taking a big loss on FAZ did not turn out to be a good move as FAZ went deeper in the red and the cash didn’t go up. We had fantastic winners on our upside plays, which were:
| Symbol | Description | QTY | Price Paid | Last Price | Change | MKT Value | Profit Loss | % |
|---|---|---|---|---|---|---|---|---|
| GENERAL ELECTRIC CO VGE1122A15 | GE CALL 15 Jan 11 | 5 | $2.24 | $4.75 Stock: $19.35 | $0.40 | $2,375.00 Margin: $0.00 | $1,255.00 | 112.05% |
| SUNPOWER CORPORATION QRU1017P19 | SPWRA PUT 19 Apr 10 | -5 | $2.00 | $0.80 Stock: $18.26 | -$0.11 | $400.00 Margin: $2,682.50 | $600.00 | 60.00% |
| VALERO ENERGY CORP VLB1017P18 | VLO PUT 18 Apr 10 | -5 | $1.10 | $0.02 Stock: $20.36 | $0.00 | $10.00 Margin: $1,375.00 | $540.00 | 98.18% |
| SIRIUS XM RADIO INC QXO1017P1 | SIRI PUT 1 Apr 10 | -50 | $0.15 | $0.05 Stock: $1.07 | $0.00 | $250.00 Margin: $1,235.63 | $500.00 | 66.67% |
| MEMC ELECTRONIC MATERIALS CJC1017P12 | WFR PUT 12 Apr 10 | -5 | $0.85 | $0.01 Stock: $16.82 | -$0.01 | $5.00 Margin: $605.00 | $420.00 | 98.82% |
| GENERAL ELECTRIC CO VGE1122M12.5 | GE PUT 12.5 Jan 11 | -10 | $0.70 | $0.29 Stock: $19.35 | -$0.02 | $290.00 Margin: $1,540.00 | $410.00 | 58.57% |
| PROSHARES ULTRA FINANCIALS UUF1017P5 | UYG PUT 5 Apr 10 | -20 | $0.16 | $0.01 Stock: $7.75 | $0.00 |
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$100,000 Virtual Portfolio Update – Week 2
by phil - March 7th, 2010 5:30 pm
10 Winners and 5 losers but our loser is a doozy!
Despite being down $7,170 on our FAZ hedge, we are at net $99,079.64 in the virtual portfolio after two weeks, which is fine as we still have plenty of premium to collect and we still have $92,884.64 in cash with $163,661.13 in available buying power. Now comes the hard part – where (if anywhere) do we need to make some adjustments? I was a little too skeptical of the rally, we could have grabbed some more bargains but I thought we'd at least try to make our adjustments to this well-balanced set first and THEN worry about adding more complexity – kind of like this video on balance.
We closed our first position on Friday, buying back the FAZ Apr $17 calls for .95, a $1.68 gain off our $2.63 short entry (up 64%) for a $2,860 gain. As we expected, our other positions did very well as FAZ went down but it does look like we could do with a few more of them, especially if this continues. Don't forget we were supposed to fill the FAZ spread at $2.20 and it filled at $2.53, which is a $990 difference on 30 contracts and that is the entirety of our loss. If you have a broker that does "little things" like this to you – THEY ARE KILLING YOUR PROFITS! Don't let them get away with it… Our other positions are all open and as follows:
How are our trading plans holding up?
BAC - 10 Apr $15 puts sold for .46, now .23. - up 50% (margin $1,730). $1,730 in margin is a lot to try to make $230 but not if you're not using it for anything else. Also, it's $230 in 6 weeks on $1,730, which is 13% or 112% a year so don't sell these little victories short! We are 50% ahead and way ahead of our goal for 2 weeks on this trade but the real questions are: 1) Do we have any better use for the margin? No, we do not as we are still early in our scales and we anticipate having lots of cash around for a few months. 2) Are we worried about losing the 50% ($230) we…
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$100,000 Virtual Portfolio – Conservative – 25% Annual Returns
by phil - February 24th, 2010 10:11 pm
I've had a few new members ask me about deploying a new virtual portfolio.
