Halftime Report for 2.9.2012

In other news, we see AAPL raging to the upside by $17 and approaching 500$ level shortly. Analysts price targets have all risen and ipad 3 should be a positive growth driver. I think this AAPL momentum to the upside is proven and you cant making money shorting APPL. Somtimes the best trade is no trade.

We have not seen any unusual option activity today but we have seen a huge volume Feb 35 Call buyer of EXPE. We have seen EXPE rally more then 2.5% to the upside. However, with poor results from TRIP this call buyer could be selling stock against its Calls creating a straddle. I will put on a EXPE position minutes before the closing bell. More unusual options activity we have seen is call buyers in solar names such as JASO,SOL, TSL. KOTM took profits on the calls they were long and we are currently flat solar stocks

Morning Rage 2.9.2012

After the Bell on Wed:
Cisco(Csco)-had a huge qtr, q2 eps .47 vs.43 est.  11.5b vs 11.2B q2 revs estimate. Cloud computing will definitely be a growth driver in 2012.   Trading up 3% after hours.Wmfi- great report. Priced to perfection IMO. Beat bottomline by .05 cents, beat top line, and increased guidance.. street loves it,good forward looking guidance.Diamond foods down 35% afer in the extended hours do to bad accounting practices.

Cam at the Close 2.8.12

It is all about stock picking in 2012 instead of being long/short the overall market when all asset classes were rising and falling in tandem. In 2011, the markets could not rally without the banks. In 2012, this has not been the case as the banking sector has been one of the best performers. Bank of America (BAC) is up over 40% since January 1st. It closed up 3.44% to $8.12 today. It found resistance at $8.15 in afternoon trading which is the R3 pivot point and a few cents away from the 200-dma at $8.18. Citigroup (C) also traded higher today and closed up 3.51% to $34.23. Citigroup, Wells Fargo, AIG, Goldman Sachs and U.S. Bank are all trading above their 200-dma’s. Bruce Berkowitz also came out today and described his “value” thesis for Bank of America. This could have helped the move today in BAC. Euro finance ministers are meeting in Brussels tomorrow to discuses an emergency rescue plan for Greece. I think much of this negative information is already priced in and the market is disregarding it. Spot Gold closed down -0.68% to $1733.62, Crude closed up +0.57% to $98.97 and Silver closed down -0.50% to $33.97.

Earnings Trade of the Day (WFM) 2.8.2012

Reason I like this Trade: I looked at the amount of movement that Whole Foods has had over the last 4 quarters and it has been very tight.  Here is a performance of how much the stock has moved the next day after earnings.

11/03/11   $70.56   $69.15  $-1.41 (-2.0%)
07/28/11   $65.43   $67.14  $+1.71 (2.6%)
Average Magnitude of Post Earnings Return 2.3%

The volatility is exploding and I think this is a great risk vs reward trade that I can’t pass on.  

UPDATE 2.9.2012 This trade looked a lot better last night when the stock was trading $77.50. The stock is currently trading $79.70. Looking to take off a partial position for $1.50. The more the stock sells off the more profitable. Stay tuned for more updates.

UPDATE 2.10.2012 I sold this spread for $2 and it is currently worth $1.90, I am looking to take it off for a profit, because the more the stock rallies and closer to expiration the less profitable this trade will be.  

UPDATE 2.13.2012 With the stock market rallying and Whole Foods selling off, I am trying to get out of this trade.  It is currently worth about $1.80, so it is a small winner, but I would like to take the trade off and move on.

UPDATE 2.14.2012 I TOOK 1/5 of my position off at $1.88.  I am looking to take the rest off, because this position is long front month premium that would expire on Friday worthless.

UPDATE 2.16.2012 Yesterday I sold the February 80-77.5 Put Spread for $.50 and today I bought my short Feb 75 Puts for $.01, so this trade was a small loser, on to the next trade.  

