International Paper Company (IP) is a paper and packaging manufacturer with operations around the world. The company’s stock is currently trading around $51.70 and is down nearly 3.8% on the session. The stock has been relatively flat this year with shares down by roughly 3.8% year to date. IP has been trading in a 52 week range of $44.50-$57.90. IP is sharply lower today but there was some very interesting options activity earlier in the session that telegraphed the move perfectly.

Earlier this morning a trader bought 1,029 IP May 8th Weekly 52 puts for $0.16 less than 10 minutes after the open. This is a rather large bet for weekly options and nearly 1,900 contracts have now traded on that line. Over 2x the average daily options volume has traded in IP today and the stock saw a big move lower after these puts were bought. Stock was trading at $53.49 when these puts were bought and sold off to session lows of $50.90 after they hit. These puts exploded in value as the stock continued to sell off and traded as high as $3.03 on the session meaning they increased in value by nearly 20x. This trade is a perfect example of an absolute blowout winner in unusual options activity.

Trade: A trader bought 1,029 IP May 8th Weekly 52 puts for $0.16.
Risk: $16 per 1 lot
Breakeven: $51.84

These puts traded as high as $3.03 on the session making this an extremely profitable trade. If a trader would have bought a 20 lot of these puts they would have profited $5,740 at the highs.

Noble Energy, Inc. (NBL) is an oil and gas exploration and production company with operations around the world. The company’s stock is currently trading around $50.70 in a 52 week range of $41.01-$79.63. The stock has rallied nearly 7% this year and is now trading in relatively bullish territory on the Ichimoku Cloud. NBL is set to report earnings before the open tomorrow and a flurry of bullish unusual options activity ahead of the report may be signaling a move higher in the stock.

Earlier in the session a trader bought 1,995 NBL Jun 52.5 Calls for $1.40 and another 1,528 NBL May 50 calls for $1.50. NBL has now traded nearly 15x its average daily options volume NBL is rallying on the day and it seems like options traders are looking for a move higher on earnings.

NBL has rallied 4 times and sold off 4 times on earnings day over the past 8 quarters. On average the stock moves around 2.1% on earnings day. With the options market currently implying a move of $2.30 by expiration we can calculate an upside target of around $53.00 by May expiration. With the relatively bullish chart and bullish orderflow into earnings it seems like NBL is setting up well to the long side.

Trade: Selling the NBL May 52.5-50 put Spreads for $1.45
Risk: $105 per 1 lot
Reward: $145 per 1 lot
Breakeven: $51.05

LinkedIn Corporation (LNKD) is a professional networking site with 300 million members I countries around the world. The stock is currently trading around $252.85 in a 52 week range of $136.02-$276.18. The stock has been doing relatively well this year with shares rallying over 10% year to date. LNKD is set to report their most recent quarterly earnings today after the bell and it appears that the stock may be setting up well for a long into the report.

LNKD has rallied on earnings day 4 of the past 8 quarters and has rallied more than 10% on earnings day for the past 3 quarters. On average the stock moves around 10.3% on earnings. This time around market makers are implying a move of around $21.00 by tomorrow close which would give us an implied upside target of $273.85. LNKD is technically trading inside the cloud showing neutral price action. Despite the relatively sideways chart the stock has shown strong historical performance on earnings. Using the upside measured move target I want to set up a trade in LNKD.

Potential Trade: Buying the LNKD May 1st Weekly 262.5-272.5-282.5 Call Butterfly for $1.00
Risk: $100 per 1 lot
Reward: $900 per 1 lot
Breakeven: $263.50 and $281.50

This trade sets up with a 9-1 reward to risk ration and profits in a very wide range.

Gilead Sciences, Inc. (GILD) is a biopharmaceutical company with operations in North America, Europe, and Asia. The company’s stock is currently trading around $102.00 in a 52 week range of $74.00-$116.83. GILD is has been relatively strong this year with shares rallying more than 8% year to date. GILD is set to report earnings after the bell tomorrow and appears to be setting up well for a long position.

