A trader sold 4,000 PKT Dec 15 Calls for $0.50 (8.2 times usual volume) with stock at $14.96
A trader bought 3,400 CCJ Dec 20 Calls for $0.40 (2.8 times usual volume) with stock at $19.37
A trader bought 977 KND Feb 15 Calls for $1.00 (3.3 times usual volume) with stock at $15.19
A trader bought 6,040 AMLP Jan 17 Puts for $0.25 (4.3 times usual volume) with stock at $17.62
A trader bought 5,000 IBKR Dec 22 Puts for $0.30 (5.5 times usual volume) with stock at $22.84
The Manitowoc Company, Inc (MTW) is a capital goods manufacturer operating in cranes and food-service equipment. The company’s stock is currently trading around $19.70 in a 52 week range of $12.82-$21.87. The stock has been outperforming the market adding more than 25% to share prices year to date. Recent activity in the options market indicates that traders believe this trend will continue through next year as traders are placing very large bets on MTW. On November 13th a trader bought 15,400 MTW Jan 2015 30 Calls for $0.90. This is a nearly $1.9 million bet on further upside in MTW. The MTW chart is relatively neutral with stock trading inside the Ichimoku Cloud, indicating the stock is not trending. Despite the lackluster technical in MTW we believe the activity in MTW is strong enough to justify a long term set up. We will look to get long MTW with a longer time frame. (more…)
The Home Depot, Inc (HD) is a home improvement retailer operating warehouse style stores selling assortments of building materials and home improvement goods. The company’s stock is currently trading around $79.90 in a 52 week range of $60.21-$81.56. The stock has been outperforming the market this year rallying over 29% year to date. The company is set to release its most recent quarterly earnings report tomorrow before the market open. Analysts are expecting HD to report earnings of $0.90 per share on revenues of $19.1 billion. Historically, HD is a strong performer on earnings day having rallied 5 of the past 8 quarters with an average moved of 2.5%. HD is trading relatively well on a chart as well with shares trading just off of their 53 week highs and well above the Ichimoku Cloud. We believe that both the historical performance in HD and the strong technical present a great opportunity to get long HD ahead of earnings. With the options market currently implying a move of around $2.75 by this Friday’s expiration we will look to set up a trade with a target around $82.75. (more…)
Twitter, Inc. (TWTR) options listed for the first time today and opened for trading with this morning’s opening bell. TWTR stock is trading around $0.80 lower on the day at $43.90. The stock has been trading in a range of $39.40-$50.09 since its IPO. It appears that TWTR implied volatility is trading at a premium to other names in the space like FB and LNKD. This could provide us with an opportunity to sell what look like relatively expensive options in TWTR. Picking strikes to sell and which strategy to use can be tricky as there is only 7 trading days’ worth of price action and data. This means that technical indicators are not going to be much use to us. Looking at TWTR options for next week’s expiration we can see that the at the money straddle is trading around $2.90. Using this straddle price we can calculate implied closes for TWTR and use them to set up a trade. This method works best here because of the lack of technical data. With the options market implying TWTR stock to close at either $46.90 or $41.10 on next Friday’s expiration we will now set up a trade based on those targets. (more…)
A trader bought 3,000 EPD Dec 65 Calls for $0.15 (2.5 times usual volume) with stock at $61.50
A trader bought 2,100 SWIR Dec 20 Calls for $0.70 (2.5 times usual volume) with stock at $18.67
A trader bought 2,500 ENOC Dec 20 Calls for $0.30 (12.2 times usual volume) with stock at $18.17
A trader bought 6,000 JIVE Dec 12.5 Calls for $0.30 (2.8 times usual volume) with stock at $11.21
A trader sold 20,000 CDNS Feb 12 Puts for $0.35 (15.5 times usual volume) with stock at $12.70
A trader bought 5,500 NIHD Jan 2015 3 Puts for $1.20 (3.4 times usual volume) with stock at $2.92
A trader bought 2,300 WU Jan 60 Puts for $0.50 (2.4 times usual volume) with stock at $16.48
A trader bought 950 MAR Jan 47-43 Call Spreads for $1.20 (2.4 times usual volume) with stock at $47.23
A trader bought 1,800 CALL Jan 2015 10 Puts for $2.05 (3.7 times usual volume) with stock at $12.57
A trader bought 3,000 EPD Dec 65 Calls for $0.15 (2.5 times usual volume) with stock at $61.50
A trader bought 2,100 SWIR Dec 20 Calls for $0.70 (2.5 times usual volume) with stock at $18.67
A trader bought 6,000 JIVE Dec 12.5 Calls for $0.30 (2.8 times usual volume) with stock at $11.21
A trader sold 20,000 CDNS Feb 12 Puts for $0.35 (15.5 times usual volume) with stock at $12.70
A trader bought 5,500 NIHD Jan 2015 3 Puts for $1.20 (3.4 times usual volume) with stock at $2.92
