A trader bought 3,000 EPD Dec 65 Calls for $0.15 (2.5 times usual volume) with stock at $61.50
A trader bought 2,100 SWIR Dec 20 Calls for $0.70 (2.5 times usual volume) with stock at $18.67
A trader bought 2,500 ENOC Dec 20 Calls for $0.30 (12.2 times usual volume) with stock at $18.17
A trader bought 6,000 JIVE Dec 12.5 Calls for $0.30 (2.8 times usual volume) with stock at $11.21
A trader sold 20,000 CDNS Feb 12 Puts for $0.35 (15.5 times usual volume) with stock at $12.70

A trader bought 5,500 NIHD Jan 2015 3 Puts for $1.20 (3.4 times usual volume) with stock at $2.92
A trader bought 2,300 WU Jan 60 Puts for $0.50 (2.4 times usual volume) with stock at $16.48
A trader bought 950 MAR Jan 47-43 Call Spreads for $1.20 (2.4 times usual volume) with stock at $47.23
A trader bought 1,800 CALL Jan 2015 10 Puts for $2.05 (3.7 times usual volume) with stock at $12.57

A trader bought 3,000 EPD Dec 65 Calls for $0.15 (2.5 times usual volume) with stock at $61.50
A trader bought 2,100 SWIR Dec 20 Calls for $0.70 (2.5 times usual volume) with stock at $18.67
A trader bought 6,000 JIVE Dec 12.5 Calls for $0.30 (2.8 times usual volume) with stock at $11.21
A trader sold 20,000 CDNS Feb 12 Puts for $0.35 (15.5 times usual volume) with stock at $12.70
A trader bought 5,500 NIHD Jan 2015 3 Puts for $1.20 (3.4 times usual volume) with stock at $2.92

Tyson Foods, Inc (TSN) is a food production company that distributes chicken, beef, and pork products along with other prepared foods and related products. The company’s stock is currently trading around $28.85 in a 52 week range of $16.55-$32.40. The stock has massively outperformed the market this year adding over 48% to share prices year to date. TSN is set to report their most recent quarterly earnings results on Monday morning before the market open. Historically, the stock is relatively strong on earnings day. The stock has rallied 6 of the past 8 quarters on earnings day with an average move of 4.6%. On a chart the stock is relatively weak with shares trading below the Ichimoku Cloud and the future cloud sloping downward. Despite the weakness in the chart we believe that the historical movement in TSN is strong enough to justify a long ahead of earnings. When trading earnings it is important to understand that catalyst movement can be completely different from the overall trend. With the options market currently implying a move of around $1.90 by December expiration we can look to set up a trade with a target around $30.75. (more…)

Market Vectors Russia ETF (RSX) seeks to track the performance of the DAXglobal Russia+ Index (DXRPUS). This index is comprised of publically traded companies based in Russia. Shares of RSX are currently trading around $28.65 in a 52 week range of $23.94-$31.15. RSX has been underperforming the broader us equity market this year with shares falling 4.25% year to date. Despite this weakness options traders have been making some very bullish bets on RSX. On Wednesday traders came in and bought several large blocks of Dec 29 calls for $0.40 to $0.45. These trades took place at volume greater than open interest in any line in Jan expiration. Open interest in the Dec 29 call line has now swollen to over 12,000 contracts. This action is very bullish and serves as a signal for a long setup in RSX. We want to look at a covered call set up in RSX. (more…)

WE ARE ALL CONNECTED:  Cisco, Walmart, and the World

There is amazing connectivity in the world around us.  From Bentonville, AK to Beijing to Silcon Valley, CA, actions in one place have a reaction in another.  Specifically, government decisions can have repercussions far beyond their intended effects.  When a person starts to realize this, he or she becomes a smarter, more sophisticated investor.

Two recent examples show this clearly and specifically.  And more examples are right around the corner, waiting to happen.

The first example involves food stamps.  For years R’s have been trying to cut food stamps, believing it to be a costly welfare program.  However, when a food stamp enhancement ran out last month, one of the main entities hurt was Walmart (WMT), whose sales are made to millions of food stamp recipients. Other retailers who also cater to “low price shoppers” were similarly hurt.  It is likely that the R’s pushing against food stamps were not trying to hurt Walmart They likely had not thought through all the economic effects of cutting food stamps.  But what happened, happened.  And there is a lesson to be learned there.

