PetSmart, Inc operates as a specialty retailer of products, services, and solutions for pets in the United States, Puerto Rico, and Canada, which means that it has no European or Chinese exposure.  The stock trades about 1.5 Million shares in a day and has been trading in a 52 week range of $61.30-$77.32.  Technically the stock looks weak even though it is possible that it has made a rounding bottom at $62.  Today, a trader bought almost 2,000 PETM March 70 Calls for $.90 hoping the stock can recover and move higher after they report earnings on March 5^th.  The stock has shown strength on earnings rallying 5 of the last 8 quarters.  I am currently long the PETM March 70 Calls for $.90, I sold 25% of my position at $1.10 with targets at $1.30, $1.50 and $1.75.  I will leave only 25% of my position on into the earnings announcement.

PowerShares DB Agriculture Fund (DBA) is an investment trust that invests in commodities. Shares of DBA are trading around $27.70 in a 52 week range of $24.04-$27.86. DBA has been underperforming the market over the past year with shares rallying only 5.6% in the past 12 months. Despite its relatively lackluster performance options action in DBA during today’s trading session has been decidedly bullish. Earlier in today’s trading session a trade bought 1,261 DBA Apr 27 calls for $1.05. This is a very bullish trade that also represents volume nearly 3.5 times the average daily option volume in DBA. With shares of DBA trading well above the Ichimoku Cloud and the future cloud sloping upward the chart is suggesting there can be further upside in DBA. We believe this order flow and chart set up is a great signal for a long in DBA.

I am a trader, not an expert on geopolitical events. For me it’s important to stay focused on markets, namely price action and order flow. We knew that there was a chance of news over the weekend and we saw some interesting price action into Friday’s close. As far as Russia we actually saw a fair amount of options activity early last week in the Market Vectors Russia ETF (RSX), as traders positioned themselves for the weekend. Puts massively out traded calls on Tuesday and Wednesday as concerns over the situation in the Ukraine continued.

Today we are actually seeing the exact opposite; calls are out trading puts in the opening hour of the session as two huge blocks of short puts hit the tape this morning. A trader sold 9,650 then another 9,500 Mar 21 puts this morning for $0.40 indicating they believe RSX will stay above 21 through March expiration

Although it is an obviously tense situation I think if market participants were truly in a panic we would see a much larger move in the VIX. Although the VIX is up nearly 15% today it’s still only trading at 16. Traders can still buy relatively cheap protection and I still do not see a reason to get short the market. We overlooked some positive data this morning because of the Ukraine situation. Not time to panic yet.

InterMune, Inc (ITMN) is a biotechnology and medical research company focused on developing therapies for the treatment of lung conditions. The company’s stock is currently trading around $31.05 in a 52 week range of $8.21-$37.22. The stock is now higher by over 261% over the past 12 months with stock prices nearly doubling during today’s trading session. This large move higher was telegraphed by some unusual options activity earlier this month.On February 10th a trader sold 9,900 ITMN May 8 puts to buy 9,900 of the May 15 calls for a net debit of $2.78. With stock at $31.05 this spread is worth $16.05. At that level this trader profits over $15.8 million in this trade. This was the biggest trade in the past 10 days and did a good job of leading the move higher. The options action in ITMN and subsequent move higher in the stock is another great example of the value of reading the tape.

Rovi Corporation (ROVI) is a company that focuses on providing content discovery, video delivery and advertising through a number of platforms. The company’s stock is currently trading around $24.70 in a 52 week range of $16.00-$26.55. The stock performed very well last year with shares gaining over 38% in the past 12 months. Options action during today’s trading session would suggest that traders believe the stock will continue this rally through April expiration. Early in the session a trader bought 1,077 ROVI Apr 25 calls for $1.60. This is a very bullish trade that also represents volume nearly 4 times the average daily option volume in ROVI. Shares of ROVI are also trading well above the Ichimoku Cloud and the future cloud is thick and upward sloping. We believe that strong technicals and bullish order flow provide a great signal for a long setup in ROVI.

Trade: Buying the ROVI Apr 25 Calls for $1.55
Risk: $155 per 1 lot
Reward: Unlimited
Breakeven: $26.55

Southwestern Energy Company (SWN) is an independent oil and natural gas company with a focus on exploration and production. The company’s stock is currently trading around $42.35 in a 52 week range of $31.91-$43.51. The stock made a new 52 week high yesterday extending its year to date rally to about 7.5%. Traders seem to believe that SWN’s strength will continue as we have seen some very large bullish orders hitting the tape today. Earlier in the trading session a trader bought 15,000 SWN Jun 47 calls for $1.05. This is a $1.575 million bet on more upside in SWN. With shares of SWN trading just off of their 52 week highs and well above the Ichimoku Cloud we believe that order flow this large signals for a long opportunity in SWN.

Trade: I bought the SWN Jun 47 Calls for $1.10
Risk: $110 per 1 lot
Reward: Unlimited
Breakeven: $48.10

OSI Systems, Inc (OSIS) is a designer and manufacturer of electronic components and parts for the healthcare, aerospace, security and defense industries. The company’s stock is currently trading around $61.85 in a 52 week range of $39.00-$78.50. The stock has under performed the market over the past year with shares gaining only 8.12%. Recent price action has been more bullish however and options action in the name during today’s session indicates that traders believe this trend will continue through July expiration. Early in the session a trader bought 1,421 OSIS Jul 65 Calls for $5.62. This is a very large block to trade in OSIS. This block represents volume over 13 times the average daily option volume in OSIS. With the stock trading above the Ichimoku Cloud and the future cloud sloping higher we believe that order flow this strong is a great signal for a long in OSIS.

Trade: I bought the OSIS Jul 65 Calls for $5.70
Risk: $570 per 1 lot
Reward: Unlimited
Breakeven: $70.70

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