Trade of the Day (MNST) 4.30.2012

Break-even:  I breakeven on this trade if MNST closes at $75 by May 18, 2012 and at $74.50 by June 15, 2012.

Unprofitable: I lose money on this trade if MNST closes at $75 by May 18, 2012 and above $75 by June 15, 2012.  This trade is a little more complicated than described above.  As I looked at the volatility I think I will make money on this trade as long as MNST stays within a $9 range within the next couple of weeks.

UPDATE 5.1.2012  Even though MNST has sold off more than $10 since I put this trade on, this spread is currently worth $.75.  I will leave it on for more potential upside knowing that the most I can lose on this spread is the amount I paid for it.

UPDATE 5.2.012  With a rally in MNST over the last 2 days and time on my side, this trade is currently worth $.90, but since I defined my risk vs reward, I will leave this trade for more upside potential.  

UPDATE 5.3.2012  With time on my side, this spread is still worth $.75 and I will continue to leave it on.

UPDATE 5.4.2012  With time on my side, this spread is still worth $.75 and I will continue to leave it on.

UPDATE 5.7.2012  With MNST hanging out arounf this $68 level, this is good for my trade and this spread is currently worth $1.10 and good for a double so far.   

UPDATE 5.10.2012  With a HUGE POP in MNST on earnings, this Spread has not got a triple and is currently worth $1.50.  I will leave this trade on until May expires and play with time on my side.  

UPDATE 5.11.2012  Another trade when time is on my side, I will leave this trade for 5 more days in order to try to squeeze more money out of this trade.

UPDATE 5.14.2012  I will leave this position on until at least Friday, but it is currently worth $1.60 for a triple

UPDATE 5.15.2012  A nice perfect landing at $74.95 would be perfect for this trade.  The closer MNST is to $75, the more this trade will be work. 

UPDATE 5.16.2012  This trade will be properly hedged, but not until Friday when the May options expire to squeeze more money out of this trade.

UPDATE 5.21.2012  The May 75 Puts that I was short tuned into LONG stock versus the June 75 Puts I was long, creating a LONG Call Strategy.  These Calls are worth $1 today, and I hedged them by selling stock today.  

UPDATE 5.22.2012  As I was frustrated with any LONG positions, when the stock was trading $70.50 I sold my Calls off at $1.25.  Taking profits and moving on.

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Morning Rage 4.30.2012

Microsoft (MSFT) and Barnes & Noble (BKS) announced a partnership today that would create a new subsidiary to house the digital and college businesses of BKS, as well as include a Nook application on Windows 8. BKS is 100% higher in premarket trade – jumping from $13.68 close on Friday to $27.36. MSFT is making a $300 million investment at a 17.6% stake of the subsidiary, valuing the company at $1.7 billion. This is a significant increase in value from a March offer from private equity that would have valued the digital and college business at $900 million.

Overnight, equity futures are slightly lower on the confirmation that Spain is officially in its second recession since 2009. This is likely to do little – as it is not really news so much as the confirmation of a long-known story. With unemployment at nearly 25%, it would be hard for any economy to experience growth. Nonetheless, it might cause some pause in the recent strength of U.S. equity markets. S&P front-month futures remain below 1,400, and are lower by 3 points this morning. 

Gold futures are slightly lower on the session. Bloomberg reported this morning that Gold is experiencing its third consecutive monthly decline – the most since three consecutive months in 2000. An interesting stat, I suppose, but considering that prices have increase 5 fold in the meantime and that Gold futures are up 6% this year, it holds less weight.

The Treasury market is relatively flat ahead of the official open. 30-year bond and 10-year note prices crept higher, by 0.2% and 0.1% respectively. The US$ Index is 0.15% stronger, as the EUR/USD lost 0.3% overnight. 

The NYSE Euronext (NYX) reported earnings this morning, missing EPS expectations of $0.49 by $0.02. Profit for the quarter was down 44%, a result of charges incurred during the merger and lower trading volumes. 

Halftime Report for 4.27.2012

Amazon (AMZN) continues to be one of the stellar performers of the day, rising over 14% at last glance. But, Expedia (EXPE) shareholders are feeling even better – as that stock is higher by 27% today after earnings. EPS came in at $0.26 versus expectations of $0.16.

