1:20pm (EST)
The bulls are trying to run today and have taken the market higher despite a downbeat report on housing. Other economic news has helped take the spotlight off the sector and merger and acquisition (M&A) news is also keeping the bears at arm’s length.
The market also got some decent earnings from Wal-Mart Stores (WMT, $51.37, up $0.96) and Home Depot (HD, $28.65, up $1.27) which has also put Wall Street in a buying mood.
Housing starts for July increased 1.7% month-over-month to 546,000 units, but was less than the 555,000 units analysts had been expecting. Building permits for July fell 3.1% to 565,000 and below the 573,000 number that had been penciled in.
The Labor Department reported the Producer Price Index for July showed a 0.2% monthly increase, as expected, and was the first increase since March. Excluding food and energy costs, the index rose 0.3% in July.
And finally, Industrial production jumped 1% in July, which was double the 0.5% growth forecast prediction.
Now to the good stuff…
In M&A news, Potash (POT, $140.45, up $28.30) rejected an unsolicited takeover proposal from BHP Billiton (BHP, $70.45, down $1.49) this morning and its shares are on fire. The company said the $130-a-share bid from BHP was not enough and that its bid was “grossly inadequate”.
This is always the normal, first reaction from a company and its board members when they get a takeover bid. At $130 a share, the offer by BHP represented only a 15% premium over Potash’s closing price on Monday so it was kind of a slap in the face. We have been following Potash for years and as matter of fact, we recently had some call option listed on them last week.
For those of you who haven’t been inside our Members Area, in addition to trade recommendations, we also have a Watch List where we focus on stocks and options that are about to breakout or breakdown. Sometimes we are waiting for a certain price to trigger point before we initiate the trade as we are waiting for a move below support or resistance. Other times, we list stocks and options on sectors that are on the move.
We listed the Potash August 120 calls (POT100821C00120000, $21.00, up $20.70) last Tuesday in our Members Area and at the time the options were going for 95 cents. Since the market was in a downdraft last week, it didn’t make sense to purchase these cheap out-of-the-money options since 70% of stocks move overall that the direction the market is going. As you can see though, the August call options have zoomed to the moon today and are up over 7,650% after closing at 30 cents yesterday!
We were also going to list the Potash September 120 calls (POT100918C00120000, $20.60, up $18.20) as a possible play and they have surged nearly 760%.
Of course, we can’t take credit for these being official trades but we did have some subscribers who did their homework and used our Watch List to their advantage.
Here was an email from this morning:
“Once again, thank you!
I trade POT almost every option expiration and had 20 options this morning. Just cashed in for $47.7K.
Thanks for adding it to your watch list.
Scott H.”
As we head to press, the Dow is showing a gain of 137 points, or 1.3%, and is at 10,439. The index has broken through slight resistance at 10,400 and has hit a high of 10,450 today.
The S&P 500 is higher by 16 points to 1,095, or 1.5%, but is once again fighting the 1,100 level while the Nasdaq is up 33 points to 2,215. Tech has busted out past the 2,200 level and it wil be interesting to see if it holds.
We were thisclose to bagging a big option trade but we are on the cusp of breaking through with others, we can feel it. The market has been choppy but we are still finding sectors and stocks that are hot or about to drop.
In fact, we have a couple of current trades that are on our Watch List that look ready to pop and we are releasing one of them today! Subscribers, check the members Area for the NEW TRADE!
Tags: BHP, hd, option picks, POT, Potash takeover bid, stock options trading, WMT
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on Tuesday, August 17th, 2010 at 1:25 PM and is filed under Company Commentary, Mergers and Acquisitions, Watch Lists.
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Potash (POT) Pops on Takeover Bid, August Call Options Up 7,650%
1:20pm (EST)
The bulls are trying to run today and have taken the market higher despite a downbeat report on housing. Other economic news has helped take the spotlight off the sector and merger and acquisition (M&A) news is also keeping the bears at arm’s length.
The market also got some decent earnings from Wal-Mart Stores (WMT, $51.37, up $0.96) and Home Depot (HD, $28.65, up $1.27) which has also put Wall Street in a buying mood.
Housing starts for July increased 1.7% month-over-month to 546,000 units, but was less than the 555,000 units analysts had been expecting. Building permits for July fell 3.1% to 565,000 and below the 573,000 number that had been penciled in.
The Labor Department reported the Producer Price Index for July showed a 0.2% monthly increase, as expected, and was the first increase since March. Excluding food and energy costs, the index rose 0.3% in July.
And finally, Industrial production jumped 1% in July, which was double the 0.5% growth forecast prediction.
Now to the good stuff…
In M&A news, Potash (POT, $140.45, up $28.30) rejected an unsolicited takeover proposal from BHP Billiton (BHP, $70.45, down $1.49) this morning and its shares are on fire. The company said the $130-a-share bid from BHP was not enough and that its bid was “grossly inadequate”.
This is always the normal, first reaction from a company and its board members when they get a takeover bid. At $130 a share, the offer by BHP represented only a 15% premium over Potash’s closing price on Monday so it was kind of a slap in the face. We have been following Potash for years and as matter of fact, we recently had some call option listed on them last week.
For those of you who haven’t been inside our Members Area, in addition to trade recommendations, we also have a Watch List where we focus on stocks and options that are about to breakout or breakdown. Sometimes we are waiting for a certain price to trigger point before we initiate the trade as we are waiting for a move below support or resistance. Other times, we list stocks and options on sectors that are on the move.
We listed the Potash August 120 calls (POT100821C00120000, $21.00, up $20.70) last Tuesday in our Members Area and at the time the options were going for 95 cents. Since the market was in a downdraft last week, it didn’t make sense to purchase these cheap out-of-the-money options since 70% of stocks move overall that the direction the market is going. As you can see though, the August call options have zoomed to the moon today and are up over 7,650% after closing at 30 cents yesterday!
We were also going to list the Potash September 120 calls (POT100918C00120000, $20.60, up $18.20) as a possible play and they have surged nearly 760%.
Of course, we can’t take credit for these being official trades but we did have some subscribers who did their homework and used our Watch List to their advantage.
Here was an email from this morning:
“Once again, thank you!
I trade POT almost every option expiration and had 20 options this morning. Just cashed in for $47.7K.
Thanks for adding it to your watch list.
Scott H.”
As we head to press, the Dow is showing a gain of 137 points, or 1.3%, and is at 10,439. The index has broken through slight resistance at 10,400 and has hit a high of 10,450 today.
The S&P 500 is higher by 16 points to 1,095, or 1.5%, but is once again fighting the 1,100 level while the Nasdaq is up 33 points to 2,215. Tech has busted out past the 2,200 level and it wil be interesting to see if it holds.
We were thisclose to bagging a big option trade but we are on the cusp of breaking through with others, we can feel it. The market has been choppy but we are still finding sectors and stocks that are hot or about to drop.
In fact, we have a couple of current trades that are on our Watch List that look ready to pop and we are releasing one of them today! Subscribers, check the members Area for the NEW TRADE!
Tags: BHP, hd, option picks, POT, Potash takeover bid, stock options trading, WMT
This entry was posted on Tuesday, August 17th, 2010 at 1:25 PM and is filed under Company Commentary, Mergers and Acquisitions, Watch Lists. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.