InterMune, Inc (ITMN) is a biotechnology and medical research company focused on developing therapies for the treatment of lung conditions. The company’s stock is currently trading around $31.05 in a 52 week range of $8.21-$37.22. The stock is now higher by over 261% over the past 12 months with stock prices nearly doubling during today’s trading session. This large move higher was telegraphed by some unusual options activity earlier this month.On February 10th a trader sold 9,900 ITMN May 8 puts to buy 9,900 of the May 15 calls for a net debit of $2.78. With stock at $31.05 this spread is worth $16.05. At that level this trader profits over $15.8 million in this trade. This was the biggest trade in the past 10 days and did a good job of leading the move higher. The options action in ITMN and subsequent move higher in the stock is another great example of the value of reading the tape.

Rovi Corporation (ROVI) is a company that focuses on providing content discovery, video delivery and advertising through a number of platforms. The company’s stock is currently trading around $24.70 in a 52 week range of $16.00-$26.55. The stock performed very well last year with shares gaining over 38% in the past 12 months. Options action during today’s trading session would suggest that traders believe the stock will continue this rally through April expiration. Early in the session a trader bought 1,077 ROVI Apr 25 calls for $1.60. This is a very bullish trade that also represents volume nearly 4 times the average daily option volume in ROVI. Shares of ROVI are also trading well above the Ichimoku Cloud and the future cloud is thick and upward sloping. We believe that strong technicals and bullish order flow provide a great signal for a long setup in ROVI.

Trade: Buying the ROVI Apr 25 Calls for $1.55
Risk: $155 per 1 lot
Reward: Unlimited
Breakeven: $26.55

Southwestern Energy Company (SWN) is an independent oil and natural gas company with a focus on exploration and production. The company’s stock is currently trading around $42.35 in a 52 week range of $31.91-$43.51. The stock made a new 52 week high yesterday extending its year to date rally to about 7.5%. Traders seem to believe that SWN’s strength will continue as we have seen some very large bullish orders hitting the tape today. Earlier in the trading session a trader bought 15,000 SWN Jun 47 calls for $1.05. This is a $1.575 million bet on more upside in SWN. With shares of SWN trading just off of their 52 week highs and well above the Ichimoku Cloud we believe that order flow this large signals for a long opportunity in SWN.

Trade: I bought the SWN Jun 47 Calls for $1.10
Risk: $110 per 1 lot
Reward: Unlimited
Breakeven: $48.10

OSI Systems, Inc (OSIS) is a designer and manufacturer of electronic components and parts for the healthcare, aerospace, security and defense industries. The company’s stock is currently trading around $61.85 in a 52 week range of $39.00-$78.50. The stock has under performed the market over the past year with shares gaining only 8.12%. Recent price action has been more bullish however and options action in the name during today’s session indicates that traders believe this trend will continue through July expiration. Early in the session a trader bought 1,421 OSIS Jul 65 Calls for $5.62. This is a very large block to trade in OSIS. This block represents volume over 13 times the average daily option volume in OSIS. With the stock trading above the Ichimoku Cloud and the future cloud sloping higher we believe that order flow this strong is a great signal for a long in OSIS.

Trade: I bought the OSIS Jul 65 Calls for $5.70
Risk: $570 per 1 lot
Reward: Unlimited
Breakeven: $70.70

To See Our TradingView Post Click Here

Rovi Corporation (ROVI) is a IT services and consulting firm with a focus on digital entertainment. The company’s stock is currently trading around $23.85 in a 52 week range of $16.00-$26.55. The stock has been performing well over the past year with shares rallying over 32% in the past 12 months. Options action in ROVI during today’s trading session would suggest that traders believe this trend will continue and that ROVI will be strong through April expiration. Late in the session a trader bought 2,418 ROVI Apr 25 Calls for $0.93. This is a very large block that represents volume more than 11 times the average daily option volume in ROVI. Shares of ROVI are also trading well above the Ichimoku Cloud and the future cloud is sloping higher suggesting there is more potential upside in ROVI. We believe that this strong order flow and bullish chart set up signals for a long position in ROVI.

