Bearish Activity

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A trader bought 1,100 JNY Dec 13 Puts for $0.60 (4 times usual volume) with stock at $13.63
A trader bought 2,900 AU Jan 2016 Puts for $2.10 (3.1 times usual volume) with stock at $15.29
A trader bought 3,000 JNS Mar 10 Puts for $0.65 (9.6 times usual volume) with stock at $10.46
A trader bought 600 AMED Nov 14 Puts for $0.40 (7.7 times usual volume) with stock at $14.05

Unusual Option Activity

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A trader bought 3,000 JNS Mar 10 Puts for $0.65 (9.6 times usual volume) with stock at $10.46
A trader bought 600 AMED Nov 14 Puts for $0.40 (7.7 times usual volume) with stock at $14.05
A trader bought 1,100 HP Jan 62.5 Calls for $15.40 (2.4 times usual volume) with stock at $77.73
A trader bought 750 FMC Nov 65 calls for $8.00 (12.9 times usual volume) with stock at $72.67
A trader bought 3,395 CHKP Jan 65 Calls for $1.25 (6.6 times usual volume) with stock at $61.81

Covered Call of the Day: TUR

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iShares MSCI Turkey ETF (TUR) is an ETF that seeks to track the return of the MSCI Turkey Investable Market Index. This index measures the performance of equity markets in Turkey. Shares of TUR are currently trading at $52.35 in a 52 week range of $47.36-$77.38. The fund has been underperforming the U.S. equity market this year with shares falling nearly 22% year to date. Despite this weakness options traders made some very bullish bets on TUR in yesterday’s trading session. Early in the session a traders sold 2,575 TUR Dec 49 puts for $0.80. This is a very bullish bet that involves a large amount of risk meaning this trader’s conviction is relatively high. With this position a trader is indicating a strong belief that price will be above $49.00 on December expiration. We believe that this order is a great signal for an opportunity for a covered call in TUR. (more…)

Long Term Trade of the Day: AIR

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AAR CORP (AIR) provides products and services to commercial aviation and defense markets. The company’s stock is currently trading around $30.30 in a 52 week range of $13.27-$30.81. The stock has been massively outperforming the market this year adding more than 62% to share prices year to date. Options action in yesterday’s session would indicate that traders believe this run will continue through February of next year. Early in the session a trader bought 3,500 AIR Feb 35 calls for $0.55. This is an extremely bullish bet with an aggressive upside target. The stock is also trading very well on a chart with shares trading well above the Ichimoku Cloud. The future cloud is also strongly upward sloping suggesting the stock could continue higher. With stock trading just off of its 52 week highs and strong technical we believe that this order serves as confirmation of an opportunity to profit in AIR to the long side. (more…)

Bullish Signals

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A trader bought 2,100 TC Dec 4 Calls for $0.10 (5 times usual volume) with stock at $3.14
A trader bought 1,985 BGC Feb 31 Calls for $1.05 (2.4 times usual volume) with stock at $28.32
A trader bought 2,900 TSM Jan 20 Calls for $0.15 (5 times usual volume) with stock at $17.75
A trader bought 2,200 TIF Dec 80 Calls for $3.20 (3.1 times usual volume) with stock at $80.48
A trader bought 1,800 ONVO Nov 10 Calls for $0.30 (2.5 times usual volume) with stock at $8.77

Bearish Signals

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A trader bought 2,000 HRB Dec 27 Puts for $0.80 (3.8 times usual volume) with stock at $28.00
A trader bought 800 IMAX Jan 30 Puts for $2.05 (3.6 times usual volume) with stock at $29.17
A trader bought 1,500 VIPS Nov 60 Puts for $0.70 (2.9 times usual volume) with stock at $73.76
A trader bought 1,400 RDA Dec 17.5 Puts for $0.10 (5 times usual volume) with stock at $18.17

