Movers and Shakers (CRM) Up $11.60 (8.75%) to $142.32

Reaction: Was trading as high as $148.02 this morning. It quickly sold off to $140, but bounced from there.  CRM opened at $145.54 on 2.5x average daily volume.

Next Targets to Upside and Downside: CRM has been trading in a huge range between the July 2011 Highs of $160 and traded as low as $98 in January of 2012.

Estimates and Guidance are increasing for Salesforce .  Morgan Stanley predicts continued margin expansion.  Salesforce mentioned in the conference call that it won 100(+) 7 figure deals during the quarter.  Also, Nomura reiterated its “BUY” recommendation on CRM. Nomura expects CRM to exceed revenue and increase its guidance.  CRM’s 50 day moving average is around $113.82 and 200 day moving average is $128.20.  Salesforce mentioned in the conference call that it won 100+ (7 figure) deals during the quarter.  Also, Nomura reiterated its “BUY” recommendation on CRM. Nomura expects CRM to exceed revenue and higher guidance.

Morning Rage 2.24.2012

Earnings:

Jcp- Quarterly earnings estimates ending(Q4E) $ .67 and $5.5 Billion quarterly revenue estimates ending (Q4E). In my opinion, JCP could miss bad on earnings and its PPS could still rise due to low expectations. Also, I can see JCP beating earnings and selling off due to low guidance that’s already baked in the stock price.
Newmont Mining Corp- Quarterly earnings estimates ending QE4 of $1.26 and quarterly revenue estimates of $2.7 billion. Since Obama has been president it has been, “DRILL, DRILL, DRILL.” With US oil production up 9% and US oil leases higher year over year, it is hard to be short oil mining stocks with WTI Crude at $109.

Cam at the Close 2.23.2012

American International Group (AIG) saw profit in their fourth quarter rise by 77%. This was due to a big tax benefit. Shares are trading up 4.5% to $29.00. This could lift the financial sector as a whole tomorrow. Deckers Outdoor Corp. (DECK) is trading down pretty heavily. The company beat EPS and Revenue estimates but is still getting smacked. Stock is currently down 6.85% to $82.41. Good old Crocs Inc. (CROX) is getting hammered as well; this shouldn’t be a surprise to anyone. Only in America can the most hideous pair of clogs sell. Stock down 9.85% to $18.25 as CROX issued poor Quarter 1 guidance. The SPY closed at $136.70 after putting in a low at exactly $135.50. The trend of morning sell offs and afternoon buy programs stills seems to be the status quo for 2012. The SPY is up 7.5% for the year so far.

Written by Cameron Patrick

@Cam_Patrick

Earnings Plays of the Day 2.23.2012

CRM TRADE:

Trade: I bought the CRM March 120-140 Strangle and sold the Feb weekly 120-140 Strangle for $2.69 total. 
Profitable:
 I make money on this trade if CRM closes between $120-$140 and the March volatility does not get crushed too bad.
Break-even:
 I break-even on this trade if CRM Stangle Swap is worth $2.69.
Unprofitable:
 This trade is unprofitable if CRM Strangle Swap is worth less than $2.69.  This is a very hard trade to explain, but I basically want to the front month Strangle to be worthless and have March volatility not get crushed, so the March strangle is worth more than $2.69.

UPDATE 2.24.2012 I like to think of the earnings trades as one day bets, takes profits or losses then move on.  I sold 25% of this Calendar spread for $3.15, 25% at $3.50 and I have half still on.  I will take this trade off before the end of the day, but it looks like I will turn $2.69 into $3.50ish, good for 30% profit in one day.

DECK TRADE:

Trade: I sold the DECK March 92.5-95 Call Spread for $1.05. 
Profitable:
 I make money on this trade if DECK closes below $93.55 by March 16, 2012.
Break-even:
 I break-even on this trade if DECK closes at $93.55 by March 16, 2012.
Unprofitable:
 This trade is unprofitable if DECK closes above $93.55 by March 16, 2012.  The most I can lose on this trade is the amount this spread can be worth $2.50 minus the amount I sold it for $1.05 for a total of $1.45

UPDATE 2.24.2012 With DECK getting slammed, this spread that I sold for $1.05 is now worth $.15.  I put a $.05 bid in the “Order Book” to take the trade off and move on to the next one, another HUGE winner.