GILD has a relatively strong record on earnings. Over the past 12 quarters the stock has rallied 7 times on earnings day and has rallied from earnings day to the nearest expiration 8 times. On average, shares of GILD move 3.8% on earnings day. This time around market makers are pricing in a move of $4.75 or 4.7% by this Friday’s close. Using this implied move I can calculate an upside target of $106.75 for GILD.

GILD looks relatively strong on a chart as well. The stock is trading well above the Ichimoku Cloud and the future cloud is sloping higher. With a positive technical setup and strong historical performance I will look to get long GILD ahead of the release.

Trade: Buying the GILD May 1st Weekly 106-107 Call Spreads for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $106.30

Twitter, Inc. (TWTR) is currently trading around $51.00 in a 52 week range of $29.51-$55.99. The stock has been doing extremely well this year with shares rallying more than 42% year to date. Despite this strong performance shares of TWTR are looking weak ahead of the release of their most recent quarterly earnings after the bell today. TWTR shares are trading lower by over 1.1% today as investors position themselves for the report.

The weakness in TWTR makes sense as the stock typically sells of on earnings day. Over the past 5 quarters the stock has only managed to rally 2 times on earnings day and has traded lower to the nearest options expiration 3 of 5 times. On average shares of TWTR move around 16.3% on earnings day but this time around market makers are implying a move of around $5.50 b this Friday’s close, pricing in a 10.1% move into TWTR options. TWTR looks strong on a chart but with the bearish historical performance record TWTR has and the move lower on earnings day Facebook shares saw I think it is difficult to justify anything other than a short position in TWTR.

Using the implied move I can calculate a downside target of $45.50 by Friday’s close and look to set up an options trade.

Trade: Buying the TWTR Weekly 47-45 Put Spreads for $0.50
Risk: $50 per 1 lot
Reward: $150 per 1 lot
Breakeven: $46.50

This trade offers a 3-1 reward to risk set up should TWTR close below $45 on Friday’s close.

Sometimes the data make no sense. Todayʼs reading on Consumer Confidence fell to a four month-low, in spite of consistently rising home prices, continued mortgage affordability, low gasoline prices and months of steady employment gains. Blame the lingering impact of the so-called soft patch from the first quarter, when the polar vortex choked off travel and retail sales.

In fact, much of the reported data of the past several months has fallen significantly short of expectations. Consider the snapshot provided by Citigroup Economic Surprise Indicator, where better than expected data adds to the index while worse data subtracts. Recently it fell to a two year low, suggesting either conditions are really bad or economists have been way too optimistic.

The good news? It seems to have bottomed.

This data disconnect is also at odds with first quarter results. Based on figures collected by Bloomberg, 72 percent of the 203 companies in the S&P 500 Index reporting earnings have beaten estimates by an aggregate 6.3 percent. As strategist Michael Purves of Weeden & Company notes to clients this morning, the rise provides a stark contrast to last yearʼs first quarter decline of nearly the same amount (6.0).

Economist Don Rissmiller of Strategas Research Partners tell investors to look past the disappointments of the first quarter, and instead to focus on his +2.9 percent consumer spending forecast for the second half of the year. Heʼs keying off wage growth and the highest small business hiring outlook since 2007, based on data from the National Federation of Independent Businesses.

We agree. We also note consumer staplesʼ earnings performance ranks #1 this quarter among all ten sectors in the S&P 500 Index. The group has beaten earnings estimates by 88 percent and sales estimates by 65 percent, compared to 72 and 46 for the index as a whole. The easiest way to gain exposure is the Consumer Staple Select Sector SPYDER fund (XLP). We think it makes good sense, especially since it yields 2.5 percent and costs just 0.15 percent.

Apple Inc (AAPL) is set to release their most recent quarterly earnings report today after the bell. Stock is currently trading around $132.70, up nearly 2% today, in a 52 week range of $80.57-$133.60. The stock has been very strong this year with shares rallying nearly 20% year to date. Analysts have high expectations for this quarter’s earnings and market makers are pricing in a move that would represent a new all-time high for AAPL.

