Posts Tagged ‘TOL’

Options Trader Positions for Airline Recovery Story

Today’s tickers: UAL, HBI, SFLY & TOL

UAL - United Continental Holdings, Inc. – The airline operator’s shares rose 4.3% this morning to an intraday high of $23.76, rebounding 9.7% off of its lowest point of the week at $21.65, but still trading substantially lower than last week’s closing price of $27.02. Shares relinquished some of the earlier gains this afternoon to stand 1.65% higher on the session at $23.16 as of 12:15pm in New York. At least one options strategist is positioning for UAL’s shares to continue recovering in the next couple of months. It looks like the investor employed April contract ratio call spreads to prepare for a sizable, albeit limited, correction higher by expiration day. The trader appears to have purchased approximately 3,000 in-the-money calls at the April $22 strike for an average premium of $2.49 apiece, and sold roughly 6,000 calls up at the April $27 strike for an average premium of $0.52 each. The net cost of the transaction amounts to an average of $1.45 per contract, and positions the trader to profit in the event that UAL’s shares rally 1.25% over the current price of $23.16 to surpass the average breakeven point on the upside at $23.45 by April expiration. Maximum potential profits of $3.55 per contract are available to the trader should shares in United Continental Holdings jump 16.6% to settle at $27.00 at expiration in a couple of months. The sale of twice as many higher-strike call options expose the investor to losses should the stock fly higher than he expects within the time remaining to expiration. Profits give way to losses on this strategy if shares in UAL jump 31.9% to exceed the upper breakeven price of $30.55 by April expiration day. The call options transacted in the ratio spreads represent opening positions given the minimal levels of open interest observed at either strike price.…
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Imax Surges on Sony Buyout Talk

 Today’s tickers: IMAX, HIG, VRGY, TOL & WM

IMAX - Imax Corp. – Earlier today you’d have needed more than just 3D-glasses to see the trail left behind by a near 20% surge in shares of the movie-theater corporation. Rumors have emerged that Japan’s Sony Corporation is set to make a $40-plus bid for the company enamored by its growing popularity amongst movie theater-goers. With more films built using 3D-technology shares in the company had already tripled this year in anticipation of growing revenues. Earlier in the week we witnessed what appeared to be a delta-neutral strategy that would have benefitted perfectly from the surging share price, which has subsequently halved its intraday gain. An investor sold stock at around $25.00 and bought call options at the $30 strike expiring in March. As the shares jump in value, the delta on the option swells to give the investor a far-greater long exposure to the stock hugely eclipsing losses from the short position. But is looks like this trader is sitting pretty today as developments unfold and there is no action at that strike price. Rather investors appear to be more concerned with an imminent Sony bid and have targeted the January expiration $35 strike, which has traded in a range spanning 40-cents to $1.10 per contract as the share price digests today’s news. Trading currently at 60-cents the contract would make money by expiration only if shares in Imax surged by more than 18.6% based upon a share price at $30.00.

HIG - Hartford Financial Services Group. – Earlier in the month it appears that an options trader took to a bullish call strategy on the multi-line insurer. December 8 was a high volume day for the stock but also saw around 7,500 calls expiring in January 2011 trade at a 55-cent premium. The strike price of $27.50 was above the closing share price that day by exactly 10%. Just nine days ago the share price hit home lifting the premium to 90-cents. Since then and…
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Bulls Take the Wheel, Initiate Recovery Plays Using Ford Options

