A trader bought 4,700 HST Jan 2015 17 Puts for $1.775 (3 times usual volume) with stock at $18.21
A trader bought 3,434 DLR Apr 40 Puts for $2.50 (2.8 times usual volume) with stock at $45.65
A trader bought 1,518 Dec 55 Puts for $1.05 (2.5 times usual volume) with stock at $56.30
A trader bought 3,000 KRFT Dec 52.5 Puts for $1.00 (2.1 times usual volume) with stock at $52.70

A trader bought 4,140 PWE Dec 9-10 Call Spreads for $0.58 (3 times usual volume) with stock at $8.62
A trader bought 14,575 NBL Jan 80 Calls for $1.05 (5 times usual volume) with stock at $73.88
A trader bought 3,434 DLR Apr 40 Puts for $2.50 (2.8 times usual volume) with stock at $45.65
A trader bought 1,518 Dec 55 Puts for $1.05 (2.5 times usual volume) with stock at $56.30
A trader bought 3,000 KRFT Dec 52.5 Puts for $1.00 (2.1 times usual volume) with stock at $52.70

American International Group, Inc. (AIG) is a global insurance company providing various insurance and financial services to people in more than 130 countries. Shares of AIG are currently trading around $48.50 in a 52-week range of $30.64-$53.33. The stock has been outperforming the broader market this year adding over 34% to share prices year to date. Yesterday’s trading session saw some unusual options activity that indicates traders believe the run in AIG can continue through May of next year. Early in yesterday’s session a trade bought 67,875 AIG May 55 calls for $0.86 and 45,202 May 50 calls for $2.33. These are hugely bullish bets that require an enormous amount of premium. The sheer size of this trade suggests that this trader has a strong belief in further upside in AIG. Although AIG has broken through some key technical levels on a chart the Ichimoku Cloud is still relatively bullish looking. The cloud remains upward sloping indicating strength in AIG. We believe that this big block trade coupled with the strength in AIG this year provides us with a great opportunity for a long-term trade.
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Sotheby’s (BID) is an auctioneer of art and jewelry along with operating finance and dealer units for the brokering of private sales of artwork. Shares of BID are currently trading around $50.05 in a 52 week range of $27.98-$53.61. The stock has been massively outperforming the market this year having added over 52% to share prices year to date. BID is set to report their most currently quarterly earnings on Monday after the close. Analysts are expecting earnings of -$0.47 on revenues of $70.3 million. Historically, the stock is weak on earnings day. The stock has sold off on earnings day 5 of the past 8 quarters with an average move of 3.3%. However the stock is trading very well on a chart. Shares of BID are currently trading well above the Ichimoku Cloud and the future cloud is strongly upward sloping indicating there could be more upside in store for BID. Flows have been bullish in BID as well with large open interest in the Nov 55 call line. Despite the relatively weak historical earnings performance in BID we believe that other factors are lining up well for a long trade in BID ahead of earnings. With the options market currently implying a move of around $3.50 we can look at an upside target around $55 and set up a trade. (more…)

ConocoPhillips (NYSE: COP) is a multinational energy corporation headquartered in Houston, Texas, and also holds the distinction of being the largest petroleum exploration and production company in the world.   COP shares are off about one percent midway through Thursday’s session, with shares trading around $73.00. The stock has modestly outperformed the market thus far in 2013, having risen nearly 25% so far.  Recent bullish order flows suggest COP shares have further room to run to the upside, with a trader buying the 10,000 COP Dec 75s for $0.86, representing an $860,000 bet to the upside.  With COP shares just off their October 29 52-week high, we believe there to be an opportunity for a swing trade:

Trade: Buying shares of COP stock at $73.15 with a stop at $71.45
Target 1:  73.80
Target 2:  $74.45
Target 3: $76.00

Floyd the Barber presents common sense views on the intersection of politics and the markets.  

Friday’s jobs report may be the most crucial one of the year.  Why you ask?  Simple. Because it is the most telling “political” report of the year, and politics is one main driver of the markets.

Last week ADP projected a gain of 130,000 jobs.  Most estimates for Friday’s official number are 100,000 to 120,000.  A number in this range would be good for the market.  It would show continued small gains that are not large enough to put fed tapering back on the table.  Last month’s number was in this range and the market reacted quite well.

