Gerdau SA (GGB) is a Brazilian based seller and manufacturer of steel products. The company’s stock is currently trading around $7.70 in a 52 week range of $5.27-$9.68. The stock has been weak this year with share prices slipping over 14% year to date. Despite the stocks lackluster performance today’s session has seen some very bullish options flows. Early in today’s trading session a trader sold 3,200 GGB Mar 8 puts for $0.80. This is a very bullish order that indicates this trader strongly believes the stock will close above $8.00 on March expiration. The stock also looks good on a chart. Shares of GGB have not traded in bearish territory since late July according to the Ichimoku Cloud and the stock has been in a strong uptrend since Geradau last reported quarterly earnings on August 1^st. We believe that strength in the chart and bullish order flows present us with the opportunity for a covered call set up in GGB. (more…)

Fidelity National Financial, Inc (FNF) is a provider of mortgage, title insurance services and other diversified services. The company’s stock is currently trading around $27.85 in a 52 week range of $21.04-$28.09. The stock has been performing well this year adding nearly 19% to share prices year to date. This morning we have seen some bullish option activity in FNF that indicates traders expect the stock to head higher through March of next year. Early in today’s trading session a trader bought 6,000 Mar 28 calls for $1.45. This block represents volume in FNF 4.5 times the average daily option volume. We take this as a very bullish signal. The stock is also trading well on a chart and has been trending higher since the company reported quarterly earnings on October 25^th. Shares are also trading well above the Ichimoku Cloud with a strongly upward sloping future cloud indicating there can be more upside in FNF. With stock below its 52 week highs we believe the strong chart and unusual option activity in FNF sets up well for a long term bullish trade. We will look at out of the money call spreads in order to reduce initial capital outlay while preserving a great reward potential. (more…)

Crocs, Inc (CROX) is a manufacturer of men’s and women’s footwear that is sold in more than 90 countries worldwide. The company’s stock is currently trading around $13.05 in a 52 week range of $12.00-$17.95. The stock has been massively underperforming the market this year as it has fallen over 9% year to date. CROX is set to release their quarterly earnings report after the close today. Analysts are expecting earnings per share of $0.17 on revenues of $292 million.  CROX has had relatively mixed performance on earnings day over the past 8 quarters having rallied 4 times and sold off 4 times. On average the stock moves 9.7% on earnings day but has sold off over 20% twice in the past 4 quarters. CROX is technically trading in neutral to bearish territory according to the Ichimoku Cloud with the future cloud indicating there can be more downside in store for CROX. With the options market currently implying a move in CROX of $1.30 by November expiration we can calculate a downside target of $11.75. With relatively weak recent earnings day performance and lackluster technical we believe that CROX sets up well for a short ahead of earnings. (more…)

Tech giant Apple Inc (AAPL) is currently trading at $527.40 down around $2.45 in today’s session after reporting a better than expected fourth quarter earnings. The announcement has failed to impress investors and initially sent the stock spiraling as low as $503 in the after-hours session. Despite reporting record iPhone sales earnings per share fell nearly 8.5% over the same quarter last year. AAPL also released guidance for Q1 of 2014 with revenues falling near the high end of their previous estimates. AAPL has been in the news in recent weeks as a new line of iPads and Macs were introduced last week and as activist investor Carly Ichan continues to pressure AAPL CEO Tim Cook for a $150 billion stock buyback. Margins continue to be a concern for AAPL investors as net margins on new product lines introduced last week remain unknown. With uncertainty and the possibility of a buyback or deal with carrier China Mobile it seems likely that AAPL will continue to trade in a range. We will look at a trade setup that can profit if AAPL trades in a range while still giving the stock room higher or lower. (more…)

Diana Shipping Inc (DSX) is a provider of shipping transportation services around the world. Their specialty is dry goods such as commodities and coal. The company’s stock is currently trading around $11.70 in a 52 week range of $6.93-$13.24. The stock has performing quite well this year adding gains of over 60% year to date and over 67% in the past 12 months. Bullish order flows in the options market suggest that this trend could continue as institutional traders are betting on more upside in DSX. Earlier in today’s session a trader bought 2,250 DSX Jun 16 calls for $0.50. This is a $112,500 bet that shares of DSX will trade above $16 on June expiration. While this trader is betting on long term upside in DSX we believe there is an opportunity for a swing trade in DSX stock. Using the Ichimoku Cloud we will identify a level of support and use that as a stop. (more…)

