Posts Tagged ‘SLM’

Options Investors Flock to Sallie Mae

Today’s tickers: SLM, LYB, SRZ & AUY

SLM - SLM Corp. – A barrage of bullish options traders targeted the student loan provider today perhaps on news SLM Corp. will continue to downsize and increase the number of company-wide layoffs to 2,500 by the end of next year. Shares in Sallie Mae rallied as much as 3.4% today to touch an intraday high of $12.28, with shares currently trading 2.35% high on the day at $12.16 just before 12:30 pm. Plain-vanilla call buyers expecting bullish movement in the price of the underlying shares to continue picked up 1,500 in-the-money calls at the December $12 strike for an average premium of $0.36 each. Call buying spread to the higher December $13 strike where more than 4,700 call options were purchased for an average premium of $0.14 a-pop. Investors holding the December $13 strike contracts are prepared to make money should SLM Corp.’s shares surge 8.05% over the current price of $12.16 to exceed the average breakeven point at $13.14 by expiration day this month. Bulls also targeted longer-dated put and call options to gain upside exposure on the stock. It looks like one strategist sold 10,000 puts at the January 2011 $11 strike for a premium of $0.22 each, in order to purchase the same number of April 2011 $15 strike calls at a premium of $0.22 apiece. The investor responsible for the transaction seems to be predicting a sharp recovery in SLM Corp. shares by April of next year. Shares in Sallie Mae would need to rally at least 23.35% for the trader to start to make money above the effective breakeven share price of $15.00. The sale of January 2011 $11 strike puts indicates the investor expects shares will exceed that price level through expiration day. But, also suggests the trader is willing to have 1,000,000 shares of the underlying stock put to him at $11.00 apiece should the puts land in-the-money ahead of January expiration. The sharp rise in demand for…
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Bears Bombard Blackberry-Maker, Research in Motion

Today’s tickers: RIMM, CAT, MGM, F, SLM, FRX, FXI, MWW & AIG

RIMM – Research in Motion Limited – Blackberry maker, Research in Motion, attracted bearish options strategists even though the firm’s target share price was upped to $100.00 this morning from $95.00 at Canaccord Adams. RIMM opened the session higher, but slipped slightly in afternoon trading by 0.05% to $70.85. One bearish tactic employed today was the use of a plain-vanilla put spread in the March contract. The trader responsible for the transaction purchased 4,400 puts at the March $65 strike for a premium of $0.54 apiece and sold the same number of puts at the lower March $60 strike for $0.20 each. The net cost of the spread amounts to $0.34 per contract. Maximum potential profits of $4.66 per contract are available to the investor if RIMM’s share price slumps 15.30% beneath the current value to $60.00 by expiration. We note that the mobile device manufacturer’s shares last traded below $60.00 on December 4, 2009. The bearish risk reversal is another pessimistic tactic utilized today. One trader sold 5,000 calls at the April $75 strike for a premium of $2.66 each in order to purchase 5,000 puts at the lower April $70 strike for $3.80 apiece. The net cost of the reversal play amounts to $1.14 per contract. The investor stands ready to accrue profits to the downside if shares of the underlying stock trade beneath the effective breakeven point at $68.86 by expiration in April.

CAT – Caterpillar, Inc. – February marked the seventh consecutive month of manufacturing expansion in the United States; this fact, coupled with today’s jump in equities’ prices, inspired bullish options trading on machine-maker, Caterpillar. CAT’s shares rallied 1.50% during the session to $57.92 after its earnings forecast through the year 2012 were increased by analysts at Morgan Stanley. MS maintains an ‘overweight’ rating on CAT and a $70 share price target, at present. Bullish options activity appeared on the put side of the field where one investor established a credit spread. The trader sold roughly 16,300 puts at the April $55 strike for a premium of $1.38 apiece, and purchased the same number of puts at the lower April $50 strike for $0.47 each. The investor pockets a net credit of $0.91 per contract, and keeps the full amount as long as Caterpillar’s share price remains above $55.00 through expiration day in…
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Testy Tuesday – Have the Markets Become Comfortably Numb?

