A trader bought 46,000 HAL Apr 60-65 Call Spreads for $0.35 (4.8 times usual volume) with stock at $49.24
A trader sold 9,600 ADBE Jan 10^th 17 Puts for $0.60 (5.1 times usual volume) with stock at $16.88
A trader bought 4,750 SUNE Jan 2015 5 Puts for $0.45 (2.6 times usual volume) with stock at $11.26
A trader bought 10,000 AGO Apr 19 Puts for $0.91 (2.4 times usual volume) with stock at $22.13
A trader bought 2,229 YRCW Apr 12.5 Calls for $2.35 (2.7 times usual volume) with stock at $10.10

A trader bought 1,000 ACOR Dec 30 Calls for $1.10 (9.7 times usual volume) with stock at $29.81
A trader bought 2,500 CYH Jan 41 Calls for $0.90 (2.4 times usual volume) with stock at $38.81
A trader bought 20,000 BSX Feb 13 Calls for $0.20 (8.3 times usual volume) with stock at $11.32
A trader bought 13,600 BX Jan 2015 35 Calls for $1.25 (2.6 times usual volume) with stock at $28.89
A trader bought 2,200 GREK Dec 24 Calls for $0.10 (6.1 times usual volume) with stock at $22.41

A trader bought 2,058 SUNE Dec 12 Puts for $0.51 (5.9 times usual volume) with stock at $12.05
A trader bought 25,000 IAG Jun 3 Puts for $0.35 (9.4 times usual volume) with stock at $3.53
A trader bought 1,500 RFMD Jan 5 Puts for $0.25 (4 times usual volume) with stock at $5.03
A trader bought 1,200 DRI Dec 50 Puts for $0.55 (3.2 times usual volume) with stock at $51.45
A trader bought 1,000 CSC Dec 50 Puts for $0.20 (3.2 times usual volume) with stock at $52.59

A trader bought 20,000 BSX Feb 13 Calls for $0.20 (8.3 times usual volume) with stock at $11.32
A trader bought 2,058 SUNE Dec 12 Puts for $0.51 (5.9 times usual volume) with stock at $12.05
A trader bought 13,600 BX Jan 2015 35 Calls for $1.25 (2.6 times usual volume) with stock at $28.89
A trader bought 25,000 IAG Jun 3 Puts for $0.35 (9.4 times usual volume) with stock at $3.53
A trader bought 2,200 GREK Dec 24 Calls for $0.10 (6.1 times usual volume) with stock at $22.41

YEAR SUMMARY:  POLITICAL CRAZINESS MOVES MARKETS UP 25%

As I write this blog article, the S&P 500 is up over 25% for the year.  Given the political events of 2013, this is absolutely astonishing.  Here is a brief summary of some of these events.  If, on 1-1-2013, a person had predicted these events—and also projected a bullish stock market—that person would have been viewed as loonie as a nude streaker at the “snowstorm” Eagles-Lions football game.

In any event, here are the political events that the market had to overcome:

**A fiscal cliff “deal” is reached which raises taxes on the wealthy.  Also, this deal lets expire the “payroll tax holiday,” thereby increasing taxes on the middle class as well.  As a capper, dividend tax rates go up.

**War rages in Syria, threatening Middle East stability.

**Immigration reform—strongly supported by business interests—passes the Senate. But the bill has apparently died in the House without even a vote.

**Edward Snowden reveals intrusive NSA activities.  Obama is embarrassed.  Everyone is a little scared.  Tech companies and the NSA begin to feud.

**Gay marriage gains strength throughout the country, even in the Supreme Court.  (Effect on market is unknown, but this event is clearly significant.)

**Ted Cruz energizes the far right. Elizabeth Warren and Bill de Blasio energize the far left.  (Shame on you if you don’t know these last 2 names.)  These events infer even greater left-right animosity in the future.

**War continues to wage in Syria.  Pres. Obama seeks Congressional approval to attack over chemical weapons, but approval is not in the cards.  Obama is politically “saved” by Putin who pushes a chemical weapons deal with Syria.

**Republicans in Congress shut down the US government.  A large rift emerges between Republican business interests and Tea-publicans. Far right wing Tea partiers challenge many sitting Republican Senators.  Republicans get crushed in the polls. (But see next item.)

