Posts Tagged ‘Ratio Put Spread’
Wednesday, March 2nd, 2011
Apple (NASDAQ:AAPL) appears to be bouncing back after a rough second half of February. From February 16 through last Thursday, the shares dipped from an annual high near $365 to below the $340 level.
Last Friday, as the market put in its first positive session for the week, Apple shares began to claw higher as well and have already recovered back above the $350 level. After rebounding off its 50-day moving average last week, the stock has now moved back above its 10-day and 20-day moving-average trendlines. (more…)
Tags: Apple, Bear Call Spread, Options Strategies, Ratio Put Spread
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Tuesday, February 15th, 2011
Yum! Brands (NYSE:YUM) is looking to shed two of its less-iconic brands (Long John Silver’s and A&W) but a long-term investor seems to be adding to his or her own bearish position by scooping up LEAP ratio put spreads. The January 2013 40 and 45 puts were active on Monday and it was the second time since late January we have noticed unusually large volume at these strikes.
Yesterday, as the stock was moving modestly higher to an eventual close of $50.30, an investor apparently sold 3,600 of the January 2013 40 puts, as they traded on the bid price of $3.00 apiece. At the same time, a block of 2,000 of the January 45 puts traded on the ask price of $5.00 each, suggesting they were initiated on the buy side. This spread likely traded with stock, but probably only to aid in its execution.
What is especially interesting about this trade is not even the long-term nature of the play or the 1.8 ratio at which it traded, but the fact that the same strikes saw similar action on January 27. On this day, it looks as though 8,000 of the 40 puts sold for $3.70 each while 5,000 of the 45 puts were bought for $5.90 each. If it is the same investor, they may just be adding to this position with a similar trade fewer than three weeks later. (more…)
Tags: LEAPS, options trading, Options Volume, Ratio Put Spread, YUM, Yum Brands
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Friday, February 11th, 2011
Consolidating is brewing in the financial sector, as NYSE Euronext (NYX) is in advanced merger discussions with Deutsche Boerse. If this pairing comes to fruition, it would create the world’s largest financial exchange, with trading capabilities on both sides of the Atlantic.
This potential pairing has reignited takeover talk in CBOE Holdings (NASDAQ:CBOE), which is the leading options exchange in terms of volume. The exchange just held its IPO last year – raising almost $340 million in the process – but some analysts are suspecting it could already be looking toward its next big change.
Thursday morning, CBOE reported fourth-quarter earnings of 32 cents per share, three cents above analysts’ estimates. Revenue was slightly above the consensus view as well. Exchange officials referenced the M&A talk but neglected to comment specifically, merely noting its own competitive position. (more…)
Tags: CBOE Holdings, Ratio Put Spread, Synthetic Long Stock
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Friday, January 14th, 2011
Watch for falling stock prices? Goldman Sachs recently expressed bearish sentiment on Wal-Mart Stores (NYSE:WMT), downgrading shares of the retailer to neutral from buy. Reasons for the downgrade included inflationary risks in the food and apparel sectors, which could limit margin upside. Goldman analysts also opined that the sheer size of WMT limits growth potential for same-store sales.
Going back to the late 90s, WMT has been the epitome of a range-bound stock, spending nearly all of its time bouncing between 40 and 60. The stock is now trading near the upper end of this long-term range. What’s more, the stock is within a dollar of its 52-week high of $56.27.
Simply buying or selling range-bound stocks may not be the quickest way to profitability; if the stock doesn’t move, portfolios don’t either. There are, however, options strategies designed for low-volatility stocks and indices. To learn more about the pros and cons of these neutral trading strategies, join Bill Sullivan and me for our free Two Traders, One Strategy series Tuesdays after the close. Next Tuesday’s webinar strategy? Iron condors. (more…)
Tags: Buy Write, Covered Call, Options Strategies, Ratio Put Spread, Wal Mart, WMT
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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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Monday, November 22nd, 2010
Research in Motion Limited (NASDAQ:RIMM) has earned some interesting and enigmatic reviews over the past few days. On the bullish front, Goldman Sachs increased its fiscal year 2012 and 2013 earnings estimates for the BlackBerry parent. The brokerage believes increased sales of tablet-style devices should help sales growth. One caveat to this seemingly bullish adjustment, however, is that Goldman kept its target at $50 (representing modest downside from current levels).
On the other hand, Stifel Nicolaus downgraded its rating on RIMM to hold from buy and reduced its 12-month price target to $45 from $65. The firm expressed concern that developers are devoting less time and money to apps for the BlackBerry operating system, suggesting the battle for smartphone domination may be a losing one for RIMM. (more…)
Tags: Calendar Spread, Ratio Put Spread, Research in Motion, RIMM, Weekly Options
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Thursday, November 11th, 2010
Moms and Dads, get your shopping lists ready! Wal-Mart Stores (NYSE:WMT) announced this week that it is dropping its prices on toys to get a jump on the holiday shopping season and potentially gain an edge over competitors such as Target (NYSE:TGT).
The world’s largest retailer is lowering the price of popular toys, expanded its overall toy selection, and aggressively marketing these new prices through a 52-page newspaper circular. Everyone loves cheap toys, right? Except for those who feel price cuts could equal margin cuts. (more…)
Tags: Covered Strangle, Ratio Put Spread, wal-mart stores, WMT
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Thursday, October 28th, 2010
Ford Motor (NYSE:F) remains in solid recovery mode judging by its latest earnings figures announced earlier this week. In the third quarter, F earned 48 cents per share, 10 cents better than analysts were expecting and 22 cents better than the year-ago period. Revenue, however, fell 4.3% year-over-year (but grew by $1.7 billion if the Volvo brand is excluded). After an initial drop out of the gate, Ford shares quickly recovered, closing up 1.5% in Tuesday’s trading.
The day after earnings hit the Street, analysts with UBS upped their 12-month price target on Ford to $18 from $16, reflecting nearly 30% in additional upside from current levels. The firm adjusted its target based on the company’s proven ability to expand its market share with new products. According to Briefing, UBS also feels Ford will improve its balance sheets in such a way that the company could be at a net cash position by the end of the year.
(more…)
Tags: Calendar Spread, Diagonal Spread, F, Ford Motor, Ratio Put Spread
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Friday, October 22nd, 2010
The leaves are beginning to fall, which means the holiday shopping season isn’t too far away. Some investors may think the time is right to look at adding some retail stocks to their portfolios.
With this seasonal trend in mind, brokerage firm Barclays upped its 12-month price target in Coach (NYSE:COH) to $52 from $50. This represents a move of roughly 20% from currently levels. The covering analyst noted, “…we believe the company’s growth strategies are sound and working, and the outlook is strong … we think Coach is well-positioned in the near term for a solid upcoming holiday season.”
Investors who want to tuck Coach shares in their satchels could consider a bullish option strategy to potentially gain leverage over simply buying the stock outright. Bearishly skewed investors, on the other hand, might consider options in lieu of shorting the shares. (more…)
Tags: Call Backspread, Coach, COH, Options Strategies, Ratio Put Spread
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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
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