Posts Tagged ‘Bull Call Spread’
Wednesday, June 8th, 2011
The much-ballyhooed Apple Worldwide Developers Conference was held Monday, and Steve Jobs was there in his ever-present turtleneck to offer the keynote address. As expected, among the product team’s major announcements was a new operating System – OS X Lion – and the iCloud service that will sync a user’s personal information (email, contracts, calendars, iBooks, song purchases, and more) among Apple devices and the web. Example – buy a song on your iPad and it will be available to download on your iPhone without having to plug anything in.
This week, however, Apple shares have dropped 3% in a solid demonstration of “buy the rumor, sell the news.” In the two weeks leading up to this meeting, the stock rose roughly 4% and has sharply backpedaled beginning in early-afternoon trading on Monday.
Perhaps investors were hoping for an iPhone 5 announcement or were underwhelmed by the unveilings they did hear. Either way, the reaction is making Apple investors wince, at least for a little while. (more…)
Tags: AAPL, Apple, Bear Put Spread, Bull Call Spread
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Monday, January 31st, 2011
No, that title’s not a misprint and you don’t have déjà vu. Japanese automaker Toyota Motor (NYSE:TM) is under fire again because of another recall, which this time impacts 1.7 million vehicles worldwide. The culprit this time is a fairly broad one – “defective parts” – including but not limited to leaky fuel systems.
In the U.S., the recall is expected to impact about a quarter-million Lexus vehicles. The majority of the impacted autos were sold in Japan. This latest recall brings the total number of Toyota vehicles recalled to more than 15 million globally since late 2009.
On the “plus” side, arguably, is the company’s transparency surrounding the latest defect. TM has been shouldered with fines of nearly $50 million due to its perceived hesitancy in reporting problems it discovers. As a result, the automaker has pledged to be more forthcoming with information. (more…)
Tags: Bull Call Spread, Risk Reversal, Synthetic Short Stock, TM, Toyota Motor
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Thursday, December 2nd, 2010
With the holiday shopping season now officially unleashed, analysts and investors are reviewing the nation’s publicly traded retailers. Early this week, Bank of America adjusted its 12-month price target on Kohl’s (NYSE:KSS) to $60 from $55, maintaining a “buy” rating.
The firm said November sales numbers are poised to rebound following a weak October. A price target of $60 implies less than 10% of upside from current levels. This would be roughly on par with the stock’s 12-month return of 6%. In the last three months, however, KSS shares have increased by more than 16%. (more…)
Tags: Bull Call Spread, Kohls, KSS, Option Strategies, Ratio Put Spread
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Wednesday, November 24th, 2010
The seemingly unstoppable force which is Netflix (NASDAQ:NFLX) continued higher on Tuesday even while the broader market reversed sharply lower in early trading. Yesterday, the company launched a streaming-only video subscription plan and upped the prices for its DVD mail delivery plans. These business decisions were received well on Wall Street and the stock easily cruised to a new all-time high. In fact, Oprah declared Netflix as one of her favorite holiday things!
NFLX is up almost 250% in 2010 and is higher by roughly 570% in the past five years. There are typically two schools of thought when it comes to a powerfully trending stock such as NFLX. One follows the “trend is your friend” mantra and believes an outperforming stock can continue to power higher until there is a palpable fundamental shift. (more…)
Tags: Bull Call Spread, Iron Condor, Netflix, NFLX, Options Strategies, options trading
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Friday, November 5th, 2010
Trading the biotech sector can be a tricky business, especially when an FDA decision hangs in the balance. Such is the case with Human Genome Sciences (NASDAQ: HGSI), which is awaiting a ruling on the lupus drug Benlysta by the end of the year.
Some analysts expect the stock to shuffle along sideways until this decision is made, at which point a dramatic price swing could follow. Option traders today may be hoping for a positive resolution as they traded a bull call spread on Friday morning.
In late-morning activity, blocks of 4,900 contracts changed hands on both the December 26 and December 32 calls. Both calls had modest open interest heading into the session, so it’s reasonable to assume the volume traded to open.
