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Monday, March 1st, 2010
1:00pm (EST)
The bulls came out in a buying mood this morning as mergers and acquisitions (M&A) activity continues to pick up and more information about a possible European bailout of Greece has lifted the market.
At midday, the Dow is up 80 points, or 0.8%, to 10,404, while the S&P has climbed 10 points, or 0.9%, to 1,114. The Nasdaq is showing the most strength as the index is up 31 points, or 1.4% to 2,270.
We mentioned the AIG (AIG, $26.30, up $1.53) news this morning and in other M&A activity, OSI Pharmaceuticals (OSIP, $56.41, up $19.39) is up a whopping 52% after getting a buyout offer from Japanese drugmaker, Astellas Pharma. The $3.5 billion takeover offer for OSI Pharmaceuticals is being presented directly to shareholders after being rebuffed several times by executives at OSI.
We saw some action in shares of OSI last week but we didn’t think a buyout was right around the corner. Too bad. The March 35 calls (GHU100320C00035000, $20.90, up $18.70) are up 850%…
In economic news, the Commerce Department said personal spending rose 0.5% in January. Wall Street was looking for an increase of 0.4%. However, personal income edged up 0.1%, below the 0.4% forecast by the pencil pushers. It was the slowest growth in income in four months.
Meanwhile, the Institute for Supply Management (ISM) said its manufacturing index fell to 56.5 in February from 58.4 in January. Wall Street was looking for a print of 58. The one silver lining was that the report sees manufacturing employment improving. The ISM releases its services industries index on Wednesday.
Before we go, we thought we would mention the strength Sandisk (SNDK, $31.95, up $2.80) is showing today after the company boosted its first-quarter guidance to reflect more demand for memory chips. The 9% pop has the stock at a new 52-week high. Sandisk was on our Watch List but we just missed bagging a 200% return…
We have some other trades that are doing really well today but obviously we are disappointed we didn’t pull the trigger on Sandisk last week. Current subscribers, check the Members Area for the juicy updates.
Tags: Mergers and Acquisitions, option picks, option signals, options alerts, OSI Pharmaceutical, OSIP, Sandisk, SNDK, stock options trading
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Mergers and Acquisitions, Option Trades | Comments Off
Wednesday, February 10th, 2010
9:05am (EST)
The market got a breath of fresh air on Tuesday and the bulls needed it after watching the Dow fall below 10,000 on Monday. Futures were already pointing towards a slightly higher open yesterday morning but shortly before Wall Street’s lunch hour news broke on a possible rescue package for Greece.
The market soared in seconds and stayed in a solid uptrend for well over an hour before giving back some of its gains close. The Dow managed to finish with a 150 point gain and closed at 10,058. The S&P 500 added 14 ticks and closed at 1,070 while the Nasdaq tacked-on 25 points to settle at 2,150.
In earnings news, Walt Disney (DIS, $29.84, up $0.36) reported profits of $0.44 a share, down from $845 million, or $0.45 a share, from a year ago but still good enough to beat Wall Street’s figures.
Revenue came in at $9.7 billion. If you do some fancy accounting and exclude certain items which all companies do, Disney actually earned 47 cents a share. That beat the 38 cents the suit-and-ties put on the board for the company’s profits.
From the “Imagine That” department…Airgas (ARG, $61.35, up $0.80) announced that its board has unanimously rejected the buyout proposal from Air Products & Chemicals (APD, $67.95, down $0.20). The deal was announced last Friday and we told you that there had already been two previous offers.
It looks like APC will have to go hostile if it wants Airgas.
Look for some Fed news out at 10am on how they plan to unwind stimulus measures without sending the nation back into recession. As we head to press, Dow futures are up 10 points to 10,014 while the Nasdaq futures are higher by 2 to 1,753. S&P 500 futures are flat at 1,066.
Tags: Air Products & Chemicals, ARG, option picks, option signals, options alerts, stock options trading, Walt Disney earnings
Posted in Company Commentary, Market Analysis, Market Commentary, Mergers and Acquisitions | Comments Off
Friday, February 5th, 2010
1:20pm (EST)
The market is trending lower once again despite the ”surprise” unemployment rate numbers from the Labor Department this morning. The Dow is well below the 10,000 level and appears headed for its fourth-straight weekly loss.
The bulls got excited when they heard the unemployment rate unexpectedly fell in January to 9.7% from 10%, as Wall Street had pegged a number of 10.1%. That was the good news. The bad news was employers cut 20,000 jobs, more than the 5,000 expected.
As a result, the Dow is down 74 points, or -0.7%, and is currently at 9,928. The S&P 500 is off by 8 to 1,055 while the Nasdaq is getting clipped for a 6 points and stands at 2,120.
Just when we said we needed to see more M&A activity…Air Products and Chemicals (APD, $68.14, down $5.55) has made a $5 billion bid for Airgas (ARG, $60.27, up $16.74) and is willing to go “hostile”, if need be. Shares of Airgas are up 38% but the February 50 calls (ARGBJ, $10.20, up $10.15) (ARG100220C00050000) are up 20,000%. Ah yeah…we wish we would have gotten you in that trade yesterday.
