Paper bought 7264 TJX Oct 45 Calls and Sold Nov 47.5 Calls for $.53 debit (2.9 times usual volume) when stock was trading $45.55
Paper bought 857 VRNG Nov 3 Puts for $.60 (7.1 times usual volume) when stock was trading $5.14
Author: Andrew Keene
Covered Call of the Day TJX 10.4.2012
Today’s trade is to buy TJX at $45.56 and selling the Oct 45 Calls for $1.00.
Google October Returns and Statistics Since IPO 10.4.2012
The sheet also displays a correlation coefficient. Statistics define this figure as the relationship between two properties of interest, and our properties were GOOG and QQQ monthly returns. The coefficient was a positive .681, which could be expected, for GOOG is a large weight and market leader in the NASDAQ 100. For those who are rusty or not statistically inclined, the correlation coefficient ranges from -1 to +1, with -1 indicating a perfectly negative correlation and +1 indicating a perfect positive correlation.
This seasonal occurrence has an average return of 16.9% in GOOG and 1.63% for QQQ. While this is all interesting, it is important to note that this was a rather small sample set; meaning that the data below was only from once a year since the GOOG IPO, or only eight observations each.
In related news, GOOG said that they will spend about $300M on severance as opposed to the prior $275M, estimated in August, in efforts to clean out MMI. On the lighter side, it is reported that Google’s famous ‘street view’ option will soon be available for the mobile app on smart devices. Analysts have and average price target of $772 on GOOG, with 37 buy ratings and 8 holds (zero sells).
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Morning Rage 10.4.2012
All index, energy, metals, and grains futures are higher today. The Dow futures are up fifty three points, S&P futures are up five and a half, and Nasdaq futures are up eleven. Crude is up a half of a point, while gold futures are up fifteen, silver is up a quarter and platinum gains thirteen. Corn bounces back up seven points.
Marriott (MAR) released its earnings after the market closed yesterday, beating the estimate of $0.40 by four cents. However, the company lowered its yearly earnings outlook. Marriott has been bolstering its lagging US revenue by focusing on overseas growth, especially in China.
Weekly jobless claims are reported today, which may be pushing futures higher this morning as well. Jobless claims are expected to grow this week up three thousand from its prior revised count of 363 thousand.
S&P Emini Pivot Points for 10.4.2012
Apple (AAPL) and Google (GOOG) Pivot Points for 10.4.2012
Associate Option Battle 10.3.2012
Associate Jim:
Trade: Buy 28 MAR Oct 41-43 Call Spreads for $0.35
Risk: $35 per 1 lot
Reward: $165 per 1 lot
Notes: I think the stock will rally on earnings, Its trading a few
points below its 52 week high. I think it could break out above 52
week high territory
Associate Alex:
I am long 2 lot of Mastercard (MA) weekly 460-470-480 Iron Butterfly for a net credit of $5.02 (Short Put Spread/Short Call Spread)
My risk is $408 per one lot
My reward is $502 per one lot
Why: I like this trade because Mastercard made a huge move today and I think it will trade within a tight range for the rest of the week due to traders waiting to see what happens next before buy or selling. I hope this will last till Friday.
Unusual Option Activity 10.3.2012
Paper bought 4,000 TRIP November 30 Puts for $1.60 (6.5 times usual volume) when stock was trading $32.28
Paper bought 18,900 LYV Oct 7.5 Puts for $.25 (55.3 times usual volume) when stock was trading $8.36
Paper sold 5,000 JNS Dec 8, and sold Dec 9 Put Stupid for $.60 (151 times usual volume) when stock was trading $9.25
Covered Call of the Day WMGI 10.3.2012
My trade is to buy the stock at $22 and sell the Nov 20 calls for $2.40. My risk is the stock falling to zero, $19.60 per share, and my reward is the value of the calls, $2.40. My break-even is $19.60. I am hoping to make a return of 10.1% on the call sale.
Are the Dollar Stores Too Expensive? (FDO, DLTR, DG) 10.3.2012
To define a stock or sector as expensive, one must be familiar with fundamental analysis. While the nominal price of AAPL, for example, may seem expensive…the real future earnings power, forward and trailing P/E multiple, cash net of debt, and other metrics make it an attractive buy…according to some. This same type of analysis can be done to any sector or stock. Viewing the stocks of interest against traditional retail is an interesting exercise. WMT, TGT, and SWY were each given an equal weight in a basket against the dollar stores (33% each-FIVE was excluded because the example needs price performance over 2 years); see chart 1.
The chart below clearly displays the obvious outperformance, but also a narrowing gap between the two. This could be a real time indicator of the consumer. Spenders may be ‘upgrading’ to middle tier retail from the lower. The most conservative of the dollar discount group is arguably DLTR. Dollar Tree is very active in the share retirement department. Outstanding shares have decreased 14% since 2008, making EPS look even better! The cash flow statement confirms this, for the largest item over the last two years has been the common stock repurchase section under financing activities. These actions however have choked off net cash flow or net change in cash; but free cash flow, a metric that displays cash generated after spending money required for expanding its business, has raged 25% higher in 2012 from $340m to $437m. Consistently putting up figures like this could lead to multiple expansions.
DLTR currently trades as 21.5x TTM, but the analyst community seems to be mixed, for the median PE on next year’s EPS is at roughly 17x. Depending on your economic forecast, the implied thesis behind next year’s low multiple could be a booming economy and a trade down away from DLTR or maybe even inflation. The bottom line in all these analyst reports is always the price target. Here the average target is back to $54. The average target over the estimated EPS for next year yields a 19 multiple, more in line with where shares are trading now.
This has clearly been a hot sector for economic and fundamental reasons; and is one investor’s should keep a keen eye on.
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