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Trade of the Day: Danaher Corporation (DHR)

Average volume has been 2.7 million shares over the past 30 days. Shares are up roughly 12% year to date as of close on Friday. The company has a market cap of $43.37 billion and a P/E ratio of 18.42. DHR’s success can be seen in numerous areas, such as its increasing revenue, secure financial position with practical debt levels, a steadily increasing stock price during the past year, superb record of EPS growth and increase in net income. Brian Drab stated that Danaher will continue to expand its sales in the years to come.

“Danaher currently generates 40% of its revenues from recurring aftermarket sales and believes this could expand to more than 50% over the next three to five years,” said Drab.

 All eyes will be on Danaher’s Q2 2013 Earnings release on July 15.

My Trade: Buying the June 62.5-65 Call Spread for $1.40

Risk: $140 per 1 lot

Reward: $110 per 1 lot

Breakeven: $63.90

 

 

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Biggest Bullish Activity 5.20.2013

bullish Option Trade earnings.pngPaper bought 9,900 HTZ Sep 27 Calls for $1.50 (2.4 times usual volume) with stock at $25.69
Paper bought 1,173 CBI Jul 65 Calls for $1.55 (3.8 times usual volume) with stock at $63.20
Paper bought 770 KKR Jun 23 Calls for $0.15 (2 times usual volume) with stock at $21.00
Paper bought 1,672 CNC Jul 57.5 Calls for $0.75 (11.5 times usual volume) with stock at $50.62
Paper bought 479 INSM Jul 12.5 Calls for $1.80 (6 times usual volume) with stock at $11.28

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Biggest Bearish Activity 5.20.2013

Bear Market Crash VolatilityPaper bought 996 MW Jun 34 Puts for $1.90 (3 times usual volume) with stock at $34.57
Paper bought 1,883 TPX Sep 44 Puts for $3.10 (3.7 times usual volume) with stock at $47.87
Paper bought 623 DSS Jun 2.5 Puts for $0.20 (2.8 times usual volume) with stock at $2.82
Paper bought 500 MDR Aug 8 Puts for $0.35 (2.2 times usual volume) with stock at $9.05

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Unusual Options Activity 5.20.2013

Chart emini Sp500 ChartsPaper sold 8,820 RAD Jul 2.5 Puts for $0.10 (2.8 times usual volume) with stock at $2.94
Paper bought 9,900 HTZ Sep 27 Calls for $1.50 (2.4 times usual volume) with stock at $25.69
Paper sold 2,794 FWLT Jul 25 Calls for $0.39 (21.7 times usual volume) with stock at $23.49
Paper bought 1,173 CBI Jul 65 Calls for $1.55 (3.8 times usual volume) with stock at $63.20
Paper bought 770 KKR Jun 23 Calls for $0.15 (2 times usual volume) with stock at $21.00

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Gold to Rally 30%? 5.20.2013

            It seems as though the story is far deeper than traditional correlation. The US economy seems to be improving and stocks are therefore, at the margin, perhaps a better buy than fear driven gold. Moreover, the Fed is slowly being expected to taper off its extremely easy monetary policy. Some traders were expecting the move however.

            As of Tuesday of last week, there were a record number of shorts in the gold market according to CFTC data. Large hedge funds and other large speculators were holding a record number of short deltas or a record number of positions that would benefit from lower prices. 

            The data suggests that this is the lowest number of speculative net longs in the market since July 2007. The last time there was a record number of high net shorts and low net longs is displayed in the chart below. The chart during this period is rather interesting. The record amount of shorts and the lack of longs may have fuel a massive rally. The chart suggests that after a quick double bottom in July 2007 gold then rallied 30%.

            While the economic and financial backdrop is dramatically different during the aforementioned period, the data and resulting price action is very interesting and calls attention to one-sided thinking. While everyone is looking down, perhaps it is prudent to look up, with a tight stop naturally.

Gold to rally

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