The stock is trading above the offered price of $60 a share which could signal that a higher bid may be needed to get the deal done. A merger would create one of the biggest industrial gas companies in the world and this is the third time Air Products has made an offer as the other two were shot down.
Air Products already knows it may have to dig deeper in its coffers.
If you will notice, we included two different option symbols to reflect the upcoming changes that are going to be taking place in the option pits. With 20+ inches of snow coming our way, we will have no excuse for not getting this information out to you this weekend.
We are old school and we hate to see the change but it should make option trading easier and you really don’t need to worry about all those confusing numbers. We are going to break it down for you on how they work but don’t sweat it.
As we look forward to earnings next week, Hasbro (HAS, $30.73, down $0.53) could be in-play before the market opens on Monday. Wall Street is looking for the company to report a profit of $0.82 cents a share on revenue of $1.3 billion. As far as the options, it looks like put volume is outpacing the call options but traders could be selling the puts as well.
Our checks indicate that the company had a great quarter and they could surprise Wall Street by a few cents. That might not mean anything given the current market environment as the stock could sell-off despite an earnings beat.
We have updated our current trades before we head out and make sure to look for a complete portfolio update over the weekend as well as the options symbol review in the Members Area. When we post them, we will be sure to send out an email.
Tags: APD, ARG, HAS, Hasbro, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Mergers and Acquisitions, Sectors, Trading Psychology | Comments Off
Wednesday, December 9th, 2009
9:00am (EST)
The market had a lousy Tuesday and it was one of them days where you just knew we were going to stay in the red. Futures were pointing towards a crummy open and the bulls did not do a good job of holding the Dow above 10,300. We have talked a lot about support and resistance levels lately and while they aren’t exact they help us stay focused.
The Dow finished the day with a 104 point loss to close at 10,285 but we aren’t THAT worried about…yet. The “zones” we have been going through still favor the bulls but we might get one foot ready for the back door if we fall below Dow 10,000. That being said, we still think a “blow the top off the roof” type rally could be in the cards.
The S&P 500 fell 11 points and closed at 1,091. We still have support at 1,067 but if that level fails it could crack the seal for further leakage. If the bathroom line is full and you’ve had a bunch of beers this is how 1,067 is going to feel for us…
From the “Where have you been department”:
Every now and then have we will find a stock that looks really good for a option trade and one of the first things we look for is volume. Most of you know we don’t buy stocks because they take too much capital and the returns from options simply dwarf the returns you get from stocks. Remember, a 5% move in a stock can mean a 100% return in the right option which is why we play the game.
If a stock has low “daily volume” then it means the options are probably thinly traded as well. When we do option trades we try to pick stocks that have a lot of volume because the bid and ask on the options are usually between 5-10 cents and the options are liquid. We also like to pick stocks that are volatile so that we can play them both ways. Call options on the way up, and put options on the way down.
One stock we were/ are bullish on is AthenaHealth (ATHN, $44.96, down $1.10) which hit a high of $47.75 last Friday. Here were our thoughts from July 20th (quotes from that day):
ATHN Could Challenge New High
AthenaHealth (ATHN, $38.03, up $1.64) could see some action as the healthcare reform bill is heating up. The options aren’t as liquid as other stocks…the August 40 calls (QJNHH, $1.55, up $0.55) have only traded 10 contracts.
The September 40 calls (QJNIH, $1.95, up $0.60) have traded about 50 contracts but because of the low volume we may crowd this trade if people start piling in. That could be a good thing as well.
AthenaHealth’s CEO, Jonathan Bush, has made the TV rounds and he is worth listening to. I love his insights on the HealthCare sector but the option pits just don’t have the volume. Let’s see where these things end up in a month or two but because of the low volume, I’m staying away. The stock might be the better buy if you are looking for some quick profits. The 52-week high is $39.29… (END)
Aeropostale (ARO, $31.06, up $0.86) got upgraded to “Buy” yesterday with a long-term price target of $45. The stock made it to a high of $31.50 and held its gains for most of the session. If the company would not have scared the BeJesus out of Wall Street when they announced earnings last week, the stock would be above $35 by now…
As we head to press, Dow futures are up 30 to 10,301 while the Nasdaq 100 futures are higher by 9 points to 1,777. The S&P futures are showing a 4 point gain to 1,094.
Although the market slid, we did pretty well with our trades yesterday. Current subscribers, check the Members Area for the current trade updates this morning.
Tags: call option trading, chicken option trades, Covered Calls, momentum stock option trading, option trade picks, option trading online, options blog, options mentoring, options newsletters, options track record, put option trading, Rick Rouse, stock option trade pick service, straddle option trades, strangle option trades, support and resistance levels, triple-digit option trades
Posted in Company Commentary, Hot Stocks, Mergers and Acquisitions, Rick's Account, Strategies | Comments Off
Thursday, November 19th, 2009
1:30pm (EST)
We date options, we don’t marry them…
The market is getting punished today after getting some unpleasant economic news this morning. The jobless claims report wasn’t too bad…505,000 versus Wall Street’s forecast of 504,000, and slightly higher than the previous week’s 502,000, but the market didn’t like it.