Likewise, some D’s were absolutely thrilled by the recent “whistleblowing” of NSA activities by Edward Snowden.  However, this revelation had many bad effects, one of which was clearly market related.  Both IBM and Cisco (CSCO) reported that their earnings from China were down drastically, because the Snowden episode made China less likely to buy American.  That’s right, Snowden made China more suspicious which directly hurt stockholders of IBM, CSCO, and similar companies.  Connectivity at its most powerful—and in this case not good power at all.

The most classic example of connectivity is sequestration.  Initially agreed on by both the D’s and R’s, it is now heralded by Tea-publicans as an effective tool to cut government spending.  But, as almost all agree, sequester is not efficient. Sequestration’s “across the board” methodology creates many unintended, harmful results, both for the economy and for certain stocks.  For example, the 2014 version of sequester will hit hard on Defense spending. Many D’s and R’s acknowledge that it will cause a substantial setback to our national defenses.

Defense stocks will also be hurt–perhaps substantially.  It is really weird to see  many R’s—typically strong supporters of national defense—touting sequestration.  But they are.  And both our economy and many defense stocks will bear the resultant pain.

In sum, connectivity between politics and the market is here to stay.  Its bad effect on individual stocks can readily occur.  Moreover, it is not the sole province of either D’s or R’s—both parties must deal with it.  But knowledge that such connectivity exists should be taken into consideration by both investors and by our politicians.

Of course, for politicians to do so, they will have to start thinking with their brains, instead of other parts of their anatomy.

Follow me on Twitter @USKOTM.

A trader bought 1,000 BRLI Dec 30 Puts for $0.40 (5.4 times usual volume) with stock at $35.49
A trader bought 11,325 MJN Dec 70 Puts for $0.41 (8.2 times usual volume) with stock at $80.63
A trader bought 26,000 LOW Dec 44 Puts for $0.205 (7.6 times usual volume) with stock at $51.70
A trader bought 10,600 XLV Jan 45 Puts for $0.25 (3.7 times usual volume) with stock at $53.81

A trader bought 10,000 YNDX Dec 38 Calls for $1.50 (5 times usual volume) with stock at $36.82
A trader bought 2,900 VCRA Jan 20 calls for $0.60 (2.7 times usual volume) with stock at $16.95
A trader bought 2,000 CDNS Dec 13 Calls for $0.30 (3.4 times usual volume) with stock at $12.69
A trader bought 4,304 HP Jan 80 Calls for $2.10 (6.8 times usual volume) with stock at $77.44
A trader bought 17,000 FOXA Dec 35 Calls for $0.60 (3.8 times usual volume) with stock at $34.10

A trader bought 4,304 HP Jan 80 Calls for $2.10 (6.8 times usual volume) with stock at $77.44
A trader bought 11,325 MJN Dec 70 Puts for $0.41 (8.2 times usual volume) with stock at $80.63
A trader bought 10,000 YNDX Dec 38 Calls for $1.50 (5 times usual volume) with stock at $36.82
A trader bought 2,900 VCRA Jan 20 calls for $0.60 (2.7 times usual volume) with stock at $16.95
A trader bought 26,000 LOW Dec 44 Puts for $0.205 (7.6 times usual volume) with stock at $51.70

Vocera Communications, Inc (VCRA) provides mobile communication solutions through both voice communications and messaging solutions. The company’s stock is currently trading around $17.15 in a 52 week range of $11.99-$29.47. The stock has been under performing the market this year with shares losing over 30% year to date. Despite this weakness options traders have been placing large bets on further upside in VCRA. Early in today’s session a trader bought 2,900 VCRA Jan 20 calls for $0.60. This block represents volume in 2.7 times the average daily option volume in VCRA. This bullish bet adds to activity we saw earlier this week when a trader bought 1,800 VCRA Dec 20 calls for $0.30. The VCRA chart is relatively neutral but the huge amount of upside call buying we’ve been seeing is more than enough signal to get long VCRA in a stock swing trade. (more…)