Posts Tagged ‘XLV’

Bearish Options Play Paying Off As Abercrombie Shares Lose Their Cool

Options brief will resume June 3rd, 2013.

Today’s tickers: ANF, XLU & XLV

ANF - Abercrombie & Fitch Co. – Shares in teen retailer, Abercrombie & Fitch Co., are getting hammered today, down 10% at $48.92 in early-afternoon trading after the company reported a wider-than-expected first-quarter loss and missed topline estimates, lowered its full year earnings forecast and said same-store sales would be down slightly for the rest of the year. A review of pre-earnings report activity in Abercrombie options yesterday indicates one trader was prepared for the pullback today. It looks like the strategist initiated a ratio put spread, picking up 500 May 31 ’13 $50 strike puts for a premium of $0.91 each, and selling 1,000 puts at the May 31 ’13 $47 strike at a premium of $0.35 apiece. The bearish trade cost a net premium of $0.21 per contract and established an effective breakeven price of $49.79, with maximum possible gains of $2.79 per contract given a 13.5% move lower (based on ANF’s closing price of $54.37 on Thursday 5/23/13) in the stock to $47.00 by expiration on the 31st of May. The $47/$50 ratio put spread is working today given the sharp selloff in the price of the underlying, and would cost roughly $1.20 per contract, or more than five times as much, to initiate as of the time of this writing.

XLU - Utilities Select Sector SPDR – At the end of April shares in the Utilities ETF were trading at the highest level since the summer of 2008, having rallied nearly 20% during the first four months of 2013 to hit $41.44 on April 30th. Several trading sessions prior to securing the $41.44 high, we noted a large trade in XLU options; the purchase of a block of 50,000 Jun $40 strike puts for a premium of $0.51 per contract. The trade was initiated within…
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Will We Hold It Wednesday – Dollar Dives to 79, Futures Flat

Let's not make this more complicated than it needs to be

A weak Dollar lifts the markets and, this morning, the Dollar fell from 79.50 at yesterday's close to 79 at 6:45 and that's why, despite earnings disappointments from both INTC and IBM, the Futures are up slightly 3 hours before the open.  As you can see from the chart on the right, to say there's a strong inverse correlation between the Dollar and the S&P is quite the understatement.  Over the longer run – the effect tends to wash out but, over the short run, it's an almost perfect match.  

Of course, this also has a very direct effect on commodity pricing and part of the reason for the Dollar's big sell-off last night was the much-better-than-last-time performance of Barack Obama in the second Presidential Debate as the future of the Fed and all that free money hangs in the balance.  

After the first debate, two weeks ago, Romney clearly won and has made it known that he will kick both Big Bird and Big Ben to the curb as soon as he gets in office – that sent the Dollar up from 79.10 to 80.21 (up 1.4%) last week and dropped the S&P from 1,460 to 1,430 (2%).  After last night, Romney looks to be back off the table and that leaves the Dollar to resume it's downward slope – giving another lift to the markets.  

At the same time, Moody's left Spain's credit rating above junk this morning and that's lifting the Euro to $1.31 and the Pound is moving in lock-step at $1.61 BUT the Yen dropped 0.5% to 78.63 and it's not likely the BOJ will let the Dollar slip below 79 as that makes Toyotas and Sonys more expensive just ahead of the holidays.  Also, the Nikkei finally got back to 8,850 last night and you know they hate to lose that line.  

So get set for some heavy-duty Global Market Manipulation by our Central Banksters as everyone but Europe tries to race for the bottom.  Europe, interestingly enough, doesn't mind a strong currency as they are fuel and goods importers and most of the goods they export are "luxury" class and less susceptible to currency fluctuations.  With strong intra-zone trading the backbone of the EU economy, it doesn't matter where the Euro is trading from that perspective either and, of
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Bullish Investor Enacts Options Combo Play on Goldman Sachs Group, Inc.