The Conference Board’s index of leading indicators for October, month over month, was higher by 0.3% versus consensus 0.4%, and below the previous month’s 1.0%. Meanwhile, the Philadelphia Fed’s survey for November increased to 16.7 versus expectations of 12.0, and above the previous month’s 11.5.
As a result, the Dow is down 135 points to 10,290 while the S&P 500 is off by 17 to 1,092. The Nasdaq is lower by 41 points and is currently trading at 2,151.
Wednesday morning we said this:
“All things considering, and it may too early to tell, but these levels that we have been talking about being RESISTANCE for the Dow (10,400), S&P 500 (1,100), and the Nasdaq (2,175) have now become SUPPORT. Again, it’s too early to tell because the bulls are running fast this week.”
If you still don’t think we are in a trader’s market, think again.
This means you will have to have strict discipline and take profits when you can. For example, yesterday we were excited when Colgate-Palmolive (CL, $84.14, down $1.73) got hot right before the market closed. Most of our subscribers were looking at gains of over 200%. Some of them closed half of their positions yesterday and the other half this morning.
We had stops in place to protect a 100% return but many of you did better. This is the point we want to make. We have said we will put you in some really great trades and where you take your profits depends on you. If you followed this strategy then your return is more than the one we are going to show.
We went long on Tuesday morning because we felt the stock could make a run to $100 by January. The merger news with British household-product maker Reckitt Benckiser Group yesterday was unexpected but welcomed.
We didn’t close half yesterday because it looked as though the market was battling back at the close and we thought that momentum would carry over into today. If the futures would have been higher this morning then we doubt Colgate would have dropped as much as it did. It has and we had our stops in place.
Now, the stock could rebound but the parameters of the trade have change and although the merger has been denied it could be a drag on the stock. Then again, Colgate could go on to make a run at $100.
Who cares? We made over a 100% return and got out. We may revisit the trade and we will keep the stock and options on our Watch List. But for now, this trade is over.
Microsoft (MSFT, $29.94, down $0.17) just released some breaking news and said it Windows 7 sales have more than doubled any previous version during the same time frame. This has helped the stock rebound off its low of $29.70. We currently have an open trade on Microsoft and we like what the company is doing and saying. Heck, the CEO even said he was ready to roll up his sleeves and take on Apple (AAPL, $201.68, down $4.28). Easy big fella’, we are just hoping your stock can run to $32 by December 18th so we can double our money.
Current subscribers, please check the members Area for the trade updates. We were also stopped out of FedEx (FDX, $82.05, down $1.66) today.
Tags: momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Company Commentary, Economic News, Hot Stocks, Market Analysis, Market Commentary, Mergers and Acquisitions, Money Management, Option Trades, Trading Psychology | Comments Off
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M&A Heats Up
Monday, March 1st, 2010
1:00pm (EST)
The bulls came out in a buying mood this morning as mergers and acquisitions (M&A) activity continues to pick up and more information about a possible European bailout of Greece has lifted the market.
At midday, the Dow is up 80 points, or 0.8%, to 10,404, while the S&P has climbed 10 points, or 0.9%, to 1,114. The Nasdaq is showing the most strength as the index is up 31 points, or 1.4% to 2,270.
We mentioned the AIG (AIG, $26.30, up $1.53) news this morning and in other M&A activity, OSI Pharmaceuticals (OSIP, $56.41, up $19.39) is up a whopping 52% after getting a buyout offer from Japanese drugmaker, Astellas Pharma. The $3.5 billion takeover offer for OSI Pharmaceuticals is being presented directly to shareholders after being rebuffed several times by executives at OSI.
We saw some action in shares of OSI last week but we didn’t think a buyout was right around the corner. Too bad. The March 35 calls (GHU100320C00035000, $20.90, up $18.70) are up 850%…
In economic news, the Commerce Department said personal spending rose 0.5% in January. Wall Street was looking for an increase of 0.4%. However, personal income edged up 0.1%, below the 0.4% forecast by the pencil pushers. It was the slowest growth in income in four months.
Meanwhile, the Institute for Supply Management (ISM) said its manufacturing index fell to 56.5 in February from 58.4 in January. Wall Street was looking for a print of 58. The one silver lining was that the report sees manufacturing employment improving. The ISM releases its services industries index on Wednesday.
Before we go, we thought we would mention the strength Sandisk (SNDK, $31.95, up $2.80) is showing today after the company boosted its first-quarter guidance to reflect more demand for memory chips. The 9% pop has the stock at a new 52-week high. Sandisk was on our Watch List but we just missed bagging a 200% return…
We have some other trades that are doing really well today but obviously we are disappointed we didn’t pull the trigger on Sandisk last week. Current subscribers, check the Members Area for the juicy updates.
Tags: Mergers and Acquisitions, option picks, option signals, options alerts, OSI Pharmaceutical, OSIP, Sandisk, SNDK, stock options trading
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Mergers and Acquisitions, Option Trades | Comments Off