Read more about february by keeneonthemarket.com


Earnings Trade of the Day (AKAM) 2.8.2012

Reason I like this Trade: I looked at the amount of movement that AKAM has had over the last 4 quarters and it has been very wide.  Here is a performance of how much the stock has moved the next day after earnings.  
10/27/11   $23.78   $27.45  $+3.67 (15.4%)
07/28/11   $29.48   $23.84  $-5.64 (-19.1%)
04/28/11   $40.98   $34.94  $-6.04 (-14.7%)
02/10/11   $47.99   $40.75  $-7.24 (-15.1%)
Average Magnitude of Post Earnings Return 16.1%

When I see movements like this, I want to be a buyer of premium instead of a seller.  I am betting that AKAM will make a HUGE movement on earnings and it has been seen that the high flyers have been moving more than the big BLUE chip stocks.  This is why I put this trade on even though I am risking more than other trades.  

Please feel free to email me with any questions at  [email protected].

UPDATE 2.9.2012 I sold 2/3 of my stock last night at $38.80 and the rest at $38.90 today. The calls will be worth $4.90 w stock trading at those levels. I am left w Feb 34 puts and I will be looking to sell at any profit possible.

UPDATE 2.10.2012 I am glad this trade worked out, because Visa and Linkedin did work out so well.  This straddle that I bought at $3.97 I sold out at $4.90 and I have free puts.  Moving on to the next trade.

UPDATE 2.14.2012 These February 34 Puts are virtually worthless, so I have locked in my profits and its on to the next trade.

Read more about total by keeneonthemarket.com

Earnings Trade of the Day (V) 2.8.2012

Reason I like this Trade: I looked at the amount of movement that Visa has had over the last 4 quarters and it has been very tight.  Here is a performance of how much the stock has moved the next day after earnings.  
10/27/11   $92.02   $94.40  $+2.38 (2.6%)
07/28/11   $87.75   $86.92  $-0.83 (-0.9%)
05/06/11   $78.70   $79.41  $+0.71 (0.9%)
02/03/11   $72.09   $71.63  $-0.46 (-0.6%)
Average Magnitude of Post Earnings Return 1.3%

UPDATED 2.9.2012 With the stock rallying more than I thought it would, this spread has expanded and is currently worth $2.70.  I will leave this trade on until expiration.

UPDATE 2.10.2012 With the stock market down and Visa up, this trade is not working out as planned.  I have two choices, I could either sell next week’s Feb 110 Puts to try to recover my losses or I could to take the trade off and move on.  I will decide by the end of day, hopefully I can get a sell-off in the stock.

UPDATE: 2.14.2012 This spread ended up worth $4, but I left a short stock position on, when the Feb weekly 110 Calls were in the money and the Feb 1155 Calls closed worthless last week.  This left me with a short stock position, and I bought stock yesterday for $113.03 making the Call Spread Iron Condor I sold for $1.65 worth $3.03.  Moving on to the next trade.

This helps me conclude that I would rather be a seller of premium than a buyer.  When I looked at this I thought this spread was a great way to define my risk vs reward and make a bet that V does not move over 4% by Friday despite a strong earnings from Mastercard, MA.   

 

Please feel free to email me with any questions at  [email protected].

Trade of the Day (ITW) 2.8.2012

Reason I like this Trade: To be honest, I like this trade, because a saw a customer come into the market and buy Calls in ITW on the March 55, 57.5, and 60 line.  I usually do not like to overpay for options, because the customer bought these ITW March 67.5 Calls for $.75, but I looked at the volatility and I realized how cheap it was, around 20.5%, so I thought it was good enough to jump in and buy Calls in ITW.  I will be looking to piece out of this position if the stock rallies higher.  Please feel free to email me with any questions at  [email protected].

UPDATE 2.9.2012 I sold 15% of my position at $1.05 leaving me with an 85% position in ITW. These Calls are currently worth .85 cents and im hoping for some more upside in ITW.

UPDATE 2.10.2012 These Calls are currently worth $.75 and I will leave it on for more upside.

UPDATE 2.14.2012 These Calls are currently worth $.85, so this trade is a small winner, might look to Punt it on a POP higher.  

UPDATE 2.15.2012 This will be the same update as yesterday as these Calls are still worth $.85 and I am still LONG them.

UPDATE 2.16.2012 Getting bored very easily is a flaw and advantage at the same time.  I want to take the best and highest probable trades, and I did not like the way ITW was trading so I punted these Calls at $.85 and took a small profit.  

Read more about money by keeneonthemarket.com