Today’s tickers: GS, BP, XLV & EEM

GS – Goldman Sachs Group, Inc. – One options strategist initiated a three-legged bullish options combination play on Goldman Sachs this morning in order to position for the company’s shares to increase significantly ahead of October expiration. The global investment banking firm’s shares rallied more than 4.6% today, adding to Thursday’s 3.8% bullish move in the price of the underlying stock, to secure an intraday high of $152.00 after the firm agreed to pay $550 million to settle with U.S. regulators. The investor responsible for the three-legged bullish transaction sold short put options in order to partially offset the cost of buying a debit call spread. The trader sold 1,750 puts at the October $130 strike for a premium of $3.50 each, purchased 1,750 calls at the October $160 strike for a premium of $5.50 apiece, and sold 1,750 calls at the higher October $175 strike for a premium of $1.86 a-pop. Net premium paid to establish the spread is reduced to just $0.14 per contract. Thus, the options strategist if prepared to profit should Goldman’s shares rally 5.35% over today’s high of $152.00 to surpass the effective breakeven price at $160.14 by expiration day. The investor walks away with maximum potential profits of $14.86 per contract if shares of the underlying stock surge 15.1% to exceed $175.00 by October expiration.

BP – BP PLC – The 3.75% decline in the price of BP’s shares to $37.46 this morning did not deter one optimistic options player from purchasing a bull call spread in the August contract. It looks like the investor purchased 2,500 in-the-money calls at the August $35 strike for an average premium of $4.34 apiece, and sold the same number of calls at the higher August $40 strike for an average premium of $1.74 each. Net premium paid to purchase the spread amounts to $2.60 per contract. The investor responsible for the transaction makes money as long as the oil company’s shares trade above the average breakeven point on the spread at $37.60 by August expiration day. Maximum potential profits of $2.40 per contract are available to the trader if the price of the underlying stock increases 6.8% over the current price of $37.46 to exceed $40.00 at expiration.

XLV – Health Care Select Sector SPDR – One options strategist expecting shares of the XLV, an exchange-traded fund designed to provide…
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Contrarian Options Player Sheds Put Options on Lloyd’s Banking Group PLC

Today’s tickers: LYG, XLV, MSFT, XLF, F, AZN, LYV, AZO, MW & XLNX

LYG – Lloyd’s Banking Group PLC – One optimistic options strategist initiated a short put stance on Lloyd’s Banking Group PLC today, suggesting perhaps that shares of the underlying stock are not likely to collapse much further ahead of October expiration. Lloyd’s Banking Group shares fell as much as 8.9% to an intraday low of $2.88 in morning trading, but recovered slightly during the session to stand 5.05% off yesterday’s close at $3.16 a share as of 2:45 pm (ET). Across the pond, Lloyd’s Banking Group shares declined the most in London trading, falling 8.9% to 50.52 pence, as concerns over the creditworthiness of European financial institutions continues to weigh heavily on U.K. banking stocks. But, back to U.S. equity options on LYG, the contrarian investor opted to sell short 4,000 puts at the October $2.5 strike in order to pocket premium of $0.30 per contract. The trader keeps the full amount of premium received on the sale as long as LYG’s share price exceeds $2.50 through expiration day in October. The short sale of put options in this case implies the investor is happy to have 400,000 shares of the underlying stock put to him at an effective price of $2.20 each should the put contracts land in-the-money at expiration.

XLV – Health Care Select Sector SPDR Fund – A large chunk of out-of-the-money put options were purchased on the Health Care Select Sector SPDR Fund today as part of a delta neutral trade enacted by one cautiously optimistic options player. Shares of the XLV, an exchange-traded fund designed to produce investment results that correspond to the price and yield performance of the Health Care Select Sector of the S&P 500 Index, declined 0.65% to stand at $28.54 as of 3:35 pm (ET). It looks like the investor purchased up to 22,500 put options with a .31 delta at the September $26 strike for a premium of $1.08 per contract. The trader picked up the puts in conjunction with the purchase of stock at $28.25 a-pop. The delta neutral transaction is meant to offset potential losses faced by the investor should shares of the XLV continue lower because of the larger proportion of put options held by the trader. The purchase of shares of the underlying stock in combination with the put options indicates the investor…
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Homebuilders ETF Bull Ditches Massive Call Position in the Nick of Time