GPS TRADE:

Trade: I sold the GPS March 24-25 Call Spread and 22-21 Put Spread for $.48 total. 
Profitable:
 I make money on this trade if GPS Closes between $21.52-$24.48 by March 16, 2012.
Break-even:
 I break-even on this trade if GPS Closes at $21.52 or $24.48 by March 16, 2012.
Unprofitable:
 This trade is unprofitable if GPS Closes under $21.52 or above $24.48 by March 16, 2012.  The most I can lose on this trade is the amount this spread can be worth $1 minus the amount I sold it for $.48 for a total of $.52.

UPDATE 2.24.2012 With GPS selling off and staying above $22, this spread is decreasing in value, because premium and volatility gets crushed after earnings.  I put a $.30 bid in the “Order Book” and will be looking to take profits and move to the next trade.

Trade of the Day (SNE) 2.23.2012

Reason I like this Trade: There are unusual options activity orders, then there was an order in SNE that I needed to jump on.  Someone bought 2500 SNE July 23 Calls, they paid $.90 for it and I decided not to trade SNE just yet.  Then when someone else, or maybe the same person bought another 2500 of them for $.95, I decided I could not just sit back and watch, so I jumped on board.  Later today, I saw someone buy 3485 SNE July 22 Calls for $1.40 and someone else sell 5000 SNE July 16 Puts for $.35, making my belief that SNE will rally higher much stronger.  I will be looking to piece of it it, just like I took profits in SEE, SYY, and SVU.  The chart looks strong and could test $24 very soon.  (See Disclaimer)  

UPDATE 2.24.2012 With SNE ripping higher by more than $.55 today, these Calls are really working out.  Yesterday I sold 10% of my position for $1.10 and today they are worth $1.20.  I am offering 25% of my position in these Calls at $1.30.  I still think SNE can trade $22.50, so I will leave the majority of my position on for more upside, but a nice winner so far.  

UPDATE 2.27.2012 I sold 10% of my position at $1.10, so I still have a 90% position on.  Even with the stock market selling off, I think SNE has more room to run to the $22.50 level.  These Calls are currently worth $1.15, good for over 20% gain.

UPDATE 2.28.2012 Sony traded up to $22.50 today and hit my target. I am still LONG a 75% position and it looks very strong, so I will try to piece out of Calls piece by piece.  My next offer on the Calls is $1.60

UPDATE 2.29.2012 Even with Sony getting slammed today by more than $.75 to $21.50, these Calls are worth more than I paid for them.  They are still worth $1.10 and I paid $.95 so it is still profitable  

UPDATE 3.1.2012 A little POP never killed anyone, I am leaving a 75% position on and I am LONG SNE.  These Calls are worth $1.15.

UPDATE 3.2.2012 With SNE selling off a bit, I have started to release that if I have a 30% gain in 3 days, I should take the position and move to the next trade.

UPDATE 3.5.2012 Proving once again that I need to take more quick profits, these SNE Calls are now only worth $.80, but I will not look to add to this position, I am glad that I took some partial profits.

UPDATE 3.9.2012 Sony has been all over the place and it sold off and now it is rally back.  I think the stock can trade back to $22.50, so I will leave this trade on for more upside.

UPDATE 3.22.2012 With Sony selling off again today, these Calls are now only worth $.60, indicating to me that I have to take profits quicker and faster.  Another lesson learned.

UPDATE 4.9.2012 With positive news from SNE today, this stock still can’t rally higher, but once again since the trade it on until July, I will leave it on, because anything can happen

Read more about break by www.keeneonthemarket.com

Halftime Report for 2.23.2012

Salesforce reports today after the bell . Quarterly earnings (Q4E) $.40 and Quarterly revenue (Q4E) $524M. Salesforce has a PEG of 3.7 and Forward PE of around $85. At this price I think CRM might be overvalued. SHLD ripped 10$ on reporting a $2.5 billion loss, hmmm.

Unusual Options Activity:

We saw a customer buying SNE JULY 22 and 23 Calls and sold the $16 Puts. In my opinion, this is very bullish activity.SNE is trading 9.5x average volume. Andrew Keene bought the July 23 Calls for $.95.

Also, we have seen a big sell order of 10,000 contracts of IAU on April 18 Calls for a $.25. This could be covering of a prior position or an outright short.
By: Greg Zimny