Trade of the Day (SPPI) 3.12.2012

Unprofitable: This trade is unprofitable if SPPI closes under $12.60 by April 20, 2012.  The most this spread can be worth is $1 minus the $0.40 I sold it for, so my maximum loss is $0.60.  I am risking $60 per 1 lot to make $40 on this spread.

Reason I Like This Trade: When SPPI was trading $13.05, I saw someone sell 5047 SPPI April 9 Puts for $0.8-.  This is very bullish activity, so I wanted to get LONG the DNDN.  I wanted to make a goof risk vs reward trade, so I thought this was a great way to play SPPI to the upside.  In Our “LIVE” Trading room talked about this trade in real-time, but have to be in the room to hear to LIVE.   

UPDATE 3.15.2012 I saw a customer sell more April 13 Puts in SPPI, so I was offering more of these Put Spreads for $.40, but I have not got filled yet. 

UPDATE 3.22.2012 With the stock trading right arounf $13, this Put Spread is still worth $.35, but time is still on my side.

UPDATE 4.9.2012 I am glad I sold Put Spreads instead of just Puts.  This stock has gotten hammered and is currently $10.50.  I defined my risk vs reward and realized that the spread could go to $1, so I am moving on to the next trade.

UPDATE 4.23.2012  This Spread expired worth the whole value, $1, won’t be trading $SPPI anytime soon, moving to the next trade.

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Halftime Report for 3.12.2012

However, this is a record steepness decrease and investors should be aware. On the other hand, is this the signal “long term” investors were waiting for to start putting money to work and go long stocks? NYSE short interest is the lowest it’s been in nearly four years. ES is currently down 4.50 points at the 1362.25 level. Crude Oil is down 1.22 points or 1.14% at $106.18. Silver is down $0.41 or 1.2% at the $33.80 level. The EUR/USD is at session highs trading at the $1.3147. Interesting bit of news I came across is Greece gas prices and unemployment rates are at record highs.

Banks release stress test results on Thursday March 15th, 2012. Banks capital to assets ratio looks healthy. Bigger Banks such as BAC, Citigroup, and JPM’s balance sheets in terms of profits, should be positive. Deleveraging in the US seems to be over and this bolds well for the bigger US banks. Perhaps time to buy Calls on the XLF ahead of the stress test results?

By: Greg Zimny

Movers and Shakers (MAKO) Up 1.3% to $38.54

Chart Glance – MAKOs chart glance looks like a broader, reverse head and shoulder-type pattern. MAKO is making “higher/ highs” and “lower/ lows.” Technical’s indicate that MAKO is in the early stages of up trending to higher prices and taking out recent 52 week highs ($43.00).
50 DMA ($35.03), 100 DMA ($33.27), 200 DMA ($32.91).
Support 1: $36.18 Support 2: $32.10

MAKO is a growing, innovative, med-tech name that specializes in surgical, “hip-replacements” and specialty-medical devices company. Investors should keep MAKO on their radar after Asahi Kasei buys ZOLL Medical for $2.2 Billion. Asahi Kasei pays a 24% premium to ZOLLs closing price on Friday at 93$ a share. MAKOs 4th Quarter results were quite impressive. Revenue rose 122% and the company sold around 10 hip-enabled RIO systems in Q4. MAKOs price target was raised to $50 from $37 at Piper Jaffrey, and keeps an “Overweight rating.” MAKO will present at the Barclays Capital 2012 Global Healthcare Conference in Miami Beach on Wednesday, March 14th, 2012(2PM ET). In my opinion, MAKO is a potential, “take-out” candidate and currently the MAKO March 40 Calls looks reasonably cheap trading around $0.35.

By Greg Zimny

Morning Rage 3.12.2012

It appears to be a “Risk-Off,” Monday, as Silver is selling off more than 2%. Gold is trading under the all important, psychological, $1700 level. Finally, Crude Oil is lower by 1.5% at the $106 level. In my opinion, Crude Oil Shorts need to play Crude with extremely tight stops. Tension in Syria, Iran, or Korea can escalate at given moment and send Crude LOCK LIMIT UP.

Monday Economic Events:
India IP (January)- Consensus estimates a rise to 2.1%.
Japan Machinery Orders (January)- Analysts expect a much better -7% December number.
Japan January New Orders.

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Cam at the Close 3.9.12

The SPY made a low of $137.13 this morning. Some notable names in trading today were Molycorp (MCP), Sears Holding Corp. (SHLD) and Apple (AAPL). MCP jumped 16% on news that the company was acquiring Neo Material Technologies. The street is obviously reacting well to this news by bidding up the stock. SHLD continues its meteoric rise and was up another 3% today. This rise is pretty amazing considering shares were left for dead in January, trading around $30. APPL was up AGAIN today. It feels so weird saying, but it does not surprise me. Shares were trading up 0.66% to $545.64 in late afternoon trading. The European finance ministers approved another $47 billion aid package to help Greece. This was approved by creditors as well as the swap holders. Have a good Friday everyone.