Today’s tickers: XHB, XLV, SHW, CSCO, AMR, DD & FRX

XHB – SPDR S&P Homebuilders ETF – It looks like one big options player threw in the towel on a massive bullish stance involving XHB call contracts today as shares of the underlying fund surrendered 2% to stand at $17.31 as of 1:00 pm (ET). The investor appears to have purchased roughly 50,000 calls at the January 2011 $22.5 strike for an average premium of $0.60 apiece back on April 22, 2010, when shares of the fund were trading at a volume-weighted average price of $19.04. Just four days after the purchase of the call contracts, the homebuilders fund’s share price touched a new 52-week high of $20.00. With the benefit of hindsight, it’s clear the trader would have been better off ditching the calls back on April 26, 2010. However, it seems the investor decided to sell the calls today – perhaps fearing the fund’s shares are only heading lower – for an average premium of $0.66 apiece to take in average net profits of $0.06 per contract. Again, with our hindsight coming in at a perfect 20/20, the trader made the right decision to sell the calls this morning because shares of the XHB are now down 3.1% to $17.11 as of 1:15 pm (ET), and the calls may now be sold for just $0.57 per contract. Waiting just a couple of hours more to sell the calls today would have resulted in a net loss rather than a net gain to the trader.

XLV – Health Care Select Sector SPDR Fund – Shares of the XLV, an exchange-traded fund that tracks the price and yield performance of the Health Care Select Sector of the S&P 500 Index, are trading 0.90% lower at $29.85 as of 12:35 pm (ET). Options traders populating the fund today are mostly placing bearish bets that shares of the underlying fund are set to decline ahead of May expiration. However, there was some notable contrarian activity in May contract calls, as well. Pessimistic players bracing for continued share price erosion picked up roughly 5,400 puts at the now in-the-money May $30 strike for an average premium of $0.56 apiece. Put buyers at this strike price make money if the XLV’s share price slips beneath the average breakeven point to the downside at $29.44 by expiration day. Buying interest continued at the more bearish…
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Analyst Upgrade Fuels Bullish Option Plays on Iron-Ore Giant Vale

Today’s tickers: VALE, MBT, FXI, NWL, CSE, VZ, XLV, CBY, HSY & SYMC

VALE – Vale S.A. – Shares of the world’s largest producer of iron-ore surged 2.75% in afternoon trading to stand at $31.18 after the firm received an upgrade to ‘overweight’ from ‘equal weight’ with a target share price of $39.00 at Barclays Capital. Indications of like-minded optimism are apparent in today’s option trading patterns on the stock. It looks like one investor initiated a put credit spread in the March contract. The bullish transaction involved the sale of 5,000 puts at the March $31 strike for a premium of $1.67 apiece, spread against the purchase of 5,000 puts at the lower March $28 strike for an average premium of $0.66 each. The credit spread results in a net credit of 1.01 per contract to the investor, who keeps the full premium received if VALE’s shares trade above $31.00 through expiration in March. The width of the spread indicates maximum potential losses on the trade of $1.99 per contract if shares of the iron-ore maker slump to $28.00 ahead of expiration.

MBT – Mobile Telesystems OJSC – The Russian provider of wireless communication services appeared on our ‘hot by options volume’ market scanner this afternoon due to near-term bullish options activity. Optimistic option plays fit neatly with the current 3.5% rally in shares of the underlying to $52.25 today. Traders sold 2,500 puts at the February $47.5 strike for a premium of $0.70 per contract, while the same number of calls were purchased at the higher February $55 strike for about $1.05 apiece. Another chunk of 2,500 puts were shed at the March $40 strike for approximately $0.33 each. All three transactions indicate bullish sentiment on Mobile Telesystems. If the trades are perhaps the work of one individual, the three-legged combination creates a clear directional play. In such a case, the investor will have paid a net $0.02 per contract for the calls by selling short the put options as described above. The long call stance positions the trader – in this example – to accrue profits if shares of MBT rally another 5.30% to surpass the effective breakeven price of $55.02 by expiration next month. We note that shares of the firm traded as high as $55.71 on October 21, 2009.