"There is no pain you are receding
A distant ship's smoke on the horizon.
You are only coming through in waves.
Your lips move but I can't hear what you're saying.
When I was a child
I caught a fleeting glimpse
Out of the corner of my eye.
I turned to look but it was gone
I cannot put my finger on it now
The child is grown,
The dream is gone.
but I have become comfortably numb
." – Pink Floyd
 

I have a theory that the markets (and the American people in general) aren't irrational, they are simply shell-shocked after suffering a very traumatic group financial experience… 

To be shell-shocked is to be "mentally confused, upset, or exhausted as a result of excessive stress" and the most common symptoms are: Fatigue, slower reaction times, indecision, disconnection from one's surroundings, and inability to prioritize – That certainly sounds like our Congress doesn't it?  Combat stress disorder was first diagnosed in WWI, when 10% of the troops were killed and 56% wounded – far worse than had been experienced in previous wars.  Our current financial crisis has similarly affected more people than any previous crisis with almost everyone knowing someone who is bankrupt or lost their jobs or homes and almost no one escaped the carnage of the downturn without some financial damage. 

Combat fatigue may go a long way to explaining the severe drop-off in volume that has plagued the markets since March, with participation now down to 25% of where we were last January and that leaves us open to the blatant sort of market manipulation that Karl Denninger caught last week as well as the usual nonsense we get daily from HFT programs that drive the market with such precision that we are able to tell how the day is going to go by simply checking our hourly volume targets.  Here's a clip from CNBC where a floor trader discusses market manipulation as a fact of trading (2 mins in).  

As Nicholas Santiago points out on In The Money Stocks,   "January is usually a very high volume month, yet it has started off the New Year even lighter than the last two months of 2009.  Light volume markets are very difficult to
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Mixed Sentiment on BAC Pits Bulls Against Bears

Today’s tickers: BAC, XRX, XLF, CAR, XLU, BIG, SLM, TTWO, MRVL & TSN

BAC – Bank of America Corp. – Investors employed two contradictory option strategies in the February contract on Bank of America today. One trader initiated a large bearish risk reversal while the other put on a bullish call spread. BAC’s shares rallied 3.5% this afternoon to $16.30. The pessimistic investor appears to have sold 30,000 in-the-money call options at the February 15 strike for 1.74 apiece in order to purchase 30,000 puts at the same strike for 84 cents each. The reversal results in a net credit of 90 cents per contract to the trader. Perhaps this individual expects shares to decline beneath the $15-level by expiration so he may retain the full 90 cent credit on the trade. Bullish trading in the same February 2010 contract suggests shares are set to rally higher in the next few months. An optimistic investor purchased 10,000 calls at the February 17 strike for 89 cents each, and sold the same number of calls at the higher February 19 strike for 34 cents apiece. The net cost of the spread amounts to 55 cents per contract. Maximum potential profits of 1.45 are available to the investor if shares increase more than 16.5% from the current price to a new 52-week high of $19.00 by expiration in February.

XRX – Xerox Corp. – One investor utilized the risk reversal strategy in order to take a long-term bullish stance on Xerox. Shares moved 1% higher this afternoon to $7.85. It looks like the trader sold 20,000 puts at the January 2011 7.5 strike for a premium of 1.15 each to partially finance the purchase of 20,000 calls at the same strike for 1.60 apiece. The net cost of the reversal amounts to 45 cents per contract. The investor profits if shares surpass the breakeven price of $7.95 within the next 12 months to expiration.

XLF – Financial Select Sector SPDR ETF – Shares of the XLF rallied 0.75% in afternoon trading to stand at $14.46. Bullish options activity on the fund suggests shares are likely to appreciate within the next several months. Optimistic investors purchased 69,000 in-the-money call options at the March 14 strike for an average premium of 1.36 per contract. XLF shares must rise 6% from the current price before profits accumulate above the breakeven point at $15.35. Shares last…
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Hi-Ho Long-Term Silver Bulls!