Tyson Foods, Inc (TSN) is a food production company that distributes chicken, beef, and pork products along with other prepared foods and related products. The company’s stock is currently trading around $28.85 in a 52 week range of $16.55-$32.40. The stock has massively outperformed the market this year adding over 48% to share prices year to date. TSN is set to report their most recent quarterly earnings results on Monday morning before the market open. Historically, the stock is relatively strong on earnings day. The stock has rallied 6 of the past 8 quarters on earnings day with an average move of 4.6%. On a chart the stock is relatively weak with shares trading below the Ichimoku Cloud and the future cloud sloping downward. Despite the weakness in the chart we believe that the historical movement in TSN is strong enough to justify a long ahead of earnings. When trading earnings it is important to understand that catalyst movement can be completely different from the overall trend. With the options market currently implying a move of around $1.90 by December expiration we can look to set up a trade with a target around $30.75. (more…)
Market Vectors Russia ETF (RSX) seeks to track the performance of the DAXglobal Russia+ Index (DXRPUS). This index is comprised of publically traded companies based in Russia. Shares of RSX are currently trading around $28.65 in a 52 week range of $23.94-$31.15. RSX has been underperforming the broader us equity market this year with shares falling 4.25% year to date. Despite this weakness options traders have been making some very bullish bets on RSX. On Wednesday traders came in and bought several large blocks of Dec 29 calls for $0.40 to $0.45. These trades took place at volume greater than open interest in any line in Jan expiration. Open interest in the Dec 29 call line has now swollen to over 12,000 contracts. This action is very bullish and serves as a signal for a long setup in RSX. We want to look at a covered call set up in RSX. (more…)
WE ARE ALL CONNECTED: Cisco, Walmart, and the World
There is amazing connectivity in the world around us. From Bentonville, AK to Beijing to Silcon Valley, CA, actions in one place have a reaction in another. Specifically, government decisions can have repercussions far beyond their intended effects. When a person starts to realize this, he or she becomes a smarter, more sophisticated investor.
Two recent examples show this clearly and specifically. And more examples are right around the corner, waiting to happen.
The first example involves food stamps. For years R’s have been trying to cut food stamps, believing it to be a costly welfare program. However, when a food stamp enhancement ran out last month, one of the main entities hurt was Walmart (WMT), whose sales are made to millions of food stamp recipients. Other retailers who also cater to “low price shoppers” were similarly hurt. It is likely that the R’s pushing against food stamps were not trying to hurt Walmart They likely had not thought through all the economic effects of cutting food stamps. But what happened, happened. And there is a lesson to be learned there.
Likewise, some D’s were absolutely thrilled by the recent “whistleblowing” of NSA activities by Edward Snowden. However, this revelation had many bad effects, one of which was clearly market related. Both IBM and Cisco (CSCO) reported that their earnings from China were down drastically, because the Snowden episode made China less likely to buy American. That’s right, Snowden made China more suspicious which directly hurt stockholders of IBM, CSCO, and similar companies. Connectivity at its most powerful—and in this case not good power at all.
The most classic example of connectivity is sequestration. Initially agreed on by both the D’s and R’s, it is now heralded by Tea-publicans as an effective tool to cut government spending. But, as almost all agree, sequester is not efficient. Sequestration’s “across the board” methodology creates many unintended, harmful results, both for the economy and for certain stocks. For example, the 2014 version of sequester will hit hard on Defense spending. Many D’s and R’s acknowledge that it will cause a substantial setback to our national defenses.
Defense stocks will also be hurt–perhaps substantially. It is really weird to see many R’s—typically strong supporters of national defense—touting sequestration. But they are. And both our economy and many defense stocks will bear the resultant pain.
In sum, connectivity between politics and the market is here to stay. Its bad effect on individual stocks can readily occur. Moreover, it is not the sole province of either D’s or R’s—both parties must deal with it. But knowledge that such connectivity exists should be taken into consideration by both investors and by our politicians.
Of course, for politicians to do so, they will have to start thinking with their brains, instead of other parts of their anatomy.
Follow me on Twitter @USKOTM.