Some analysts are expecting AAPL to have sold upwards of 50 million more iPhones, but many believe that AAPL will once again far surpass these estimates. One of the focus points of the conference call will be news on Apple Watch sales. With versions of the watch selling out in a matter of hours on release day expectations for sales are very high. With expectations high and AAPL trading near its all-time highs how can a trader get long without putting too much risk on the table?

Let’s look at a few different options strategies a trader could use. With the options market implying a move of around $7.00 by this Fridays expiration a trader can develop an upside price target around $139.70. Using this target we can look at a few different strategies.

Expecting AAPL flat to higher:

Trade: Selling the May 1st Weekly 133-132 Put Spreads for $0.50
Risk: $50 per 1 lot
Reward: $50 per 1 lot
Breakeven: $132.50

This trade offers a trader even money on AAPL rallying or trading flat after earnings.

Expecting a large move higher

Trade: Buying the AAPL May 1st Weekly 138-140 Call Spreads for $0.50
Risk: $50 per 1 lot
Reward: $150 per 1 lot
Breakeven: $138.50

This trade gives a trader a 3-1 reward to risk ration if AAPL trades above $140 on expiration.

A high reward, low risk trade:

Trade: Buying the AAPL May 1st Weekly 136-140-144 Call Fly for $0.65
Risk: $65 per 1 lot
Reward: $335 per 1 lot
Breakeven: $136.65 and $143.35

This trade has a huge reward to risk ratio but only profits if AAPL falls inside of a range on expiration.

A steady rise in the U.S. dollar over the past year is having a profound impact on consumer purchasing power and corporate earnings momentum, albeit in polar opposite directions. On a trade-weighted basis against a basket of six major global currencies, the U.S. Dollar Index (DXY) has appreciated 22 percent since last April, its fastest twelve month gain since 1985.

If youʼre contemplating a summer vacation abroad, book it. Itʼll be A LOT cheaper than your last visit. The only catch, you might not be paying for it with gains from your portfolio. The rising dollar is wreaking havoc on the earnings of U.S. multinationals.

When U.S. companies sell products and services abroad, they have to convert back into dollars for accounting purposes, and given the dollarʼs strength, they face the headwind of a much higher exchange rate. Even Google (GOOG), which offset $300M in currency appreciation through its hedging program, still suffered overall from dollar strength during the quarter. The dollarʼs appreciation was more than what Google and many other companies had anticipated. Consider three examples from the past 24 hours.

These three multinational U.S. companies provide ample evidence of the impact the rising dollar has exerted on corporate profitability. Sales recorded in dollars dropped significantly after adjusting for exchange rates, and in the case of Amazonʼs International segment, sales even contracted on a year over year basis.

In fairness, all three stocks are rallying this morning as the NASDAQ surpasses its March 2000 high and specific corporate developments outweigh currency impact (Amazonʼs Web Services revenue rose 49 percent and is now 10 percent of total sales, Microsoftʼs turnaround is finally bearing fruit as earnings beat estimates by 20 percent, and Google is, well just Google).

That said, we focus this morning on other companies which may not fare as well. We screened the S&P 500 companies which capture more than half their sales outside the U.S. and are reporting first quarter earnings in the next two weeks. Additionally, they are up more than the market so far this year. In theory, these stocks would be most impacted by dollar strength, and most likely to disappoint investors.