Today’s tickers: SLV, EWT, CL, BG, ILMN, COH, TMO, SPG, BG, ADSK & SLM

SLV – iShares Silver Trust ETF – A bull call spread in the January 2011 contract on the silver ETF today suggests shares of the SLV may rally significantly over the next year and two months time. Shares of the SLV are currently up 0.5% to $18.23. The silver-bull purchased a ratio call spread by buying 3,000 calls at the January 23 strike for an average premium of 1.93 apiece, and selling 6,000 calls at the higher January 30 strike for about 90 cents each. The net cost of the transaction is reduced to just 13 cents per contract. Shares of the fund must rally at least 27% before the investor breaks even at a price of $23.13. The trader stands ready to accumulate maximum potential profits of 6.87 per contract if the stock surges up to $30.00 by January 2011.

EWT – iShares MSCI Taiwan Index ETF – A massive bearish play on the Taiwan Index exchange-traded fund caught our attention this afternoon with shares of the EWT down 0.5% to $12.64 in late-day trading. It appears one investor established a bearish risk reversal in the December contract to position for potential share price declines through expiration. The trader sold 31,000 calls at the December 13 strike for 20 cents premium apiece, spread against the purchase of 31,000 puts at the lower December 12 strike for 20 cents each. The sale of the calls exactly offset the cost of buying the puts. Essentially the reversal is a “free” bet that shares of the EWT will trend lower ahead of the 2010. The investor responsible for the transaction is likely long shares of the underlying fund and seeking protection to the downside. If shares fall beneath $12.00, the value of the underlying position is protected. However, if shares of the fund rally by expiration, the trader risks having shares of the stock called from him at $13.00 apiece.

CL – Colgate-Palmolive Co. – Speculation that Reckitt Benckiser Group may acquire Colgate-Palmolive spurred an all-out call option feeding frenzy on CL today and lifted shares of the U.S. company to a new 52-week high of $86.33. Investors flooded the November and December contracts, scooping up call options to position for further upward movement in the price of the underlying. The sudden surge in demand for Colgate-Palmolive options…
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Caterpillar Sees Sizeable Options Activity

Today’s tickers: CAT, EEM, FITB, VALE, SLM, EXPE, SNDK, SLM & YHOO

CAT – Caterpillar, Inc. – A long-term bullish play on the world’s largest maker of bulldozers and excavators proved highly profitable for one investor who banked hefty gains in the January 2010 contract this afternoon. Shares of CAT are currently up less than 0.5% to $59.80 on an upgrade to ‘neutral’ from ‘sell’ at Goldman Sachs. It appears the trader originally purchased 15,000 calls at the January 55 strike for 3.50 apiece, and 20,000 calls at the higher January 60 strike for 1.95 each, back on September 25, 2009. Today the investor sold the January 55 strike calls for 6.90 and the January 60 strike calls for 3.85 per contract. Net profits to the trader amount to $8.9 million. Elsewhere, it seems a large bullish call position was partially financed through the sale of put options. It looks like a chunk of 25,000 put options sold for 68 cents apiece at the December 50 strike at the same exact moment 40,000 call options were purchased for 1.50 each at the February 70 strike. The investor responsible for the trade likely expects shares of CAT to remain above $50.00 through expiration in December. This short sale partially offsets the cost of taking a massive bullish stance through expiration in February.

EEM – iShares MSCI Emerging Markets Index ETF – Shares of the emerging markets exchange-traded fund are trading more than 1% higher today to stand at the current price of $41.45. A 100,000-lot straddle caught our attention in the November contract this afternoon. It appears one investor has taken advantage of lower volatility on the EEM by purchasing a long straddle. The transaction involved the purchase of 50,000 calls at the November 41 strike for 1.53 apiece, and the purchase of 50,000 puts at the same strike for 1.21 each. The net cost of the trade amounts to 2.74 per contract. Volatility on the EEM has fallen to 27%, the lowest reading on the fund since August of 2008. Perhaps the long-straddle player expects volatility to jump higher before the options expire in November. The nature of the strategy is such that he will benefit given a sufficient shift in the price of the EEM in either direction. Profits are available if shares swing either above the breakeven point to the upside at $43.74, or if shares dip beneath…
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Energy Options Strangle Play Delivers the Goods for Investor