I thought it would be a good idea to do a little practice run using the WSS platform with ORDINARY margins so these will be trades anyone can make. My intention with this virtual portfolio is not to touch it very often and I WILL NOT be able to watch it all day. So, this will be an ideal virtual portfolio for the "set and forget" crowd. Obviously, you can do this with $50,000 or even $25,000 – just buy less positions!
Our goal is conservatism and earning a least 2% a month. We did this with last spring's Q2 $100K Virtual Portfolio, which was doing better than $1,000 PER WEEK until we closed it in week 18. If those two things don't seem to go hand in hand – I hope to get you to think again as we use many of the techniques we learn ever day at PSW to take advantage of different market movements. I haven't tried the new option system at WSS yet so we'll see how it goes and how much of a pain in the ass it is but, basically – if you are the kind of trader who is busy during the day and has little time to deal with a virtual portfolio – then we're in the same boat on this one!
If you are brand new to our site I seriously request that you don't "experiment" by following this live. You can paper trade too until you get the feel for managing these positions. For new Members, we have a "New Member’s Guide" which pretty much lays things out with these standard assignments:
- If you are new to options, read Sage’s Book
- Read 1 full month of my posts and all comments, you will get a good feel for the site, the kind of trades we do and also get to know a bit about the people in chat. Knowing people’s various expertises and understanding their market philosophy and position makes the next live comment they make much more informative…
- Read Option Sage’s articles under his tab, many were co-authored by me that highlight various option strategies with real-world examples.
- Watch The Man Who Planted Trees,
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MGM Mirage Losses Inspire Downside Plays in Options
by Option Review - February 18th, 2010 4:06 pm
Today’s tickers: MGM, ANF, JPM, XLP, XNPT, HANS & SIRI
MGM – MGM Mirage, Inc. – The Las Vegas Strip’s largest casino owner posted a wider-than-expected fourth-quarter loss of $0.25 per share, which underwhelmed analysts anticipating an average loss of just $0.14 a share. Mirage’s shares fell nearly 7% today to $10.85 following the earnings disappointment. One options investor, who does not expect MGM’s luck to change anytime soon, established a medium-term bearish trade on MGM to position for continued downward movement in the price of the underlying stock through June expiration. The trader purchased 2,000 puts at the now in-the-money June $11 strike for a premium of $1.68 apiece, and sold 2,000 puts at the lower June $8 strike for $0.52 each. The net cost of the debit put spread amounts to $1.16 per contract. Maximum available profits of $1.84 per contract accumulate for the pessimistic investor if the casino-operator’s share price slumps another 26.25% lower to $8.00 by expiration day.
ANF – Abercrombie & Fitch Co. – Short straddle plays initiated on clothing company, Abercrombie & Fitch, suggests investors expect ANF-shares to remain range-bound and anticipate lower volatility in the price of the underlying stock through March expiration. Shares of the teen and ‘tween haven for micro-mini jean skirts and pre-destroyed t-shirts rallied 1% to $35.72 today. However, straddle-sellers apparently foresee little movement for shares in either direction from the current value. Investors sold approximately 6,600 puts at the March $35 strike for an average premium of $1.44 apiece in combination with the sale of 6,600 calls at the same strike for $1.46 each. The average gross premium pocketed on the transaction amounts to $2.90 per contract. Traders retain the full premium received today if Abercrombie’s shares settle at $35.00 at expiration. Investors are vulnerable to losses, however, in the event that shares trade outside of the effective breakeven points. Losses accumulate should shares rally above the upper breakeven price of $37.90, or if the stock falls below the lower breakeven point at $32.10, ahead of expiration day in March.