A trader bought 1,500 RBCN Nov 9 Calls for $0.60 (18.6 times usual volume) with stock at $8.89
A trader bought 1,600 CAKE Dec 47 Calls for $1.44 (2.7 times usual volume) with stock at $47.24
A trader bought 5,000 KORS Nov 8^th 77-82 Call Spreads for $2.10 (2.1 times usual volume) with stock at $76.98
A trader bought 2,789 RHI Dec 40 Calls for $1.15 (5.8 times usual volume) with stock at $39.53
A trader bought 2,050 DSX Jun 16 Calls for $0.50 (2.4 times usual volume) with stock at $11.69

A trader bought 5,250 SMH Feb 38 Puts for $0.95 (8.3 times usual volume) with stock at $41.12
A trader bought 1,400 MCHP Nov 41 Puts for $1.35 (2.2 times usual volume) with stock at $40.29
A trader bought 1,000 EJ Nov 7 Puts for $0.15 (4.8 times usual volume) with stock at $8.95
A trader bought 6,900 HUN Nov 20 Puts for $0.10 (2.3 times usual volume) with stock at $23.09
A trader bought 2,000 IACI Nov 55 Puts for $1.00 (6.1 times usual volume) with stock at $57.82

A trader bought 6,900 HUN Nov 20 Puts for $0.10 (2.3 times usual volume) with stock at $23.09
A trader bought 2,000 IACI Nov 55 Puts for $1.00 (6.1 times usual volume) with stock at $57.82
A trader bought 5,000 KORS Nov 8^th 77-82 Call Spreads for $2.10 (2.1 times usual volume) with stock at $76.98
A trader bought 1,500 RBCN Nov 9 Calls for $0.60 (18.6 times usual volume) with stock at $8.89
A trader bought 1,600 CAKE Dec 47 Calls for $1.44 (2.7 times usual volume) with stock at $47.24

Cheniere Energy, Inc (LNG) is a company engaged in a variety of liquid natural gas related businesses. The company’s stock is currently trading around $39.40 in a 52 week range of $13.85-$39.98. The stock has been extremely strong this year as shares of LNG have rallied nearly 110% year to date and over 146% in the past 12 months. Recent action in the options market is suggesting that this run will continue through next year. Yesterday a trader bought 12,500 LNG Mar 40-50 call spreads for $2.68 and sold 7,500 Mar 31 puts for a $1.00. This is an extremely bullish trade that indicates this trader’s high level of conviction in LNG. The short put component of this trade is extremely risky and suggests that this trader has a strong belief the stock will continue higher through March expiration. The stock is also looking very strong on a chart. Shares of LNG are trading well above the Ichimoku Cloud but are just off of their 52 week highs. The cloud is strongly upward sloping ion the future indicating the stock should remain in in bullish territory. We believe that the unusual option activity yin LNG coupled with its strong chart present us with an opportunity for a long term trade in LNG. We will look at a long term options trade that will allow us to use the inherent leverage of options to take a bullish view on LNG in a very capital effective way. (more…)

Electronic Arts Inc. (EA) is a developer, publisher and distributor of video game software to be played on a variety of devices including consoles, personal computers and mobile devices. The company’s stock is currently trading around $24.45 in 52 week range of $11.90-$28.13. The stock has been outperforming the broader market this year posting gains of over 68%. The stock is also up over 105% in the past 12 months. EA is set to report their most recent quarterly earnings after the close today with analysts expecting EPS of $0.12 on revenues of $979 million. EA has been a strong earnings day performer over the past 6 quarters. The stock has rallied 5 of the past 6 earnings announcements with an average move of 7.4%. Although shares of EA are currently trading below the cloud we believe this strong historical earnings performance gives us a good opportunity to get long EA ahead of earnings. Currently the options market is implying a move of $2.00 higher or lower by November 1^st expiration. Using this implied move we can calculate an upside target of $26.50 for Friday’s close. Using this target we can now set up a trade.

Trade: Buying the EA Nov 1^st Weekly 25.5-26.5 Call Spread for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
Breakeven: $25.75