Today’s tickers: XLE, MFE, FITB, SLM, XHB, F, INTC & XLF

XLE – Shares of the energy fund are higher by about 1% to $48.35. We observed one energetic option investor who appears to have purchased to close an 8,000-lot strangle today, that was originally established back on May 8, 2009. It looks as though the strangle was originally sold for a gross premium of between 3.58 and 4.22 through the sale of 8,000 puts at the June 47 strike price and the sale of 8,000 calls at the June 53 strike. Today the investor bought back the position for a total of 31 cents per contract. Thus, this individual is left with net gains of between 3.27 and 3.91 each by closing out the position today. The trader has reeled in minimum profits of $2,616,000 or maximum profits of $3,128,000. – Energy Select Sector SPDR

MFE – The security technology company appeared on our ‘hot by options volume’ market scanner this afternoon amid a more than 4% rally in shares to $41.86. Bullish investors hoping for continued upward movement in the price of the underlying looked to get long of calls in the near-term July contract. Traders picked up more than 3,500 call options at the July 45 strike price for an average premium of 22 cents apiece. McAfee shares would need to climb higher by approximately 8% in order for individuals who are now long the calls to breakeven at a price of $45.22 by expiration. Option implied volatility on MFE has risen throughout the trading day from a low of 31% to the current reading of nearly 35%. – McAfee Inc.

FITB – The Ohio-based bank holding company has experienced a modest rally in shares by about 1.5% to $7.05. FITB caught our attention amid a call-to-put ratio of more than 18-to-1, suggesting bullish activity on the stock. Upon further investigation, it appears that today’s activity is the work of an investor initiating a calendar spread in the expectation of continued bullish movement in the stock through expiration in November. It looks as though this individual sold 10,000 calls at the August 9.0 strike price for a premium of 20 cents apiece and then spread the sale against the purchase of 10,000 calls at the November 9.0 strike price for 63 cents per contract. The net cost of the bullish stance amounts to 43 cents and
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Chinese ETF sees more call option action

Today’s tickers: FXI, XL, AIG, WYE, EEM, JAVA, GIS, BK, SLM & C

FXI iShares FTSE/Xinhua China 25 – Shares are up by approximately 1.5% to stand at $27.96. The Chinese ETF appeared on our ‘most active by options volume’ market scanner after one investor purchased 40,000 in-the-money calls at the March 27 strike price for an average price of 55 cents per contract. The investor snagged the chunk of calls at a low premium earlier today relative to the current premium on the calls of 1.35. It looks like this trader offset the cost of the purchase by selling 40,000 calls at the April 30 strike price for a premium of 63 cents. Thus, he pockets a credit of 8 cents on the trade. As long as shares remain above $27 by Friday, this investor will have the right to collect 4,000,000 shares of the underlying stock at the strike price. But, by selling the calls in April this trader has capped upside gains at a maximum of 3.0 if shares happen to rally to $30 by expiration. The sale effectively provides him with an exit strategy in April.

XL XL Capital Limited – Shares of the property and casualty insurance firm have rallied 7.5% to $4.43 on the heels of AIG’s surge today. One investor looking for further upside gains purchased 6,400 calls at the March 5.0 strike price for 13 cents apiece. If shares can continue to rebound in this fashion and rise by 12% from its current price, then this trader would begin to profit at the breakeven share price of $5.13.