JPM – JPMorgan Chase & Co. – A large-volume ratio call spread enacted on banking institution, JPMorgan Chase, indicates one big options player expects shares of the underlying stock to rally significantly by June expiration. The firm received an upgrade to ‘buy’ from ‘hold’ with a 12-month target share price of $49.00 at Sandler O’Neill today as…
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Optimistic Trader Initiates Call Spread on ConocoPhillips
by Option Review - January 29th, 2010 4:29 pm
Today’s tickers: COP, EEM, DE, SIRI, JPM, FCX, T, PCS, MSFT & EK
COP – ConocoPhillips– Oil and gas company, ConocoPhillips, attracted an optimistic options player to the January 2011 contract today. Shares began the trading day on the up-and-up, but reversed direction in the latter portion of the session, falling slightly by 0.20% to $48.26. The long-term bullish strategist purchased a debit call spread to position for upside gains in the underlying share price by expiration next January. The spread involved the purchase of 5,000 calls at the January 2011 $50 strike for an average premium of $3.91 apiece, marked against the sale of the same number of calls at the higher January 2011 $65 strike for about $0.60 each. The net cost of the transaction amounts to $3.31 per contract. The investor responsible for the trade stands ready to accrue maximum potential profits of $11.69 per contract if COP’s shares gain 35% over the current price to reach $65.00 by expiration day. Shares must rise at least 10.5% from today’s price before the call-spreader breaks even on the transaction at $53.31.
EEM – iShares MSCI Emerging Markets Index ETF – Shares of the MSCI Emerging Markets exchange-traded fund fell less than 1% in afternoon trading to stand at $38.47. September contract options trading suggests one investor is positioning for continued downward movement in the price of the underlying stock by expiration. The pessimistic trader established a bearish risk reversal on the fund by selling 5,300 out-of-the-money call options at the September $45 strike for a premium of $1.35 apiece, spread against the purchase of the same number of put options at the September $33 strike for $1.77 each. The investor paid a net $0.42 per contract for the transaction. Profits to the downside accumulate only if shares of the EEM slump another 15.3% from the current price to breach the breakeven point at $32.58 by expiration in the next eight months. We note that the fund’s share price has remained above the $33.00-level since July 15, 2009.
DE – Deere & Co. – Shares of agricultural equipment maker, Deere & Co., are trading 1.80% higher to stand at $52.03 in the first half of the trading day. Notable options activity appeared in the January 2011 contract where one investor initiated a long-term protective play using put options. The trader established a put spread by purchasing 10,000 puts at…
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Two Week Wrap-Up – Trading Our Range
by phil - December 6th, 2009 7:58 am
Your "crystal ball" was dead-on with the insights into the report on jobs as well as the initial rise and then correction. Truly impressive. – Champstar2
We didn't have a weekly wrap-up last week because of the holiday.
In our Nov 21st Wrap-Up, I had said next week we’ll be watching to see if we can get more bullish above our 25% lines at: Dow 10,250, S&P 1,100, Nasdaq 2,187, NYSE 7,000 and Russell 600 and that became the bottom of our new range while I sent out a 9:41 Alert to our Members on Nov 23rd sticking with our upside targets of Dow 10,471, S&P 1,113, Nas 2,205, NYSE 7,266 and Russell 605. That has been a very reliable range to play for the past two weeks and we've been having a good time playing both ends of it.
Rather than just wrapping up this week's moves, I thought we'd add the prior week as the pattern is very much the same (and it was the same the week before) so it certainly bears (oops, don't say bears!) studying. Of course, when I talk about patterns, I don't just mean the chart pattern where we have all of our gains for the week on Monday and Tuesday on low volume and then larger volume selling for the rest of the week as the funds who pump the futures up dump their ill-gotten gains on retail investors. I'm talking about the global new patterns, as reported by the MSM, that make this sort of manipulation so effective. It's not that I'm so good at predicting things – it's really just that I'm good at spotting the BS…
Monday - Stuffing the Futures for Thanksgiving
I was pointing out that morning that 90% of the market gains since October had been coming on a single day each week and how a lot of that was happening in the very thinly-traded Futures market, where a few thousand shares traded overnight are able to lever the entire US market up by Trillions of Dollars. It's a very sick and broken system that has been seized by manipulators to yank investors around, making sure retail investors have little ability to participate in these wild market moves as the game is already over by the time trading starts the next…
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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. She manages the site