Twenty companies met our criteria: AFLAC Inc. (AFL); Apple Inc. (AAPL); Autodesk, Inc. (ADSK); BorgWarner Inc. (BWA); Delphi Automotive PLC (DLPH); The Estee Lauder Comaonies Inc. (EL); Expeditors International of Washington, Inc. (EXPD); FMC Corp. (FMC); Harmon International Industries, Inc. (HAR); International Flavors & Fragrances Inc. (IFF); Invesco Ltd. (IVZ); Microchip Technology Inc. (MCHP); Nvidia Corporation (NVDA); The Priceline Group Inc. (PCLN); Sealed Air Corporation (SEE); Skyworks Solutions Inc. (SWKS); Spectra Energy Corp. (SE); Varian Medical Systems, Inc. (VAR); Waters Corporation (WAT); Zoetis Inc. (ZTS)

Johnson Controls, Inc (JCI) is currently trading around $53.00 in a 52 week range of $38.60-$53.41. The stock is higher by 3.25% today and touched new 52 week highs on positive earnings news. The stock has been doing well this year with gains approaching 10% year to date. Whats interesting about this action in JCI is that it was very well telegraphed by large options blocks ahead of the release.

The bullish orderflow in JCI began last week when a trader paid $0.45 for 3,005 of the JCI May 52.5 calls. This trade was opened on Apr 16th and open interest in this line grew to over 10,000 contracts ahead of the earnings release. Traders also bought large blocks of the JCI Jul 55 Calls. Last Friday a trader bought over 6,000 of these calls for $0.75. These calls looked weak this morning as JCI showed initial weakness. The stock reversed however and rallied to new 52 week highs making these trades extremely profitable. Let’s break down the traders profit pn each block.

Trade: A trader bought 3,005 JCI May 52.5 Calls for $0.45
Risk: $45 per 1 lot
Reward: Unlimited:
Breakeven: $52.95

These calls traded as high as $1.70 today making this trade an absolute blowout winner, if this trader held this block to the highs they would have profited $375,625 on a $135,000 bet.

Trade: A trader bought 6,512 JCI Jul 55 Calls for $0.75
Risk: $75 per 1 lot
Reward: Unlimited
Breakeven: $55.75

These calls traded as high as $1.70 today meaning if this trader held their position to the highs they would have profited $618,640.

These trades are fantastic examples of why watching orderflow ahead of earnings is important. Both of these trades were absolute blowout winners.

JPMorgan recently sent a letter to large corporate customers (mostly other banks) explaining it will begin charging an annual rate of 1 percent beginning May 1 on any cash deposited in excess of the amount these businesses typically need to fund on-going operations.

Say what?

Yep, itʼs called a “balance sheet utilization fee.” CEO Jamie Dimon has taken this unprecedented step of removing the incentive for customers to deposit large amounts of unused capital in order to reduce his bankʼs liabilities and comply with mandated de-leveraging in an era of increased regulation. If this seems odd, just remember that deposits are counted as liabilities (money the bank owes), versus loans which are counted as assets (money owed the bank). Mr. Dimon is trying to reduce his liabilities, and targeted customers have withdrawn about $20B since February according to data complied by Bloomberg. Ultimately, Mr. Dimon expects withdrawals of $100B, about 0.75 percent of total JPM deposits.

Negative interest rates here at home were perhaps inevitable. With the European Central Bank purchasing roughly twice the amount of new monthly sovereign debt issuance in Europe, 55 percent of the EUʼs $5.3T sovereign bonds now trade at negative yields according to Bank of America. Even LIBOR has gone negative this week, meaning European banks must effectively pay one another a storage fee. This is not what we learned in Economics 101, but it is the new reality of ECB President Mario Draghiʼs pledge to “do whatever it takes” to reduce cash hoarding and spur risk taking.

JPMorganʼs customers will not likely withdraw their cash in order to to buy Europeʼs money-losing bonds, since they can accomplish the same task by staying at the bank. Instead, they (and the rest of us) have to find other assets which actually pay interest… namely U.S. Treasuries.

With the spread between U.S. and German 10-yr bonds at fifteen year highs, we would argue the U.S. bond at 1.96 percent actually look attractive, especially since four Federal Reserve bank presidents this week have reiterated their commitment to long-term accommodative policy.

Negative sovereign debt of highly indebted countries in Europe, and a negative deposit rate at one of the biggest banks at home. Upside down indeed.