Gamestop (GME) seeing some bullish activity after it posted positive earnings. Gamestop video game retailer posted better than expected EPS, beating estimates by .02 cents a share. Gamestop is currently up $2.09 or 5.69% move today. GME is currently trading at $38.98 and has been trading in a fifty two week range between $30.94-57.74. Gamestops earnings call began to break down the various business segments and individual results. The beginning of the call focused on pre-owned physical game titles, digital game sales, and some metrics from next generation console sales. Gamestop is operating a brick and mortar business model in a highly cyclical entertainment environment. Although pre-owned sales margins increased, pre-owned sales are on the decline as the new cycle of game consoles are a hot ticket item. Last generation consoles pre-owned titles aren’t driving sales growth. Digital copy sales on the rise may be good for this quarters sales; however in the long run digital sales cannibalize Gamestops brick and mortar business model. Gamestop is also competing with other retailers such as Amazon (AMZN), Valve and the game console creators for digital sales. Gamestop may be posting positive results but competition will continue to get more intense. Gamestop is currently trading below the Ichimoku cloud with a bearish outlook into the future. In the near term options traders believe Gamestop will continue to move in a short term  bullish trend. Today we saw a trade hit the tape with a trader buying 2000 (GME) Friday 5/30 $40 calls for $0.31. With the big move on earnings, traders are looking for a continuation of the recent Gamestop rally through next week.

Hewlett-Packard, (HPQ) could make new fifty two week highs today after its earnings announcement. HPQ is currently trading at $33.85. Hewlett-Packard has been trading in a fifty two week range between $20.25-34.09. HPQ had a relatively flat quarter overall, the company posted mixed results throughout its many divisions. Hewlett-Pack overall was able to beat EPS expectations by 0.12 cents a share. The company hopes to improve results across the board by cutting cost. By cutting cost the company plans to cut thousands of jobs. Initially the company had plans to cut 34,000 jobs, HPQ has increased that number by 11,00-16,000 additional jobs. The total number of job cuts could be north of 50,000 jobs. When companies are in an expansion phase they typically add jobs and the opposite being true in a contractionary period. A majority of the rest of the HPQ earnings call was dominated by the decision to cut jobs by such a drastic proportions. Looking at HPQ on the Ichimoku cloud, the stock is currently trading way above a thin bullish cloud. Although the stock is ripping to new fifty two week highs, its concerning that the company’s business plan is to cut jobs instead of product cost; or to focus on creating something new and innovative.

The Gap, Inc (GPS) is an apparel and accessories company with operations around the world. The company’s stock is currently trading around $41.00 in a 52 week range of $36.13-$46.56. The stock has been doing relatively well this year with shares of GPS rallying by nearly 5% year to date.  The company is set to release their most recent quarterly earnings today after the bell. Analysts are expecting GPS to report EPS of $0.57 on revenue of $3.7 billion. The stock is a mixed performer on earnings, rallying 4 times and selling off 4 times on earnings over the past 8 quarters. Technically speaking GPS is breaking some key levels to the upside with stock attempting to break above the daily Ichimoku Cloud during today’s session. Currently, the options market is implying a move of $1.50 in GPS by this Friday’s expiration. With this implied move a trader can calculate measured move targets in GPS and use them to set up a trade.

Upside Target: $42.50
Downside Target: $39.50

Bearish Setup:
Buying the GPS May 23^rd Weekly 40.5-39.50 Put Spread for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $40.20

Bullish Setup:
Buying the GPS May 23^rd Weekly 41.50-42.50 Call Spread for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $41.80

Boardwalk Pipeline (BWP) is a natural gas company that specializes in the gathering and processing of natural gas liquids. Boardwalk Pipeline has been trading in a fifty two week range between $11.99-33.00; the stock is currently trading at $18.10. BWP is up $0.64 cents today about a 3.67% move. Year to date the stock has underperformed the market and is down about 29.47% since the start of this year. BWP is currently trading inside the Ichcimoku cloud, however BWP looks like it will break the cloud to the upside. The future cloud also looks to continue this bullish trend. Option traders have a bullish outlook on BWP and think the stock will continue its move upward. Today we saw a trader rolling their 33,000 September 15 calls at $3.30. This trader then purchased 33,000 of the September 17.5 calls for $1.80. Today’s bullish rollover provides a boost of confidence for BWP continued bullish outlook. Today volume has been heavy with 2.9 million shares trading, this is 3X the normal midday trading volume in Boardwalk Pipeline. With today’s big move, an improving cloud set up, and the bullish order flow in BWP; I believe Boardwalk Pipeline is setting up for a long.

Trade: Buy the September 20 calls
Risk: 85 per one lot
Reward: Unlimited
Break-even: 20.85

Micheal Kors expected to report earnings on the 5/28/14. Michael Kors Holdings is a retailer that focuses on higher end fashion apparel and accessories. Although many companies in the retail sector have not posted favorable earnings this past quarter, (KORS) may be an exception. Wednesday May 21 Tiffiny & Co. stock was up about 8.5% after posting better than expected earnings. Tiffiny & Co. and KORS share a similar target market. With an improving economy, Americans may be willing to spend more money on luxury type goods. KORS has been trading in a fifty two week range between $56.15-101.04. KORS is up 13.73% this year and is currently trading just barely above the cloud. The stock has been trading in a neutral trend inside the cloud throughout April. The cloud is trending very neutral with a thin bearish cloud forming ahead of the current stock price. I believe with the stock breaking the cloud to the upside, the cloud will turn to a bullish channel in the near future. Kors has had great earnings history with the stock rallying the last 8 or 8 quarters. The average post earnings move for KORS has been 8% over the last 8 quarters. Last quarter we saw an exceptional move in Kors with the stock moving 17.3% on earnings. I believe the stock is setting up for a long into earnings with great past performance and positive trends in luxury retailers.