Today’s tickers: F, TOL, BRCD, LOW, NUAN, WAG & IFF

F - Ford Motor Co. – The automaker’s shares edged 2.45% lower this afternoon to $15.80, but investors expecting to see Ford rebound and rally in the next few months initiated bullish plays using put and call options expiring in February 2011. It looks like one trader purchased a bull call spread, while another investor put on a bullish risk reversal. The call spreader picked up 5,000 contracts at the February 2011 $16 strike for a premium of $1.24 each, and sold the same number of calls at the higher February 2011 $20 strike for a premium of $0.20 apiece. Net premium paid to establish the spread amounts to $1.04 per contract. Thus, the responsible party is prepared to make money should shares in Ford Motor Co. surge 7.85% over the current price of $15.80 to surpass the effective breakeven point at $17.04 by February expiration. The call-spreader could end up walking away with maximum potential profits of $2.96 per contract if Ford’s shares jump 26.6% to trade above $20.00 by expiration day next year. The other bullish play in the February 2011 contract appears to be the work of an investor selling 1,990 February 2011 $15 strike puts at a premium of $0.69 each in order to purchase the same number of February 2011 $18 strike calls for a premium of $0.50 a-pop. The transaction results in a net credit of $0.19 per contract, which the investor keeps as long as shares in Ford exceed $15.00 through expiration. Additional profits start to accrue for the trader should shares rally 13.9% to trade above $18.00 before the contracts expire. The net credit received by the investor provides limited downside protection should shares continue to head south. The investor will face losses, however, if Ford’s shares trade below the effective breakeven price of $14.81 in the next few months to expiration.…
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Sabrient Select Opportunity Virtual Portfolio

Sample one of Sabrient’s premium products, Sabrient Select Opportunity Virtual Portfolio.

Courtesy of Sabrient

 

This Sabrient Select Opportunity Virtual Portfolio is a high-performance, proprietary product for sophisticated active traders, active virtual portfolio managers or hedge fund managers. Our Lead Trader publishes a weekly fundamentals-based,quantitative Watch List of the top Long and Short candidates. Then he overlays a technical entry/exit trigger on top of this Watch List. Each day, he identifies those stocks that have triggered their planned technical entry or exit signals, and sends an alert to the client for appropriate action.


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Wild Weekly Wrap-Up

Wheee – that was fun!

Last week, I asked the question were we "Too Bearish or Just Too Early?"  I said in that wrap-up: "This Friday the market topped out about 150 points higher than last Friday, closer to the top of our range so we went much more bearish on Friday, perhaps too bearish considering this was the best Friday finish since Nov 6th and we haven’t had a down Monday since October 26th."  We did get the move up we feared on Monday but we stuck to our guns and had a fabulous week.

Even as the market was going against us Monday morning, my first Alert of the week to members at 9:44 said: "I’m still more inclined to look downward at: Dow 10,250, S&P 1,100, Nasdaq 2,187, NYSE 7,200 and Russell 600…  I’m still bearish because oil is weak, gold is weak, the financials (XLF at 14.30) are weak and most of the good news we are hearing is nothing but fluff."  That was a pretty good call as we hit our target levels yesterday and held them, so we flipped more bullish right at 11:30 on Friday, in what was some very good timing for our intra-day play. 

We are still on a stock market roller coaster that's going to have plenty of ups and down in the thin, holiday trading that will likely characterize the end of the year.  The market will be closed 2 Fridays in a row and good luck finding people around this Thursday or the next one so 6 proper trading days left to 2009 at best.  We got out – that drop was very satisfying and we've moved mainly to cash (our $100K Virtual Portfolio has $88,000 in cash at $107,249 at the end of it's first month).  Last week we were able to cash out the bull side, this week we got satisfaction from our bear plays and that leaves us footloose and fancy free to have fun the next two weeks.  If our day trading goes as well as it did on Friday, we can end this year with quite a bang.

Manic Monday – Dubai, CitiGroup and GS Move Markets

This picture says it all.  When you want to blow smoke
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Thrill Ride Thursday

Wheee – this is fun!

Everything went according to plan yesterday as the very fake pre-market pump I warned you about in the morning post very quickly turned into a day of carnage for the markets.  Sure we only ended up down 10 points, but it was down 100 from the open

Fortunately, we have learned how to ride this bull and we grabbed the DIA $105 puts at a .55 average per my 9:47 Alert to Members and we cashed those out at .90 (up 63%) in the afternoon.  We also had a quick 20% winner on Dec QID calls and we kept the Jan QIDs as our continuing bearish bet as we didn't want to risk a possible overnight pump job taking the markets back up with open Dec calls.  Still, we weren't worried enough to cover our longer DIA puts so we were very bearish but, as I said yesterday: "We have neglected to do is play the futures pump for the past week as we keep expecting something very bad to happen and boy would we feel silly if we were just 55% bearish when this house of cards comes tumbling down."