However, what happens if the number comes in much lower, as it could.  Say 75,000 or 50,000 or even negative, due to the October government shutdown?

One of 2 things could happen.  First, the market could get very scared very quickly about a weak economy and tank.  Alternatively, the market could perceive these weak numbers as assuring continued fed accommodation, and head higher.  Existing fed policy is the current “drug of choice” for the markets.  One almost gets the feeling that, as long as the fed stays accommodative, the market will continue to be strong—regardless of whatever else happens.

Yet there could be another potential major effect of a very weak October jobs number—the very important political effect of such a number.

In essence, a weak jobs number would re-verify the horrific effect of the shutdown, and related threatened debt ceiling breach.  The current $24B estimated negative economic effect would be highlighted. The very important, resultant political effects would likely be:

**Drastically DECREASED chances of another shutdown in January.

**Drastically DECREASED chances of another debt ceiling drama in February or March.

**INCREASED chances of a small bargain between the D’s and R’s on a budget deal that would provide stability to the economy

**INCREASED chances of a GRAND BARGAIN between the D’s and R’s, which would revise harmful sequestration effects, address the deficit, improve the tax code, and let businesses know the ground rules for the next few years.  Such a grand bargain would be amazingly good news—especially in the longer term—for the markets and economy alike.

All of these outcomes are good—maybe even very, very good.  And they could all result from a weak Friday jobs report.

Follow me on Twitter @USKOTM

Pitney Bowes Inc (PBI) is a provider of a range of office hardware and software for the management of physical and digital communication channels. Shares of PBI are currently trading around $21.85 in a 52 week range of $10.34-$22.11. The stock has been outperforming the market this year adding over 105% to share prices year to date. Bullish order flows we’ve seen in PBI in today’s trading session indicate this rally could continue. Early in trading a trader bought 5,000 PBI Nov 22 Calls for $0.35. This was one of the largest blocks to trade in PBI today as option volume in the name reaches over 3 times the average daily volume. PBI is also setting up well for a long on the chart. Shares are trading well above the Ichimoku Cloud and the future cloud is upward sloping suggesting the stock’s rally could continue. With shares of PBI just off of their 52 week highs we believe there is an opportunity here for a swing trade. (more…)

Caesars Entertainment Corporation (CZR) is a casino entertainment company operating land-based and riverboat casinos in addition to racetracks, hotels and a number of other resorts and entertainment properties. Shares of CZR are currently trading around $17.65 in a 52 week range of $4.52-$26.57. The stock has been on a tear this year adding over 155% to share prices year to date. Options activity in CZR in today’s trading session is suggesting that traders believe this rally will continue through March of next year. Early in the session a trader sold 1,354 CZR Mar 17.5 puts for $3.20. This is a very bullish trade with a high level of risk that indicates this trader’s relatively high level of conviction on CZR. While this trader collects $433,280 worth of premium they are technically risking over $1.9 million on this trade. We believe that this unusual option activity in CZR sets up well as an opportunity for a long term trade in. (more…)

A trader bought 3,048 TNGO Feb 25 Calls for $0.25 (4.7 times usual volume) with stock at $17.00
A trader sold 5,000 KERX Dec 11 Puts for $0.30 (3 times usual volume) with stock at $13.36
A trader bought 6,358 BYD Nov 11 Calls for $0.15 (2.4 times usual volume) with stock at $10.18
A trader sold 5,389 CHRW Nov 55 Puts for $0.05 (3.9 times usual volume) with stock at $59.63
A trader bought 5,000 PBI Nov 22 Calls for $0.35 (2 times usual volume) with stock at $21.93

A trader bought 4,850 ANF Nov 8^th 32 Puts for $0.08 (2 times usual volume) with stock at $36.44
A trader bought 7,250 HMA Feb 12 Puts for $0.60 (15.7 times usual volume) with stock at $12.65
A trader bought 4,000 PNK Dec 25 Puts for $1.65 (8.6 times usual volume) with stock at $24.00
A trader bought 1,355 CONN Dec 55 Puts for $2.85 (5.4 times usual volume) with stock at $61.35