Trade: 98-100 bull call spread for 0.40 with a May week 4 expiration.

Risk: 40 per 1 lot

Max Reward: 160 per 1 lot

Break-even: 98.40

Methanex Corporation (MEOH) is a commodity chemicals company supplying methanol to markets around the world. The company’s stock is currently trading around $57.70 in a 52 week range of $40.14-$73.43. The company’s stock has been underperforming the market some this year with shares of MEOH falling by over 2.5% year to date. Options traders seem to expect this will reveres as orders hitting the tape during today’s trading session have been decidedly bullish. Earlier this morning a trader bought 3,100 MEOH June 60 calls for $1.10. This is a very bullish order and this block represents volume in MOEH nearly 5 times its average daily option volume. Although shares of MEOH are trading below the Ichimoku Cloud order flow this strong could signal for a long opportunity in MEOH.

My trade: I bought the MEOH Jun 60 calls for $1.00
Risk: $100 per 1 lot
Reward: Unlimited
Breakeven: $61.00

AT&T (T) telecommunication giant has just agreed to buy DirecTV for a massive $48.5 billion dollars! AT&T’s website discusses some of the benefits of the deal. AT&T looks to become content creator and distributor across platforms. The company says it will host a conference call Monday May 19, 2014 at 8:30 am, to further discuss details of the acquisition. AT&T has been trading in a fifty two week range of 31.74-37.44, and is currently near its fifty two week highs at 36.74. AT&T has agreed to buy DirecTV for $95 per share. The deal will comprise of $28.50 per share in cash and 66.50 per share in AT&T stock. DirecTV shareholders will receive 1.905 shares of AT&T if the stock is below 34.50 and shareholders will receive 1.724 share if the stock closes 38.58 or above. Regardless DirecTV shareholders should receive a $66.50 in value of shares in AT&T. DirecTV has been trading in a fifty two week range between $57.05-89.46, the stock closed on Friday at $86.18. The deal seems to be a fair deal to DirecTV shareholders. With this big of a deal on the table expect both stocks to be choppy as weary investors make sense of the deal. There is also still the issue of how regulators will react to the proposed acquisition. The Time Warner Cable (TWC) and Comcast (CMCSA) deal announced earlier this year is still in regulators hands; so don’t expect this deal to pass through overnight without some hurdles to overcome. These deals and others proposed in the telecommunication and TV network industries suggest a bigger trend than individual stocks and companies. There have been three major and very similar mergers and acquisitions proposed this year in this industry. These deals each suggesting that the industries want to merge and reshape the entire telecommunication and TV network industry.

Shares of World Wrestling Entertainment (WWE) plummeted (-43%) today! The stock is currently down $-8.67 and has been trading in a fifty two week range of $8.96-$31.98. Year to date the stock has underperformed the market. World Wrestling Entertainment dropping after failing to secure another TV network deal. After launching its WWE network subscription service it essentially cannibalized the company’s current business model. World Wrestling Entertainment’s new business model is similar to that of a Netflix (NFLX), with a library of wrestling matches and pay-per-view type matches. Investors are unhappy about the new business model and the company’s inability to generate new and consistent subscriber growth. If we look at (WWE) on the Ichimoku Cloud, the stock has been trading in a very bearish channel. The stock is currently trading below the cloud.

The headlines today are filled with mostly bearish stories and grim reminders of when “the sky fell” in the 2008 market free fall. Today we saw soft predictions of a market top. After all analyst would hate to be wrong yet again about another market correction. Those who sold the so called “top” last year, missed out on so much of this raging bull market. As a trader it doesn’t matter who’s right; it doesn’t matter who gets the gold star for predicting the top. It doesn’t matter if the market is bullish or bearish; the only thing that matters is that your moving with the market. All of this bearish talk today and uncertainty about the market creates volatility. Volatility creates opportunity as a trader. Remember the market takes the stairs up and the elevator down in a bearish market. Don’t be afraid of the bear, some of the best days as a trader are created by uncertainty in the market, volatility, and bearish turns in the market. Today the markets are a little bit choppy but for the most part unchanged overall as investors look to pick which side of the market they want to be on.

Red Hat, Inc (RHT) is a global software company. The company’s stock is currently trading around $49.10 in a 52 week range of $41.89-$61.45. The stock has been underperforming the market this year with shares of RHT falling over 12% year to date. Despite the weakness in RHT stock, options traders are relatively bullish the name as large blocks of calls are hitting the tape today. Earlier this morning a trader bought 8,557 RHT Jun 52.5 calls for $0.80. This is a very bullish trade that requires this trader to lay out nearly $685,000 in capital. This block also represents the largest order to trade in RHT on a day where options volume is over 4 times the average daily volume. Although the stock is trading below the Ichimoku Cloud order flow this strong could be providing a signal for a long opportunity.

Block Trade: A trader bought the RHT Jun 52.5 Calls for $0.80
Risk: $80 per 1 lot
Reward: Unlimited
Breakeven: $53.30