It has been volume, volume, volume that kep me questioning the rallies this year - the fact that all the up moves come on very thin volume (ie. manipulated) while all day long the insiders sell to the suckers who are draw in by the futures action and stick saves (it's a team effort).  This chart from Ron Greiss illustrates what's wrong with our rally on a more macro level:

While we are certainly not ready to do a bearish victory dance on this tiny little correction, we certainly feel a heck of a lot better about our decision to stay bearish.  In addition to adding bearish DIA and QID plays yesterday, we (of course) added more SRS at our target bottom, took the money and ran on EWJ, shorted XTO (rumors XOM may walk), got more UUP and shorted V.  Our long covers were TOL and the VIX but it was a very bearish day of picks, especially considering our already bearish stance (see Weekend Wrap-Up – Too Bearish or Just too Early?). 


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Wells Fargo Put Spreaders Back in Town

Today’s tickers: WFC, AMR, PG, DRYS, DTV, M, EMC, WYNN, TOL & SFD

WFC – Wells Fargo & Co. – A popular option strategy frequently employed on Wells Fargo, the ratio put spread, appeared once again in the January 2010 contract. The bearish play was initiated despite the more than 2% rally in shares during the trading session to $28.75. The ratio spread involved the purchase of 7,500 puts at the January 27.5 strike for an average premium of 1.60 apiece, marked against the sale of 15,000 puts at the lower January 24 strike for 67 cents each. The net cost of the protective play amounts to 26 cents per contract. Thus, downside protection will kick in if shares decline beneath the breakeven price of $27.24 by expiration in January.

AMR – AMR Corp. – American Airlines operator, AMR Corp., attracted a large bullish play by one investor targeting the January 2010 contract. Shares of AMR are up more than 4% to $5.83 with just under one hour remaining in the trading day. An AMR-optimist initiated a call spread by purchasing 15,000 calls at the January 7.5 strike for an average premium of 35 cents each, marked against the sale of 15,000 calls at the higher January 9.0 strike for 10 cents premium apiece. The net cost of the bullish transaction amounts to 25 cents per contract. Profits are available to the call-spreader if shares of AMR rally at least 33% to breach the breakeven point at $7.75 by expiration. Maximum potential profits of 1.25 per contract for a total of $1.875 million are attained by the trader if shares surge 54% to $9.00.

PG – The Proctor & Gamble Co. – Options activity in the January 2011 contract on the consumer products company today indicates one investor expects little fluctuation in shares over the next 14 months. Shares of PG are slightly up by less than 0.25% to stand at $61.90. The trader initiated a sold strangle by selling 2,000 puts at the January 60 strike for 5.73 each, and by selling 2,000 calls at the higher January 65 strike for a premium of 3.82 apiece. The gross premium pocketed on the sale amounts to 9.55 per contract. The strangle-seller retains the full premium if shares of PG remain ‘strangled’ within the parameters of the strike prices described. The investor will benefit from lower option implied volatility on the…
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Wild Weekly Wrap-Up – August in Retrospect

It has been a crazy few weeks!

I went back over our Long Shots list from August 9th, thinking all our picks must be doing great but really only C, with a 67% gain, is really outperforming.  Long spreads on UYG and BHI are on target for nice gains but haven't moved much.  Looking at our original picks in Pharmboys Phavorites from the same week, GSK is on track and up nicely already, our AZN cover is up 45% and MRK flew up 19% already.  On the riskier Biotech side, ARIA's stock is up 16% and our spreads are all performing well, ONTY has been flat, OGXI is up 33% and the Jan $17.50s are up a rockin' 63% with that "cautious" spread up a surprising 75% already

SPPI had a wild ride (as we predicted with TSCM's failed assassination attempt) and the buy/write is already up 24%, the Feb vertical is up 50% and the naked Jan put sale is up 27% and our Feb hedge play is right on track so all good there and a fine example of how following Cramer and his lackeys and and doing the opposite of what they say can be very profitable!  Congrats to Pharmboy for a very fine set of picks, proving once again that there is room for research and fundamentals - not a single loser in the bunch in a choppy market!  It was very timely as I had mentioned just that week in my interview with AOL Finance that XLV was my favorite sector and our IHI pick of 8/10 is up 28% on the naked Feb $45 put sale while the Feb $45 calls have already jumped 16%.  It was a great call as IHI outperformed XLV and all our major indexes.

