Halftime Report for 2.8.2012

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In unusual options acitivity we see a trader buy LOGM Feb 40 Puts when the stock was trading $41.60 for $1.20, then they bought more of these Puts for $1.90, $2.20, and now they are $2.50 bid.  WOW, I traded to buy Puts in March, but with the markets so wide I did not get on this trade.  The stock has traded 212 times usual volume, now that is a trade.  Also, we a trader bought 2145 RGC Feb 12.5 Calls for $.65, so in this stock I bought the March 12.5 Puts for $.35 and also bought stock at $13.02.  This accounted for 9.2 times usual volume.  Other than that just taking profits in SOL and YGE, but have not traded too much today.  Look for my tweets later in day to get my earnings trades in AKAM, CSCO, and GRPN.  

Read more about profits by keeneonthemarket.com

Morning Rage 2.8.2012

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RagegirlU.S Equities finished flat in Tues trading although S&P cash touched July ’11 levels. Financials were among the weak. ES volume was a little better then yesterday’s embarrassing volume. The Vix got slammed towards the close. Might not be a bad time to buy some cheap protection. . The market is trading funny IMO.  It is the year of the momentum stocks. The heaviest shorted/most hated stocks are gaining strength and the shorts are running even w crappy fundamentals that don’t support the moves.The Euro bounced off its morning 1.30 level to make fresh 2 month highs. Has Greece found someone to bail them out (rumors are LTRO) or is the whole world short the Euro and starting to cover(according to CFTC data)? USD is propelling the “risk on” trade for the time being.In trading Wed. all eyes will be on the 10 yr note auction and DOE inventory report. Look for big moves in WTI regardless and for the brent/crude spread to widen.

Earnings Trade of the Day (DIS) 2.7.2012

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Reason I like this Trade:  Disney reports earnings after the bell today and I am bullish on their earnings.  Their earnings are on track for $.71 on $11.19 Billion in revenue, and I do not want to fight the trend which is higher in Disney. There is immediate support at $39 and even though there is a resistance pivot level at $40.75, I think that Disney can rip to the upside, climbing to its May highs of $44.

They should benefit from an economic recovery even though the ESPN viewer-ship from the BCS games has been down year over year, I think Disney will beat on earnings and climb higher.  There is a 5% implied move and Disney has moved over 6% on each of the last 4 quarters.
In the options front, Calls have out traded the Puts on a 3 x 1 ratio.  In this strategy I want to buy the March 41-43 Call Spread for $.70.  I usually like to trade the front month options, but with the volatility being so cheap the March Call Spread is only $.10 higher than the Feb Call Spread and it gets me an extra 4 weeks of time.  This spread can be worth $2 giving me a 2×1 risk vs reward payout.

If you have any questions please email me at andrew@keeneonthemarket.com.

UPDATE 2.8.2012 I did not like the way that Disney was acting last night, so I was happy that it got a POP today.  This was a one day trade for me, like most earnings are.  I sold this spread out for $.86 and paid $.72, so that is good for a 20% gain overnight. Taking profits and moving on to the next trade.  

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Halftime Report for 2.7.2012

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In unusual we saw a customer purchase 1500 TEX February 22 Puts for $.95 and with stock selling off those Puts have now popped to $1.05.  We also saw a customer buyer of 5,000 GDXJ March 35 Calls for $.20 which is yet another bull play for the GDXJ.  We also saw weekly Call buyers in ABX which were good for a double and I flagged those on twitter.  I am glad that I sold my position in my long Calls in SEE out, because for the second straight day we see Put buyers in earnings.  Today has not brought the unusual options flow that some other days bring us and today there has been less to trade than day’s past.  I always try not to overtrade, but when I get a good trade like to jump on board.  The rest of the afternoon might be slow, but I am always watching the unusual options activity for possible trades.

