Sina Corporation is set to release earnings today, May 16, after the closing bell.  Even if earnings are a let down many close to the company are planning to use any dip in share price as an entry point.  The value added services platform recently applied to Weibo is expected to become exponentially more profitable as it penetrates the market. If the proliferation of mobile device use in China were to continue at the present rate this could be a highly profitable enterprise.  The VAS addition will likely boost historically low margins, though the business is still in a transitional phase.   Interestingly, a large stake of Sina WeiBo was recently purchased by Alibaba, the most well known of Chinese e-commerce services.  Many investors feel that a long term relationship between the two companies could yield impressive results. 

Sina Corporation is not going anywhere particularly quickly, however in the mid- to long-term it would be hard to argue against their growth and profit potential.  All of their key profit-generating elements are in growth-oriented markets, namely mobile advertising and commerce.  If the company can honestly report an optimistic outlook for next quarter it would seem unwise to ignore SINA’s potential for impressive growth.

bradyr@keeneonthemarket.com

The carrier also announced that it will be Boeing’s first customer for the 7 series of Boeing’s future 737 MAX plane in 2019. This is in addition to the purchase of 10 pre-owned 737-700s airplanes to be delivered in 2014 and 2015, as well as making changes to other existing orders.

With all this activity, we saw the share get hit with a surge of bullish options movement but investors will continue eyeing the $15 level, which has evaded Southwest since 2008.

 My Trade: Buy the June LUV 15 Calls for $0.20

Risk: $20 Per 1 Lot

Reward: Theoretically unlimited
Break-even: $15.20

Greeks of This Trade
Delta: Long
Gamma: Long

Theta: Short
Vega: Long

Paper bought 900 PXP Jun 45 Calls for $1.25 (2.7 times usual volume) with stock at $45.10
Paper bought 925 PPC Sep 15 Calls for $0.40 (4 times usual volume) with stock at $11.85
Paper bought 953 CNW Jun 37.5 Calls for $1.15 (71.2 times usual volume) with stock at $36.74
Paper bought 255 BIDOct 40 Calls for $2.30 (3.1 times usual volume) with stock at $37.34

Paper bought 5,000 GME Jun 38 Puts for $2.13 (2.9 times usual volume) with stock at $38.59
Paper bought 823 JNY Nov 13 Puts for $0.80 (4 times usual volume) with stock at $15.03
Paper bought 1,000 LFC Oct 37.5 Puts for $1.75 (10 times usual volume) with stock at $41.06
Paper bought 714 TEX Jun 32 Puts for $1.35 (4. times usual volume) with stock at $32.68

Youku announced 1Q earnings this morning, and the stock has decline on worse-than-expected EPS, but seems to be receiving support due to an improved forecast for 2Q earnings.  Revenues showed a decline quarter over quarter, but maintained a year over year earnings improvement of 21%.  The company, like many others in its field, is currently investing heavily in mobile software development and advertising partnerships and continues to consolidate its operations after last August’s merger. As such, near term losses are expected to be compensated for by long-term improvements in mobile and advertising revenue. 

China is on the verge of becoming the world’s largest mobile software and content market, and as the Central Executive Committee seems to have little interest in rolling back censorship laws it appears that Youku Tudou has what amounts to a captive audience.  However it appears that others are interested in cutting into Youku’s market.  Baidu, China’s leading online search engine, has expressed interest in entering into the streaming content market.  Analysts are wary of this move, however, comparing the possibility to Google’s floundering attempt to monetize Youtube.  The longer Baidu and other competitors delay, the firmer Youku Tudou’s foothold becomes and the better equipped the company is to cope with any future incidence of competitive market entry.

bradyr@keeneonthemarket.com

Specifically, TSLA is planning to sell 2.7 million common shares and $450 million in convertible notes. The estimated sum of both these transactions is roughly around $830 million. Additionally, founder Elon Musk said he will purchase $100 M in stock. Of this $100 M, $45 M will be purchased in the offering and the remaining $55 M will be purchased in the form of a direct placement, due to legal restrictions. Musk was also a buyer of the firm’s September offering, where he purchased only $1 M of the $225 M deal, nevertheless still a buyer.

The funds from this transaction are supposedly to repay the US Department of Energy and the timing of the transaction couldn’t be better after this epic run in the stock. TSLA has raged nearly 61% after the most recent quarter. The loan from the government is roughly $465. These funds were used in the development of the Model S roaster.

From the prospective of the options market, TSLA volatility has been on a tear. The current IV percentile is about 92%. Meaning that only 8% of the historic observations are above current levels. The volume weighted price average of the stock is roughly $91.95, therefore maybe look out for a $92.5 strike pin in the stock this Friday. However there is only 1.5k in open interest. The May 2013 100 calls have over 12k in open interest. Interesting either way.

salerno.mark.a@gmail.com