With the slowdown in the session, we can take a look at some of the other happenings this week. Apple (AAPL) quieted skeptics with a blockbuster quarter, sending shares from around $560 to $610. AAPL shares have retreated slightly, but the stock is holding above $600 today. 

Since EUR/USD closed above its Ichimoku Cloud on the daily chart last Friday, we have expected prices to rise. A Monday sell-off was followed by rallies through the rest of the week to have the pair up 50 pips, a gain of just 0.3%. Other major currencies are posied to close the week relatively higher against the US$ as well. Gold has gained 1.3% this week.

Natural Gas has been the best performer this week, up 12%. This looks to be the first weekly advance for Nat Gas in six. Over the year, Nat Gas is still lower by 27.7% – and we do not expect that this marks a reversal.

Live Cattle are down 6.6% this week following revelations on Monday about a Mad Cow outbreak in California. 

Equity futures are higher by 2.3% (NASDAQ), 1.7% (S&P 500), and 1.5% (DJIA) for the week. 

Morning Rage 4.27.2012

Following yesterday’s disappointing weekly jobless claims – the latest in a series of disappointing data – today’s first estimate of Q1 GDP is perhaps more important to the long-term macroeconomic view than before. Consensus estimates point to a 2.5% headline GDP growth, led higher by a 2.2% increase in consumer spending and 2% increase in government spending. Numbers are released at 8:30 a.m. ET. At 9:55 a.m. ET, the University of Michigan Consumer Confidence figure will be released. 

In markets, equity futures are holding near the flat-line. S&P futures are trading at 1,397 and are sure to test the 1,400 level on a good GDP figure. DJIA futures are at 13,163, and NASDAQ futures are higher – up 0.2% on AMZN’s gain – to 2,525.50. 

Bond futures are higher this morning, with modest gains seen in the 30-year bond and 10-year note. The US$ Index is unchanged on the session, trading at 1.3230 against EUR. USD/JPY fell below the 81-figure, trading at 80.72 at present. 

Reporting earnings this morning are Altria (AIMC), Chevron (CVX), Ford (F), and Procter & Gamble (PG). F is up 1.6% following its report, and PG is down 2.5%.

Meadows on the Markets 4.26.2012

Gold futures, whose low was at the session open, rose 1% on the session. Other metals – Silver (+2.4%) and Platinum (+1.4%) – experienced larger gains.

Live Cattle futures have based following a precipitous decline based on Mad Cow news released early this week. For the session, Live Cattle futures were down slightly to $118.35. 

This afternoon and into tomorrow, we are waiting on EPS from Amazon (AMZN), Wynn (WYNN), and Zynga (ZNGA). Also, tomorrow morning, at 8:30 a.m. ET, the release of Q1 GDP will dominate traders minds. For us to break through 1,400 on the S&P futures, we are looking for a good number. If not, we would likely see a pull-back before the next leg higher.

Halftime Report for 4.26.2012

In earnings news, Whirpool (WHR) beat estimates this morning when it reported, but is down 5% on the session. During the conference call, WHR executives warned that they are not expecting consumer confidence to improve and will see growth through price increases, not increased sales. Dow Chemical (DOW) is also sharply lower after earnings, dropping 3.2% after reporting net income declined 30% year-over-year.

Natural Gas is up 10% this week and 2.4% today after inventory figures at 10:30 a.m. ET. Nat Gas is trading at its highest level since early April at $2.111. Crude oil is trading higher on the session as well, holding prices near $104.50. 

Also today, Treasury futures are higher. The 30-year bond prices are up 0.4% (yield of 3.12%), and 10-year note futures are higher by 0.25% (yield of 1.95%). The CBOE Volatility Index lost 1.8% today, and has dropped sharply over the past week. The VIX is at 16.52 at present. 

A host of companies report earnings tonight, including Zynga (ZNGA), Wynn (WYNN), and Amazon (AMZN). WYNN is up 3% today, while ZNGA has gained nearly 2%. AMZN is flat on the session.