Why I'm Getting Hungry for Lions Gate (LGF) by Ben Hoben

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Why I Like Lionsgate (LGF)
Obviously the big short term driver here is going to be the Hunger Games movie.  I’ve been waiting for the stock to make a little pull back but it just doesn’t want to go down.  I’m sure some of the success of the upcoming Hunger Games movie is being priced in and is the reason for the move up but I still think there is plenty of room to run, especially if it is a huge blockbuster like the Twilight movies.The economy may still not be recovering as fast as everyone would like but one thing is certain: the teens still have money to spend and will go out to see this movie.What else is great about LGF is that it isn’t a “one trick pony”.  They have a pretty nice library of movies and television shows and are producing some great content right now.  Just look at the Emmy award winning series Mad Men.I think what you are seeing right now with a company like Netflix is that content is king.  Part of the reason for Netflix’s downfall is the realization that content is going to become more expensive.  They are just the distribution channel.  The real opportunity lies with the content owners like Lionsgate.

Full Disclosure
I finally bought the bullet and quit waiting for a pullback and bought about a 1/3 position in LGF this morning at $11.10.  I also bought a few Jun 15 calls yesterday for 35 cents but only with a small amount of capital.  Lionsgate reports earnings on Thursday February 9th after the close.I may add more LGF over the next two days as I imagine the conference call on Friday the 10th will be nothing but positive with the release of the Hunger Games coming up.  I want a full position going into the movie release.  This could end up being a longer term holding if all goes well especially with the possibility of more Hunger Games movies.

2/24/12 Update Sold half of my LGF June 15 calls.  Bought at 35 cents and out at $1.05.  Still holding the other half as well as all the stock bought at $11.10.  Unfortunately I only bought a 1/3 position before earnings and didn’t get a chance to buy more.

Metaswing.com | CBOE VIX Remix 2.7.2012

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We will be using our Volatility-Based Technical Analysis (VBTA) to gain additional perspective to what can be offered versus traditional technical analysis. During the last two months, I continue to get asked the same question, “Don’t you expect a rally in volatility?” The answer has been, “No.”  And it has paid off extremely well as we have been mostly long during this time period. And this was during the Greek tragedy part II and everyone and their mother trying to call a market top. Let’s take a look at what has been driving our opinion of compressing vols. Below, is the daily chart that I published on 2.4.2012 which comes from Friday’s close. I have shaded current/important support/resistance levels that we calculate through volatility math.

Here are the objective take aways:
•Support has continued to cascade lower
•Bounces in volatility have been countertrend off of said support and they have been contained well by resistance (can especially see this intraday – not shown)
•Trend & Trend Strength continues to be negative (hashed red lines circled below)
•VXN is not extremely oversold, volatility-wise (we trend compensate the indicator – circled in the bottom pane)•Immediate support and resistance (N Bands) are falling, giving VXN more room on the downside and less on the upside
•The biggest thing is the range created by volatility based support/resistance 14.81-19.10 


In summary, the evidence points to vols continuing to compress. There will most likely be periodic hiccups, that are tradable though, if you know how to find valid support. In fact, if you pull up the chart, you’ll see that this upper level is holding nicely. I have also included some levels above this range. I would look to take action at these levels if some unexpected news were to come into the market place and drive the vols higher. Finally, I will be extremely cautious at the lower end of this range as it is support from multiple time frames. You can find out more about (VBTA) and The A Game Trading Letter which applies it here: http://metaswing.com/site/a-game-trade-letter/ 

Morning Rage 2.7.2012

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RageZombieMonday, U.S equities finished flat for the day. Brent traded and settled at a $2 premium to WTI. The Euro traded in a narrow trading range for most of the day at the 1.3 level. Is all the bad news priced in the Euro or will the market witness more “headline risk” in the near future? The USD traded higher all day and finished near its Fri highs. While the world is awaiting Greek PSI negotiations to conclude.. The S&P had its lowest “non-holiday” volume trading day in over 10 years. Overseas market moving events for Tues trading include Germany IP #/Taiwan exports and Merkel will give a speech on Europe’s future.  In U.S markets, Lazard, Yum brands, and Anadarko are reporting Tues. Bernanke will testify before congress regarding the budget.