FXI – iShares FTSE/Xinhua China 25 Index Fund – Shares of the FXI, which invests assets…
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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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Ebay on the options auction block

Today’s tickers: EBAY, HUM, EEM, FXI, C, XLV, GM & LVS

EBAY Ebay Inc. – With its shares struggling to regain breakeven territory today and down 2% at $11.89, a large buyer of protective put options has emerged scooping up 20,000 contracts guaranteeing selling rights should the shares slip to $7.50 by January 2010 expiration. The investor paid a 67 cent premium to for 20,000 options potentially covering 2 million shares valued at almost $24 million at its current share price.

HUM Humana, Inc. – The health benefits company has become a hot-bed for options activity today, and its shares have jumped 10% to $25.30 in response to news of a potential buy-out situation fresh from the rumor-mill. Although little information is currently available in terms of specifics, it has been reported that it would “take a behemoth of a company to acquire Humana”, as they are currently the second-largest provider of health benefits that is backed by the United States Medicare program. Investors have witnessed major acquisitions lately, such as Pfizer’s buy-out of Wyeth and the more recent Merck/Schering-Plough agreement. Thus, traders wasted no time reacting to the bullish musings surrounding Humana and options volume amassed steadily this afternoon. Calls were traded six times to every put and the frantic activity boosted call premiums and implied volatility higher. Some investors were seen banking gains by selling calls in the March contract at the now in-the-money 25 strike price, where about 5,000 sold for as much as 1.90. Further along, at the March 30 strike price, about 9,300 calls were purchased for an average premium of 60 cents. Shares would need to rally an additional 21% from the current price in order to reach the breakeven point at $30.60 by next Friday. In the April contract bullish investors were seen buying calls at the 30 and 35 strikes. Traders shelled out 1.14 for each of the 2,000 calls purchased at the April 30 and 57 cents for each of the 1,800 coveted at the April 35 strike price. It is likely that until a buyer – and more importantly a buy-out price – is announced traders will continue to trade heavily in HUM and send implied volatility even higher than the current reading at 106% up from 86% this morning. Investors have left much on the table for speculators here since the Obama budget announcement caused selling across the sector…
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Phil's Favorites

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Zero Hedge

"The Scope For Pain Is Immense" - China's Consumer Default Tsunami Has Started

Courtesy of ZeroHedge View original post here.

One month ago we reported that "China Faces Financial Armageddon With 85% Of Businesses Set To Run Out Of Cash In 3 Months", in which we explained that while China's giant state-owned SOEs will likely have enough of a liquidity lifeblood to last them for 2-3 quarters, it is the country's small businesses that are facing a head on collision with an iceberg, because ...



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Biotech/COVID-19

The world before this coronavirus and after cannot be the same

 

The world before this coronavirus and after cannot be the same

Gettyimages

Courtesy of Ian Goldin, University of Oxford and Robert Muggah, Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

With COVID-19 infections now evident in 176 countries, the pandemic is the most significant threat to humanity since the second world war. Then, as now, confidence in international cooperation and institutions plumbed new lows.

While the on...



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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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Insider Scoop

'Psyched': Hawaii Considers Resolution For Shrooms, Champignon Eyes Ketamine Products

Courtesy of Benzinga

Psyched is a bi-monthly column covering the most important developments in the industry of medicinal psychedelics. We hope you follow us periodically as we report on the growth of this exciting new industry.

Champignon Brands Buys IP Company and Adds Ketamine and New Formulations To Its Portfolio

On March 19, Champignon Brands Inc. (CSE: SHRM) (OTC: SHRMF), a Canadian healt...



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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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Kimble Charting Solutions

Broadest Of All Stock Indices Testing Critical Support, Says Joe Friday!

Courtesy of Chris Kimble

One of the broadest indices in the states remains in a long-term bullish trend, where a critical support test is in play.

The chart looks at the Wilshire 5000 on a monthly basis over the past 35-years.

The index has spent the majority of the past three decades inside of rising channel (1). It hit the top of this multi-decade channel to start off the year, where it created a monthly bearish reversal pattern.

Weakness the past 2-months has the index testing rising support and the December 2018 lows at (2).

Joe...



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Chart School

Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

Just has we have birthdays, so does the market, regular cycles of time and price. The market news of the cycle turn may change each time, but the time is regular. Markets are not a random walk.


Success comes from strategy and the execution of a plan.















Changes in the world is the source of all market moves, to catch an...

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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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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.