Unusual Options Activity

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A trader bought 2,200 TIF Dec 80 Calls for $3.20 (3.1 times usual volume) with stock at $80.48
A trader bought 1,800 ONVO Nov 10 Calls for $0.30 (2.5 times usual volume) with stock at $8.77
A trader bought 1,400 RDA Dec 17.5 Puts for $0.10 (5 times usual volume) with stock at $18.17
A trader bought 2,900 TSM Jan 20 Calls for $0.15 (5 times usual volume) with stock at $17.75
A trader bought 2,000 HRB Dec 27 Puts for $0.80 (3.8 times usual volume) with stock at $28.00

Covered Call fo the Day: JNPR

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Juniper Networks, Inc (JNPR) is a company that designs and sells network infrastructure products and services. The company’s stock is currently trading around $18.97 in a 52 week range of $15.62-$22.98. The stock has been underperforming the market this year having fallen over 3.7% year to date. Despite this weakness in the stock we have seen options traders make some very bullish bets on JNPR today. Early in today’s trading session a trader sold 3,962 JNPR Dec 19 puts for $0.76. This is a very bullish bet that has also involves a high level of risk meaning this traders conviction is relatively high. Although JNPR has been trading in bearish territory since they reported earnings on Oct 22nd we believe that this order signals for a great covered call set up in JNPR. (more…)

Swing Stock Trade of the Day: COP

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ConocoPhillips (NYSE: COP) is a multinational energy corporation headquartered in Houston, Texas, and also holds the distinction of being the largest petroleum exploration and production company in the world.   COP shares are off about one percent midway through Thursday’s session, with shares trading around $73.00. The stock has modestly outperformed the market thus far in 2013, having risen nearly 25% so far.  Recent bullish order flows suggest COP shares have further room to run to the upside, with a trader buying the 10,000 COP Dec 75s for $0.86, representing an $860,000 bet to the upside.  With COP shares just off their October 29 52-week high, we believe there to be an opportunity for a swing trade:

Trade: Buying shares of COP stock at $73.15 with a stop at $71.45
Target 1:  73.80
Target 2:  $74.45
Target 3: $76.00tBxNPX5z

 

THE BARBER’S CHAIR: FRIDAY’S JOBS REPORT

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Floyd the Barber presents common sense views on the intersection of politics and the markets.  

Friday’s jobs report may be the most crucial one of the year.  Why you ask?  Simple. Because it is the most telling “political” report of the year, and politics is one main driver of the markets.

Last week ADP projected a gain of 130,000 jobs.  Most estimates for Friday’s official number are 100,000 to 120,000.  A number in this range would be good for the market.  It would show continued small gains that are not large enough to put fed tapering back on the table.  Last month’s number was in this range and the market reacted quite well.

However, what happens if the number comes in much lower, as it could.  Say 75,000 or 50,000 or even negative, due to the October government shutdown?

One of 2 things could happen.  First, the market could get very scared very quickly about a weak economy and tank.  Alternatively, the market could perceive these weak numbers as assuring continued fed accommodation, and head higher.  Existing fed policy is the current “drug of choice” for the markets.  One almost gets the feeling that, as long as the fed stays accommodative, the market will continue to be strong—regardless of whatever else happens.

Yet there could be another potential major effect of a very weak October jobs number—the very important political effect of such a number.

In essence, a weak jobs number would re-verify the horrific effect of the shutdown, and related threatened debt ceiling breach.  The current $24B estimated negative economic effect would be highlighted. The very important, resultant political effects would likely be:

**Drastically DECREASED chances of another shutdown in January.

**Drastically DECREASED chances of another debt ceiling drama in February or March.

**INCREASED chances of a small bargain between the D’s and R’s on a budget deal that would provide stability to the economy

**INCREASED chances of a GRAND BARGAIN between the D’s and R’s, which would revise harmful sequestration effects, address the deficit, improve the tax code, and let businesses know the ground rules for the next few years.  Such a grand bargain would be amazingly good news—especially in the longer term—for the markets and economy alike.

All of these outcomes are good—maybe even very, very good.  And they could all result from a weak Friday jobs report.

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