**ACA rollout is embarrassing and downright incompetent.  Millions get insurance cancellation notices. Republicans are “saved” by Obamacare’s totally botched rollout. Democrats get crushed in the polls.

**D’s and R’s apparently reach small, middlin’ budget deal, hopefully preventing a 2^nd government shutdown.  Everyone is relieved by this incredibly minor achievement.

**All in all, Congress passes less legislation than any of its predecessors.  There is NO coherent fiscal policy out of Washington to help the economy.  Dysfunction is the rule, not the exception.  The Senate changes filibuster rules to address inaction.  Even standard, basic legislation flounders (e.g. the Agriculture Bill).

Yet, despite all of the above, the market is up over 25%.  Amazing.

Follow me on Twitter @USKOTM.

A trader bought 4,575 RAD Jan 5 Puts for $0.15 (2.1 times usual volume) with stock at $6.01
A trader bought 5,000 JNS Jan 10 Puts for $0.30 (3.3 times usual volume) with stock at $10.64
A trader bought 4,700 PAYX Dec 44 Puts for $0.70 (3.1 times usual volume) with stock at $44.22
A trader bought 1,200 ATI Apr 27.5 Puts for $0.85 (4.2 times usual volume) with stock at $32.94
A trader bought 1,874 TRIP Jan 75 Puts for $1.20 (4.4 times usual volume) with stock at $86.33

A trader bought 1,950 LPI Apr 30 Calls for $1.70 (4.9 times usual volume) with stock at $26.37
A trader bought 3,500 HST Dec 19 Calls for $0.15 (2.9 times usual volume) with stock at $18.05
A trader sold 15,000 FITB Jan 20 Puts for $0.42 (5 times usual volume) with stock at $20.16
A trader bought 4,100 AZN Dec 57.5 Calls for $0.80 (5.3 times usual volume) with stock at $57.56
A trader bought 2,000 LPI Apr 30 Calls for $1.70 (6 times usual volume) with stock at $26.37

A trader sold 8,721 GFI Apr 3-4 Call Spreads for $0.56 (3.7 times usual volume) with stock at $3.80
A trader bought 10,000 GG Jan 2015 40 Calls for $0.38 (3.3 times usual volume) with stock at $21.08
A trader bought 4,575 RAD Jan 5 Puts for $0.15 (2.1 times usual volume) with stock at $6.01
A trader sold 5,000 MDLZ Mar 30 Puts for $0.23 (2.2 times usual volume) with stock at $33.80
A trader sold 15,000 FITB Jan 20 Puts for $0.42 (5 times usual volume) with stock at $20.16

Fifth Third Bancorp (FITB) is a financial service company with over 1,300 banking centers and around $117 billion in assets. The company’s stock is currently trading around $20.20 in a 52 week range of $14.05-$20.98. The stock has been performing very well this year adding nearly 33% to share prices this year.  Action in the options market this morning suggests that traders believe the run in FITB can continue through the beginning of next year. Early in today’s trading session a trader sold 15,000 of the January 20 puts for $0.42. This is a very bullish trade that represents this trader’s high level of conviction in FITB. This block also represents volume 4.7 times greater than the average daily option volume in FITB.  The stock is also trading very well on a chart. Shares of FITB are trading well above the Ichimoku Cloud and the future cloud is upward sloping indicating there could be bullish action in the future. We believe that this order flow and the strong chart provide us with a signal and opportunity for a long setup in FITB. Since this trader is expressing a strong view on the stock being above $20.00 we will look to set up a strategy that profits anywhere above $20.00. (more…)

CarMax, Inc (KMX) is a company engaged in the retailing of used cars and as a wholesaler of used vehicles. The company’s stock is currently trading around $51.50 in a 52 week range of $34.21-$52.47. The stock has had a great year with shares gaining over 37% year to date. Options action in KMX during today’s session is suggesting that traders believe the stock will continue its run through the end of the year.  Earlier in today’s trading session a trader bought 4,441 KMX Jan 52.5 calls for $1.65, a block that represents volume 9.3 times the average daily option volume in KMX. The stock is also trading well on a chart. Shares of KMX are well above the Ichimoku Cloud and have seen a nice rally over the past 2 weeks. The company is also set to report earnings near the end of December and the stock has been strong on earnings over the past 4 quarters.  Given all of these factors we believe the unusual order flow in KMX provides us with a signal for a long stock swing trade in KMX. (more…)