Trade: I bought the ROVI Apr 25 Calls for $1.02
Risk: $102 per 1 lot
Reward: Unlimited
Breakeven: $26.02

Comstock Resources Inc (CRK) is a oil and natural gas exploration and production company with most of its operations in Texas and Louisiana. The company’s stock is currently trading around $20.00 in a 52 week range of $13.12-$20.12. The stock has performed very well in the past year with shares gaining over 45% in the past 12 months. Options action in CRK during today’s trading session would suggest that traders believe there is more upside to come. Earlier in today’s session a trader bought 6,000 CRK Jun 20 Calls for $1.80. This is a very bullish trade and this block represents volume nearly 5.5 times the average daily option volume in CRK. Shares of CRK are also trading well above the Ichimoku Cloud with the future cloud beginning to slope higher. This indicates the stock is trading in bullish territory and that there could me more upside in the future. We believe that the bullish order flow in CRK and the strong chart are more than enough signal for a long position.

Trade: I bought the CRK Jun 20 Calls for $1.80
Risk: $180 per 1 lot
Reward: Unlimited
Breakeven: $21.80

Xylem Inc (XYL) is a provider of pumps and pumping equipment for water and wastewater applications. The company’s stock is currently trading around $38.35 in a 52 week range of $23.61-$38.50. The stock has performed well over the past year with shares rallying nearly 36% over the past 12 months. The stock made a new all-time high today and is up nearly 1% on the day. Options action during today’s trading session also suggests that this trend could continue through July expiration.  Earlier in the session a trader bought 1,375 XYL Jul 40 calls for $1.80. This is a very bullish bet and this block represents volume nearly 20 times the average daily option volume in XYL. With stock trading at a new 52 week high and well above the Ichimoku Cloud we believe that XYL is setting up well for a long position.

Trade: I bought the XYL Jul 40 Calls for $1.80
Risk: $180 per 1 lot
Reward: Unlimited
Breakeven: $41.80

Tesla Motors, Inc (TSLA) is a designer and manufacturer of electric cars and electric vehicle components. The company’s stock is currently trading around $202.50 in a 52 week range of $33.80-$205.50. TSLA opened at a new 52 week high before selling off slightly as buyers seem to be coming into TSLA stock ahead of their quarterly earnings report set to be released on February 19^th after the market close. Over the past 8 quarters the stock has rallied 5 times on earnings day and has sold off 3 times with an average move of 10.6%. Currently, the options market is implying a move of $24.00 by this Friday’s expiration. With shares of TSLA trading well above the Ichimoku Cloud and the future cloud sloping strongly upward we believe that TSLA is setting up well for a long ahead of earnings. Using the implied move we can calculate an upside target of $226.50 for expiration and use that level to set up an options strategy.

Trade: Buying the TSLA Feb 220-225 Call Spreads for $1.40
Risk: $140 per 1 lot
Reward: $360 per 1 lot
Breakeven: $221.40

REASON PREVAILS IN D.C.? MAYBE!

Yesterday Congress voted to raise the debt ceiling without preconditions. The importance of this event, done without past histrionics, is huge. Leader Boehner and other Republican leaders allowed this to happen with only about 12% voting support from Republican representatives. A contrary result would have been very bad news for the markets.

Today, Tea Party groups are attacking both Boehner and Republicans for allowing the debt ceiling to rise.

On Monday, The US Chamber of Commerce encouraged Republicans to raise the debt ceiling in order to help confidence in the economy, the markets, and the country. Only 12% of Republicans followed their wishes. Does this indicate a split between the Chamber and Republicans? Probably not. But it does shine a light on the infighting in the Republican Party between the pro-business wing and the anti-many things Tea Party wing.

The Tea Party has threatened challenging Republicans in upcoming primary elections. The Chamber and other groups have vowed to defend pro-business Republicans in elections. How this plays out over the next few months will greatly affect the political landscape of the country.

Is it just me, or did the market tanking of January and early February coincide with debt ceiling concerns? And, has the market soared when it became clear that Mr. Boehner would get it raised?

Attributing market reactions to debt ceiling events is probably not totally correct. But debt ceiling concerns have likely contributed to market sentiment—both pro and con.

Yesterday’s action in Congress is hopefully a sign of reason starting to prevail in Washington. Recent compromises on the Budget and the Farm Bill bolster these hopes. The country needs a respected, rational Republican party that does more than just obstruct, obstruct, obstruct—and crush the markets in the process. Hopefully, recent events have signaled reason and sanity gaining momentum.

Floyd at KOTM

Follow me on Twitter @USKOTM