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

The Goodyear Tire & Rubber Company (GT) is a manufacturer of tires. The stock is currently trading around $23.85 in a 52 week range of $12.95-$28.48. The stock is basically unchanged this year with shares gaining less than 0.50% on the year. Options traders seem to be expecting some upside in GT as some bullish orders have been hitting the tape today. Earlier this morning a trader bought 3,017 GT May 23^rd weekly 24 calls for $0.64. This is a very bullish trade with a short time until expiration. Although shares of GT are trading below the Ichimoku Cloud its possible this institutional trader is looking for a quick pop in GT. This trader is risking $193,000 on this trade with only 8 days to expiration. Bets this large are worth paying attention to as they can lead moves in the stock, an aggressive trader may find opportunity for a long in GT here.

Block trade: Trader bought the GT May 23^rd Weekly 24 Calls for $0.64
Risk: $64 per 1 lot
Reward: Unlimited
Breakeven: $24.64

Cisco Systems, (CSCO) is a communications and information technology company that deals in the design, manufacturing, and sale of internet connectivity devices. (CSCO) is currently trading at $22.92 and is in a fifty two week range between $20.22-26.49. Cisco systems is up 2.05% YTD and is only slightly under performing the broader market. If we look at Cisco using the Ichimoku cloud on the daily chart, Cisco has been trading in or below the cloud this year during the first quarter. Cisco has only broken the cloud to the upside for brief periods of time before selling off back into or below the cloud. Cisco is currently trading above the cloud; however the chart is very weak and does not give any bullish signals.If we take a look at Cisco’s past earnings performance it has sold off the last three quarters on earnings announcements. In the third and fourth quarter last year Cisco sold off -7.2% and -11% respectively. Last quarter the stock only sold off -2.5%. The average move over the past two years on Cisco earnings has been a 7.4% move. I believe Cisco is setting up for a short on earnings. The stock has been weak this year trading below the cloud and it has not been able to provide a positive earnings announcement in recent quarters.

Trade: Sell May 23 24 bear call spread for .45 cents
Risk: 55
Reward: 45
Breakeven: 23.45

Sangamo BioSciences, Inc (SGMO) is a biopharmaceutical company that is developing drugs for the treatment of HIV and AIDS. The company’s stock is currently trading around $13.60 in a 52 week range of $6.86-$24.69. The stock has been underperforming the market this year with shares falling just over 2% year to date. Options traders seem to think this trend will reverse as order flow has been decidedly bullish during today’s session. Earlier this morning a trader bought 4,170 SGMO Jun 15 calls for $0.70. This is a very bullish order and this block represents volume over 4 times the average daily volume in SGMO. Although the stock is below the cloud recent price action in SGMO has been relatively bullish in the past few sessions. With order flow this strong SGMO may be setting up well for a long position.

Block Trade: Trader Bought the SGMO Jun 15 Calls for $0.70
Risk: $70 per 1 lot
Reward: Unlimited
Breakeven: $15.70

General Dynamics Corporation (GD) is an aerospace and defense company that offers a wide array of services and products related to aviation, weapons systems and communication technology. The company’s stock is currently trading around $115.30 in a 52 week range of $75.32-$115.96. The stock has been massively outperforming the market with shares rallying more than 20% year to date. Options traders are looking for even more upside in GD as orders hitting the tape during today’s session have been very bullish. Earlier this morning a trader bought 1,882 GD Jun 120 calls for $0.70 and another 1,970 for $0.89. This is a very bullish trade and these blocks represent volume nearly 6 times the average daily option volume in GD. With stock trading above the Ichimoku Cloud and just off of its 52 week highs order flow like this could be signaling for a long opportunity in GD.

My Trade: I bought the GD Jun 120 Calls for $0.90
Risk: $90 per 1 lot
Reward: Unlimited
Breakeven: $120.90