So our energy service pick (BHI) and overall financial pick (UYG) have not done much in 3 weeks and those were our leading sectors into my call to cash out our exposed long calls on Aug 13th, ahead of expirations.  The Dow was at 9,400 on that day and now, a bit more than 2 weeks later, we've gained another 144 points but to listen to the MSM, you would think you are missing the rally of the century the past couple of weeks.  This is one of the reasons I've gotten a bit more cynical about the…
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GDPhursday – Jobs, What Jobs?

Does it matter if we have a good GDP and no jobs?

That's a question that will have to be considered today as the powers that be try to make a big deal of the fact that we are getting worse more slowly, even as the Q2 GDP report is expected to be 60% WORSE (-1.6%) than last quarter (-1%).   It's very possible we get a small beat today (it will be tragic if we don't) as crude oil prices jumped 25% in May and June (forcing Americans to spend money – yay GDP!) and exports nearly doubled, non-defense capital goods gained about 5% and, of course, the stock market jumped 15%.  In the 3 months of Q2 we lost 1.3M jobs and the average workweek for those lucky enough to still be working dropped by 4% AND their pay dropped 1.5% but hey, who cares, AIG's stock is up!

My daughter has it all figured out, she lost a tooth last night and got a visit from the tooth fairy and at breakfast she was speculating that the little pixie is probably using all those teeth to build houses for homeless people.  I didn't have the heart to tell here that, at $5 per tooth, it was probably cheaper to stick with lumber but she may be on to something as TOL blew through $472M in their last quater, losing $2.93 a share on the sale of just 792 homes in the entire United States of America (about 5 homes per month per state).  That's almost 100 Million teeth!  Maybe my daughter is onto something with this tooth house idea as clearly the wooden ones can't be sold profitably… 

DESCRIPTIONTOL isn't the only one running on empty last quarter.  We all know that the GDP is currently being boosted by the largest government stimulus package in history.  Government spending this year is trending to 30% of GDP, that compares to 12% at the height of Roosevelt's New Deal.  Of course we don't actually HAVE 30% of the GDP – we were running a huge deficit before the government had to jump in to "help" and we are now borrowing almost 40% of our spending and really we're borrowing 62.5% of what we spend because WE'RE NOT SUPPOSED to be using Social Security
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Weekly Wrap Up

Another week, another 5% gain – isn't the stock market easy?

We've gained 1,400 points in 4 weeks from our March 9th low of 6,600 – pretty impressive on the whole - but we have suffered a serious decrease in upward momentum since March 23rd, when we finished at 7,775.  That's 1,175 points in 10 sessions followed by just 225 over the next 9.  It's a little hard to reconcile this very toppy sort of action with the "bull market" mania that has swept the media this past week.  We've been bracing ourselves for a slap of cold water all week that never really came although this weekend the WSJ ran this nasty unemployment graph along with an article titled: "Time to Brace for Trouple as Profits Debacle Starts" which reminds us why we went into the weekend 55% bearish.

In last weekend's post I warned: "Don’t forget I was looking for something like a 5% pullback and "all" we got was 2.5% so far" and it only took minutes out of the gate on Monday morning to give us the rest of that 5%.  I reposted our target levels on Monday morning of Dow 7,636, S&P 805, Nas 1,525, NYSE 5,075 and Russell 420, which were well tested Monday and Tuesday until we got a proper breakout on Wednesday morning

I was actually more optimistic on Monday than I am today as Monday our plan was we were hoping to hold our pullback levels and form a base we could build off.  The problem was the way we did rally made no sense – we didn't climb a wall of worry – we climbed a wall of ACTUAL bad news that gave us brand new reasons to worry.  While the difference may sound subtle – it's actually a big deal!  As a UBS economist I quoted in Monday's post said:  "he housing market isn’t about to start booming, but the intensity of the pain will probably recede."  This is the result of our abusive relationship with the markets as they declined over 50% in 6 months – the mere absence of pain is treated as pleasure.

We had 4 new trade ideas from the Weekend Reading post in HIG, ING, FXE and BLK with all but
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Kimble Charting Solutions

Inflation or Deflation? Depends On What The Commodity Index Does Next!

Courtesy of Chris Kimble

Commodities were already in a slump when coronavirus hit in 2020. That crash sent commodities to the lowest levels in decades.

A quick economic rebound led to a return of demand which in turn led to shortages in 2021 and into 2022.