AIG American International Group – Outrage at $165 million in bonuses paid out to employees of the firm’s financial products division while taking in TARP funds at the same time apparently could not detract from AIG’s share price, which is soaring upwards by 40% to $1.35. While government appointed CEO Edward M. Liddy is getting reamed out at the Congressional hearings today, options investors have been busy trading calls across multiple contracts. Traders were heavily favoring the call side and skewed the call-to-put ratio to more than 4.5 calls to every put in action today. At the April 3.0 strike price, optimists picked up 3,700 calls for 10 cents each. Despite the huge rally today, shares would need to continue upwards by another 129% in order to reach the breakeven point at $3.10 by…
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Phil's Favorites

Mr. Morgan

 

Mr. Morgan

Courtesy of 

The Federal Reserve had a precursor before it became the lender of last resort. It wasn’t an institution or a government department. It was a single, solitary man named J. Pierpont Morgan. Mr. Morgan, he was called in the newspapers, and you didn’t need to go any further – everyone knew to whom you were referring.

Stock market panics were common in the early 1900’s because of the agrarian nature of the economy. Each summer, the local banks that catered to farmers throughout the country began calling their money back from the banks in New York City and Chicago so they could raise enough capital to bring in the h...



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Zero Hedge

Anatomy Of The $2 Trillion COVID-19 Stimulus Bill

Courtesy of Visual Capitalist

The unprecedented response to the COVID-19 pandemic has prioritized keeping people apart to slow the spread of the virus. While measures such as business closures and travel restrictions are effective at fighting a pandemic, they also have a dramatic impact on the economy.

To help right the ship, the Coronavirus Aid, Relief, and Economic Security Act — also known as the CARES Act — was passed by U.S. lawmakers last week with little fanfare. The act became the largest economic stimulus bill in modern history, more than doubling the stimulus act passed in 2009 during the Financial Crisis. ...



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Biotech/COVID-19

The new coronavirus emerged from the global wildlife trade - and may be devastating enough to end it

 

The new coronavirus emerged from the global wildlife trade – and may be devastating enough to end it

Government officers seize civets in a wildlife market in Guangzhou, China to prevent the spread of the SARS disease, Jan. 5, 2004. Dustin Shum/South China Morning Post via Getty Images

Courtesy of George Wittemyer, Colorado State University

COVID-19 is one of countless emerging infectious diseases that are zoonotic, meaning they originate in animals. ...



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Members' Corner

Tinker, Tailor, Mobster, Trump

 

Tinker, Tailor, Mobster, Trump

What happens when a Confidential Informant becomes President?

Courtesy of Greg Olear, at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

...



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Kimble Charting Solutions

Fear Indicators Creating Huge Bearish Reversal Patterns This Month?

Courtesy of Chris Kimble

Its been a rough month for Stocks and Crude Oil. Could these two indicators be suggesting that a panic in fear has run out of steam?

This 2-pack looks at the fear indicators in the Nasdaq (VXN) and Crude Oil (OVX).

Both were at the highest levels in years back in 2008. Both peaked in 2008, as they created monthly bearish reversal patterns.

Turing the page to March of 2020, the Nasdaq fear index could be double topping at t...



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Insider Scoop

Strategist Channels His Inner Elsa, Says Apple Investors Need To Let It Go

Courtesy of Benzinga

The "Frozen" character Elsa famously declared it's time to "let it go" when her dark secret has been discovered. Boris Schlossberg of BK Asset Management has a similar message to Apple Inc. (NASDAQ: AAPL) investors.

'Absolutely' No Discretionary Spending

The market is guilty of "utterly underestimating" the ultimate economic impact the ...



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Chart School

Big moving Averages and macro investment decisions

Courtesy of Read the Ticker

When price is falling every one wonders where demand will come in.


RTT black screen Tv videos study the simplest measure of price (simple moving average). What has happen before guides us now. 














Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, ...

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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

Take a quick watch of this video because it shows you ...



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ValueWalk

Entrepreneurial activity and business ownership on the rise

By Jacob Wolinsky. Originally published at ValueWalk.

Indicating strong health of entrepreneurship, both entrepreneurial activity and established business ownership in the United States have trended upwards over the past 19 years, according to the 2019/2020 Global Entrepreneurship Monitor Global Report, released March 3rd in Miami at the GEM Annual Meeting.

Q4 2019 hedge fund letters, conferences and more

The Benefit Of Entrepreneurial Activity ...

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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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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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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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