Paper bought 19,798 LIFE Nov 75 Calls for $0.60 (4.1 times usual volume) with stock at $73.55
Dollar strength is being felt across the currency and commodity spectrum. Gold is seeing another leg down in price as physical demand remains strong. Gold futures are fast approaching the $1322 bottom put in on 4/16/13. Interestingly enough, silver bounced yesterday of the $22.00 level which was the low on 4/16/13 too, but is down today by over a percent.
The gold miners again are seeing pressure on the back of dollar strength and gold weakness. In recent news NEM paid a smaller dividend, because gold prices have slid so much and their dividend is a function of gold prices.
The strong dollar is also being seen in the currency market. The Yen is again depreciating against the USD as the USD/JPY popped above 103 and similarly correlated the Nikkei 225 had a great day raging 2.3%. Japan will continue to be in focus as the BOJ pursues massive easing at the expense of the Yen. A way to play this is long YCS; which is the Pro-Shares Ultra Short Yen.
Despite the stronger USD, copper futures are up…perhaps reflecting the better than expected US economy rather that USD strength (where conventional thinking says it should be down as the USD appreciates).
Sina Corporation is set to release earnings today, May 16, after the closing bell. Even if earnings are a let down many close to the company are planning to use any dip in share price as an entry point. The value added services platform recently applied to Weibo is expected to become exponentially more profitable as it penetrates the market. If the proliferation of mobile device use in China were to continue at the present rate this could be a highly profitable enterprise. The VAS addition will likely boost historically low margins, though the business is still in a transitional phase. Interestingly, a large stake of Sina WeiBo was recently purchased by Alibaba, the most well known of Chinese e-commerce services. Many investors feel that a long term relationship between the two companies could yield impressive results.
Sina Corporation is not going anywhere particularly quickly, however in the mid- to long-term it would be hard to argue against their growth and profit potential. All of their key profit-generating elements are in growth-oriented markets, namely mobile advertising and commerce. If the company can honestly report an optimistic outlook for next quarter it would seem unwise to ignore SINA’s potential for impressive growth.
bradyr@keeneonthemarket.com
The carrier also announced that it will be Boeing’s first customer for the 7 series of Boeing’s future 737 MAX plane in 2019. This is in addition to the purchase of 10 pre-owned 737-700s airplanes to be delivered in 2014 and 2015, as well as making changes to other existing orders.
With all this activity, we saw the share get hit with a surge of bullish options movement but investors will continue eyeing the $15 level, which has evaded Southwest since 2008.
My Trade: Buy the June LUV 15 Calls for $0.20
Risk: $20 Per 1 Lot
Reward: Theoretically unlimited
Break-even: $15.20
Greeks of This Trade
Delta: Long
Gamma: Long
Theta: Short
Vega: Long
Paper bought 900 PXP Jun 45 Calls for $1.25 (2.7 times usual volume) with stock at $45.10
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Paper bought 714 TEX Jun 32 Puts for $1.35 (4. times usual volume) with stock at $32.68
Youku announced 1Q earnings this morning, and the stock has decline on worse-than-expected EPS, but seems to be receiving support due to an improved forecast for 2Q earnings. Revenues showed a decline quarter over quarter, but maintained a year over year earnings improvement of 21%. The company, like many others in its field, is currently investing heavily in mobile software development and advertising partnerships and continues to consolidate its operations after last August’s merger. As such, near term losses are expected to be compensated for by long-term improvements in mobile and advertising revenue.
China is on the verge of becoming the world’s largest mobile software and content market, and as the Central Executive Committee seems to have little interest in rolling back censorship laws it appears that Youku Tudou has what amounts to a captive audience. However it appears that others are interested in cutting into Youku’s market. Baidu, China’s leading online search engine, has expressed interest in entering into the streaming content market. Analysts are wary of this move, however, comparing the possibility to Google’s floundering attempt to monetize Youtube. The longer Baidu and other competitors delay, the firmer Youku Tudou’s foothold becomes and the better equipped the company is to cope with any future incidence of competitive market entry.
bradyr@keeneonthemarket.com