So now what? Well, if you look at today’s long-term “weekly” chart of the CRB Commodity Index you can see that the past 2 years produced the largest 90-week rally in nearly 50 years!

This has taken commodities from the bottom of the falling channel (marked by each 1) to the top of the channel.

Which starts here?  Deflation or Hyperinflation?

The rall...



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ValueWalk

B2B eCommerce Market Size Reaches $6.7 Trillion In 2021: Here's How

By Ankur Shah. Originally published at ValueWalk.

Once upon a time, B2B sales were very old school in their ways. B2B marketplaces and online websites were unheard of – until the new generation of buyers entered the market along with the digital shift business is experiencing in general to create the world of B2B eCommerce. Even though the B2B world was slow to embrace eCommerce, we’re seeing a shift towards online sales to make the buying experience less complicated and more seamless.

Q4 2021 hedge fund letters, conferences and more

Below, we'll look at the reasons why B2B eCommerce is bo...



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Zero Hedge

US Intervened With Patriot Missiles During Houthi Attack On UAE

Courtesy of ZeroHedge View original post here.

Authored by Jason Ditz via AntiWar.com,

US Air Force spokesman Lt. Col. Philip Ventura reported on Monday that US planes intervened during a missile alert in the United Arab Emirates (UAE), and helped them repel two ballistic missiles.

"U.S. military forces successfully reacted to multiple inbound threats during an attack near Abu Dhabi," the U.S. Air Force said in a Monday statement. The New York Times confirme...



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Phil's Favorites

Federal Reserve plans to raise interest rates 'soon' to fight inflation: What that means for consumers and the economy

 

Federal Reserve plans to raise interest rates ‘soon’ to fight inflation: What that means for consumers and the economy

All eyes are on Fed Chair Jerome Powell as the central bank prepares to raise rates for the first time in three years. Brendan Smialowski/Pool via AP

Courtesy of Alexander Kurov, West Virginia University and Marketa Wolfe, ...



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Biotech/COVID-19

How mRNA and DNA vaccines could soon treat cancers, HIV, autoimmune disorders and genetic diseases

 

How mRNA and DNA vaccines could soon treat cancers, HIV, autoimmune disorders and genetic diseases

Nucleic acid vaccines use mRNA to give cells instructions on how to produce a desired protein. Libre de Droit/iStock via Getty Images

Courtesy of Deborah Fuller, University of Washington

The two most successful coronavirus vaccines developed in the U.S. – the Pfizer and Moderna vaccines – are both mRNA vaccines. The idea of using genetic material to produce an immune response has opened up a world of research ...



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Politics

5 things to know about why Russia might invade Ukraine - and why the US is involved

 

5 things to know about why Russia might invade Ukraine – and why the US is involved

Courtesy of Tatsiana Kulakevich, University of South Florida

U.S. President Joe Biden said on Jan. 19, 2022, that he thinks Russia will invade Ukraine, and cautioned Russian president Vladimir Putin that he “will regret having done it,” following months of building tension.

Russia has amassed an estimated 100,000 troops along its border with Ukraine over the past several months.

In mid-January, Russia began moving ...



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Chart School

Bitcoin Swings Down to Support

Courtesy of Read the Ticker

Come on! Seriously do you think a 400% rally for Bitcoin was going to be given to the public easily. Without any pain! Come on muppets!



The uniformed (public) buy when price is rising or breaking new highs, the informed buy when price is falling or breaking lows.



The informed have to do it this way as they are large volume players and the only way they can buy large volume is to create chaos. The chaos brings to the market the weak holders and a forced sell. Price is moved to where the volume can be accumulated, in a bull trend that is down to critical support.



Of course if price is in a true bull market the 'chaos' created should not break critical long term trend signals, ...



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Digital Currencies

The metaverse is money and crypto is king - why you'll be on a blockchain when you're hopping

 

The metaverse is money and crypto is king – why you’ll be on a blockchain when you’re virtual-world hopping

In the metaverse, your avatar, the clothes it wears and the things it carries belong to you thanks to blockchain. Duncan Rawlinson - Duncan.co/Flickr, CC BY-NC

Courtesy of Rabindra Ratan, Michigan State University and Dar Meshi, Michigan State University ...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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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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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.