Options Trading Blog
Options Trading Tips and Strategies
Would An iPhone Mini Make Sense For Apple? 1.9.2013
Currently, the iPhone 4 is offered in a 4inch display with the iPhone 3G being offered at 3.5inches. If Apple continued to increase or decrease its screen sizes by .5 inches, I would imagine we would be seeing a 3inch or 2.5inch iPhone mini.
Right now on the market there are no ‘small’ smartphones offered and everything seems to be getting ‘bigger’. Nokia’s new Microsoft phone is getting a lot of ‘buzz’ around it about how fast and elegant its is. Personally, after viewing the phone it seems extremely heavy and just as fast as any other smartphone on the market. Sure, it has some nice features, but when does the point come when consumers are fed up with the same smartphone coming out, just with some small tweaks?
For example, the Samsung Galaxy is just like any other smartphone being released on the market but has one small difference…. a stylus. Now, is the stylus going to create enough ‘buzz’ around it to drastically increase sales for Samsung? Probably not…the stylus is not some revolutionary idea, its been around since the Palm.
Is decreasing the size of a product a revolutionary idea? No. But, Apple thought it would be a good idea to introduce the iPad mini. Sure, it’ll be successful since it has Apples brand backing it up, but its not the Apple that we know that is coming up with its own rules and shocking consumers every year with revolutionary products.
I believe the iPhone Mini will be a hit since there is currently no product like it on the market, and of course it still has Apples brand backing it up. It’s not the Apple we saw two years ago…but nonetheless, it’s Apple.
Author: Peter Nitso
Twitter: @PeterNitso
Dead Cat Bounce Or A Rebound For Herbalife (HLF)? 1.9.2013
HLF refuted by stating that it was not an illegal pyramid scheme and plans to give a presentation in its defense on its scheduled analyst day, January 10, 2013. The question is how much can HLF shares gain on the doubts of Ackman’s claims? Shares of HLF may continue to rise as the company prepares to defend itself against Ackman’s acqusations. HLF CEO, Michael Johnson, has called Ackman.s allegations “bogus”. HLF has hired the financial advisor Moelis & Co. and the law firm Boise Schiller to help defend the company. Taking such steps to defend the company may attract more support from investors who, as a result, have become more confident that the company is not an illegal pyramid scheme. Many investors bet against Ackman after he announced his large short position because they believed that the large bets against HLF would act as a catalyst for a larger rebound when the stock bounced back up. Ackman would also have to buy back shares he bet against, which could cause the stock to rise even higher. Activist investor Robert Chapman took a 35% position in response to Ackman’s bear raid. Chapman believes that the FTC will not take any action against HLF and, as a result, the company’s shares will not fall to critical levels. Chapman stated, “Without the FTC taking injunctive actions against HLF, Ackman’s crusade towards ’zero’ is doomed.” Hedge fund managers Robert Chapman of Chapman Capital and John Hempton of Bronte Capital both feel that HLF is running a legitimate business. The support of Chapman and Hempton, along with the lack of action taken by the FTC, may cause HLF shares to continue to rise amidst the short squeeze.
Author: Tyler Sciortino
Contact for questions or inquiries at tsciortino312@aol.com
Why Alcoa Should Be Your Best Friend (AA, SPY) 1.9.2013
The lack of volatility and the underwhelming nature of Alcoa has really prevented AA from being an interesting event, but this is exactly why AA earnings is an excellent event to trade. KOTM looked back at the last seven earnings reports from AA and found something interesting. If a trader sold the weekly straddle in AA the day before the earnings report the last seven time times, the total return would have been an impressive 18%! Not bad for just seven trades.
This exercise is simply taking advantage of the underwhelming nature of Alcoa, but clearly this is not a free 18%. The risks to the short straddle are unlimited, for the stock could blow through the short call and move up to infinity; in theory. While Alcoa moving up to $13, no less infinity, in the short term is highly improbable, it is still a risk to the trade and should be noted.
Either way, the data from this little exercise is interesting. The prevailing market media manufactured norm has become a reality, but this does not mean that one should ignore potential catalysts…large or small.
Feel free to e-mail any comments, feedback, suggestions, or general inquiries to…
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Market Recap 1.8.2013
S&P Emini Pivot points for 1.9.2013
Apple & Google Pivot Points for 1.9.2013
Futures Recap 1.8.2013
Andrew Keene's Market Expectations 1.8.2013
This would be a sharp contrast to last years’ 3 cent per share loss on earnings of $5.99 billion. Reasons for the improved outlook include aluminum’s price rebound, forecast to grow by 6.5% in 2013. With improving numbers from China pointing to a recovery, increased infrastructure spending in the region could spur demand beyond the price forecast for the year.
While expectations are low, Alcoa supplies aluminum to the auto industry and for iPads. I believe they will surprise us and report better than expected earnings, another indication that global growth is not slowing down.
A better gauge will be Bank Earnings with Wells Fargo (WFC) reporting later this week and Goldman Sachs (GS) and Bank of America (BAC) reporting next week. For the recovery to move to the next level, we need to see strong Bank earnings. The minor pullback we saw recently is healthy and should attract new buyers to lead us new 52 week highs and 1500 in the S&P 500 Futures.
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Andrew Keene
President/Founder
KeeneOnTheMarket.com
Unusual Options Activity Report 1.8.2013
Paper sold 4002 AOL Feb 28 Puts for $.65 (7.6 times usual volume) when stock was trading $29.55
Paper bought 18,541 LNCO Aug 35 Puts for $3.55 (255 times usual volume) when stock was trading $37.90
Paper bought 1372 STZ Feb 32.5 Puts for $1.55 (5.0 times usual volume) when stock was trading $34.88
Paper bought 4500 FCX May 33 Calls for $3.40 when stock was trading $34.87
Paper bought 8684 TSO Feb 40 Puts for $1.60 (3.3 times usual volume) when stock was trading $40.76