Apple is on a tear today up 100 pts since reporting earnings. Apple Feb 485 Calls today are up an incredible 3000%. Apple is responsible for 90% of intraday Nasdaq gain. Zynga is down 12% on earnings. We saw people buying FEB 18 $12 Puts at $.30. We have seen call buyers in names like Cake, LIZ, and TER but nothing that perks interest.
By: Greg Zimny
In US equities this morning, Soros buys a big chunk of his gold position as an inflation hedge as Paulson sells his stake to raise capital for his clients. The funny thing is, everything Paulson has sold in q4 last year has been the big movers in Q1. For example, Paulson sold his BAC common stake (64 million shares), Citi common stock (25 million shares), and reduced his Wells Fargo position. Comcast beats analysts’ expectations and revenue estimates. Comcast’s revenue rose 3% or $15 billion. Also, its internet subscriptions have increased and Comcast raised its dividend by 44%. Comcast is trading higher in the pre-market by 3%. Zenga reported earnings that weren’t up to par with analysts’ expectations. Many analysts believe the stocks multiple will continue to decline and that it’s booking guidance was light. Many investors are waiting for FB IPO to get true valuation of FB and Zenga. Zenga is trading 6% to the downside.
The most I can lose on this trade is the amount I paid for these Calls, $.56
Reason I like this Trade: Using unusual options activity again, I noticed a customer sell June 2.5 Puts in ARRY for $.25. I went $.30 bid on these Puts and could not get filled. I put in a $.25 bid on the Puts this afternoon and got filled. I want to get long ARRY with a possible POP back to $3.20, so I turned these Puts into Calls buy buying stock against them. The Price of a Call w/o dividend or interest in Put Price and Stock Price minus Strike Price. I paid $.25 for these Puts and bought $2.81 stock, so $.25 + $2.81 – $2.50 gives me a $.56 Call. This stock only has to rally back to above $3 by June in order for this Trade to be a HUGE winner. Stay tuneds for more updates.
UPDATE 2.15.2012 These Calls are worth about $.55 and the stock have been moving less than in previous months. Since I have until June, I will wait it out until I get an upside POP.
UPDATE 2.16.2012 The stock did rally up to $2.87 and it got me real excited, but now the stock is back down to $2.80. Someone sold more June 2.5 Puts today for $.25 wanting to get me even more bullish and I will continue to play to the upside.
UPDATE 2.21.2012 This trade has not been a winner, but has not been a loser, but I have over 4 months until a POP in this stock so I will leave this trade on until further notice.
UPDATE 2.23.2012 With stock selling off $.04, these Calls are worth $.55. I would rather see the stock move up and down, down and up instead of flat lining. This is a BIG position, but I think ARRY could consoldate here then get a POP higher to $3.20
UPDATE 3.9.2012 With the stock rally higher and the options market being very illiquid, I sold stock at $2.97 and $3.07. This is a winning trade, but nothing a winner until the position closed.
Read more about reaso by keeneonthemarket.com
Avon Products posted weaker than estimated results today as sales decreased in every market except Latin America. Revenue fell 4% or 3 billion dollars. However, Mexico sales were up 12%. Volume Tuesday was huge and Avon is to continue paying dividends in 2012. I wonder if this stock will still trade up after reporting bad earnings and stating a crappy outlook. Activision Blizzard beat on earnings and raises dividend. Activision is now trading at a 13x P/E. Will it ever trade at a 20x P/E again? In my opinion, Activision is a steal right now for long term investors. The only issue right now is whether stocks have huge market cap. Michael Kors up big today after beating analysts’ earnings expectations. Kors hit a fresh 52 week high today up 23% at $42 a share. Kors has a market cap almost 10x its revenue. Zynga is up 5% today in anticipation of its earnings announcements after the close today. Has someone possibly leaked a little bit of the earning news?? Nevertheless, look what GRPN PPS did after reporting.. We are seeing a lot of people selling the Feb $15 Calls at $.95 today.