With the shares trading around $25.60, the 26-strike call traded for the ask price of $4.30 per contract and the 32-strike call traded near the bid price at $1.35 apiece. The net debit for this spread was $2.95 each, or total net premium of $1.4 million. (more…)
Tags: Bull Call Spread, HGSI, Human Genome Sciences
Posted in blog, What's Hot | No Comments »
Wednesday, November 3rd, 2010
Visa Inc. (NYSE:V) moved slightly lower last week despite a positive earnings surprise and an encouraging guidance for the current fiscal year. Following this earnings report, RBC reiterated its “outperform” rating on Visa stock but lowered its 12-month price target to $100 from $113. This new target still allows for almost 30% of upside from current levels.
Was this a case of “sell the news,” or do investors and analysts have reason for concern when it comes to the shares? Visa shares have lost 10.5% year-to-date, underperforming the broader market and peers such as MasterCard (NYSE:MA), down 3.8% and American Express (NYSE:AXP), up 4.3%.
(more…)
Tags: Bull Call Spread, Long Put Butterfly, V, Visa
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Thursday, October 14th, 2010
Wynn Resorts (NASDAQ:WYNN) shares have been on a winning streak this year, rising 75% from their 2009 close and surging more than 12% in the last month alone. But with the shares newly trading above the 100 level, is it time for a pullback? There have been recent signs of caution in the casino industry that could trickle down to impact WYNN.
Earlier this week, WYNN’s peer MGM Resorts International (NYSE:MGM) issued a third-quarter revenue guidance that was worse than expected. What’s more, MGM’s founder (billionaire Kirk Kerkorian) is in the process of selling off some of his stake (roughly 28 million shares) in the open market. The casino operator also got hit with a downgrade from Soleil Securities to hold from buy. (more…)
Tags: Bull Call Spread, Put Tree, WYNN, Wynn Resorts
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Thursday, October 14th, 2010
Google (NASDAQ:GOOG) is one of my favorite stocks to trade, simply because I know it well and its high stock cost makes it a great potential candidate for option strategies. You should get to know any stock before placing a trade. The more intimate you are with a stock, the more prepared you will be.
GOOG, in typical fashion, reports earnings today, just before October expiration tomorrow. For some traders, using October options to trade GOOG just ahead of the report can be a way for them to speculate on the movement (or lack thereof) in the tech giant. This front-month action can be a risky proposition and will tend to give traders a more binary result, with little or no time to spare.
For most of us, having a little bit of breathing room when it comes to days until expiration may be the preferred choice, if we are not looking for a dramatic (and nearly immediate) resolution. (more…)
Tags: Bull Call Spread, GOOG, Google, Ratio Put Spread
Posted in blog, What's Hot | No Comments »
Monday, October 4th, 2010
Specialty retail name GameStop Corp. (NYSE:GME) is atop the OptionsHouse Hotlist today as a number of strikes have seen large blocks change hands. It appears as though an investor is rolling out of an existing front-month call spread and buying an intermediate-term bull call spread and selling a later-dated out-of-the-money put in order to finance the purchase.
The details are as follows: around 11:30 a.m. Eastern Time, blocks of 3,000 contracts traded on five different strikes. The active strikes were the October 20 and 24 calls, the April 16 put, and the April 20 and 24 calls. Based on floor data (and existing open interest levels), it looks as though the October 20/24 call spread was sold to close for 36 cents, the April put was sold to open for 81 cents, and the April 20/24 call spread was bought to open for $1.41 (buying the 20 strike, selling the 24 strike). The net debit for the five-legged transaction, when all was said and done, was 24 cents. (more…)
Tags: Bull Call Spread, GameStop, GME, Short Put
Posted in blog, What's Hot | 1 Comment »
Monday, October 4th, 2010
Earlier this week, FedEx (NYSE:FDX) said it would raise prices by an average of 3.9% beginning January 3 (allowing those holiday packages to go out at the old rate, just under the wire). This could be bad news for companies who pay a lot of shipping costs but will help FedEx offset rising fuel costs. The company’s fuel bill rose 33% over the last year to $887 million.
The price increase was inevitable and probably expected; main competitor United Parcel Service (NYSE:UPS) nudged its own rates higher by 4.9% last year. On one hand, these price increases show some confidence in the health of the shipping business. And shipping is seen as a proxy for the overall economy; the more packages shipped, the more goods produced and sold (or so goes the theory). (more…)
Tags: Bull Call Spread, FDX, FedEx, Iron Condor, Option Strategies
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