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Thursday, May 15th, 2008
It’s official, Carl Icahn confirmed he’s got a “team” in place for a proxy fight with Yahoo (YHOO, $26.98, down $0.18). It was revealed that Icahn acquired nearly 60 million shares of Yahoo stock over the past 10 days. Talk about a “Dream Team”, Icahn’s new board would include himself, Adam Dell (brother of Michael Dell) and Mark Cuban (famous sports owner of the Dallas Mavs).
In a letter to Yahoo, here is what Icahn wrote: “It is quite obvious that Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis. I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer.”
Good stuff no doubt but can you ride this upcoming rally in Yahoo? What it boils down to is if Yahoo will get bought out at $30 or higher. I can tell you this, Icahn isn’t going to keep his money locked up for long. No way. Yahoo’s annual shareholder meeting is set for July 3 so there you go.
The action on Yahoo’s June 27.50 calls (YHQFY, $1.20, down $0.32) is ridiculous. So far, 42,000 contracts have traded. I can see the logic with this one. Option traders are betting $120 to make $250. If Yahoo is at $30 by June 20 then they double their money.
The July 27.50 calls (YHQGY, $1.91, down $0.12) have traded 15,000 contracts and these don’t expire until July 18.
I’m not getting on a soap box and yelling that these are good bets, all I’m saying is that the crowd seems to be following Icahn once again.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Add new tag, Icahn, proxy fight, Yahoo
Posted in Hot Stocks, Yahoo / Microsoft | No Comments »
Monday, May 12th, 2008
It looks like Energy Conversion Devices (ENER, $51.62, up $3.88) has turned things around after hitting another 52-week high today. The stock was at $35 before the company announced earnings last Thursday and closed that day $15 higher after reporting a profit for its third-quarter and offering strong fourth-quarter revenue guidance.
Energy Conversion Devices reported a profit of $7 million, or $0.17 a share versus a year-ago loss of $6.9 million, or $0.17 a share. Revenue increased to $70 million up from $27 million. Wall Street had expected a loss of $0.06 a share on revenue of $66.7 million.
I’ve mentioned First Solar (FSLR, $284.84, up $0.34) in the past and like First Solar, ECD’s solar panels do not use polysilicon so the company isn’t affected by the low polysilicon supplies. ECD’s panels are extremely lightweight and highly durable which has helped the company build a strong position in the marketplace since the panels don’t require any type of structural reinforcements. This reduces the costs and complexity of installation so customers can just pile the solar panels on their roof to generate electricity.
Hybrid Energy plays have been hot for quite some time and now that ECD has turned a profit their future is getting brighter by the quarter.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Add new tag, Energy Conversion Devices, Hybrid Energy
Posted in Earnings, Hot Stocks | No Comments »
Monday, May 12th, 2008
Research in Motion (RIMM, $141.69, up $8.92) is having a stellar day, hitting an all-time high of $143 earlier in the session. The company unveiled its latest BlackBerry model dubbed, the Bold, which was its first major new model in over a year. The phone is expected to compete directly with Apple’s (AAPL, $188.16, up $4.71) iPhone.
RIMM’s Bold has twice the screen resolution of the company’s current Curve BlackBerry and dual-band Wi-Fi and GPS capabilities should be available from carriers this summer. The May call options have been active in RIMM. The May 140 calls (RULEH, $4.07, up $3.30) have traded over 30,000 contracts and are up 428%, and the May 145 calls (RULEI, $1.77, up $1.52) are up 600% as over 20,000 contracts have traded hands.
The announcement of the Bold came earlier than expected and on the heels of Apple’s news that its online stores in the U.S. and U.K. are sold out of the iPhone. Some stores run by Apple and AT&T (T, $39.11, up $0.52) may still have units available but it’s hit or miss.
The low availability of the iPhones could indicate that the release of a 3G iPhone is just around the corner. Apple has a conference that starts June 9 and we all know Steve Jobs likes to make a splash at such events. Apple sold 1.7 million iPhones in its last quarter and its goal is to sell 10 million iPhones by year-end. Many analysts believe they will easily beat that number.
The release of a new iPhone would help offset sales that Apple is losing now as people anxiously await its release. All three companies (Apple, AT&T, and RIMM) have positioned themselves ahead of the competition and now its up to the rest of them to play catch-up.
Rick Rouse
Rick@OptionsMentoring.com
Tags: 3G, Add new tag, Apple, iPhone, Research in Motion, the Bold
Posted in Hot Stocks | No Comments »
Wednesday, May 7th, 2008
After holding strong for much of the morning the market slowly gave in and drifted lower for the remainder of the day. The Nasdaq (2,438.49, down 44.82) and S&P 500 (1,392.57, down 25.69) both fell 1.8%. The Dow (12,814.35, down 206.48) lost 1.5% for the day but all three are failing to break through key resistance levels.
The S&P 500 will have to make a run past 1,425-1,450 and hold before we can seriously consider the April rally. The Nasdaq will need to test 2,600 and hold while the Dow will need to make a run at 13,500 or better to get me in the bulls camp.
The VIX (19.73, up 1.52) traded higher (remember the VIX increases as the market goes down) and tested 20 today. With first quarter earnings winding down, a weak dollar, and higher oil and food prices, I just don’t see any “good” catalysts to hang my hat on for an extended rally.
Although I could care less about market direction, I do like to follow the tug-of-war between the bulls and bears. However, some people follow market direction and tend to buy put options in a bear market and call options in a bull market. Knowing these things can help with your overall trading performance as you gain valuable knowledge on what signs the market is giving you.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Add new tag, Dow, Nasdaq, resistance levels, S&P 500, stock market direction
Posted in Market Analysis | No Comments »
Wednesday, May 7th, 2008
Blowout earnings from Transocean (RIG, $157.40, down $0.45) wasn’t enough to keep the stock from closing at a 52-week high but it didn’t stop the shares from making one. The stock hit an all-time high today reaching $162 before selling-off with the rest of the market. It was pretty much a given that the biggest offshore oil driller in the world would easily top Wall Street’s estimates but Transocean really knocked the cover off of the ball.
For the quarter, the company reported income of $1.2 billion, or $3.71 per share, on revenue of $3.1 billion versus income of $553 million, or $2.62 per share, on revenue of $1.3 billion, for 1Q07. Wall Street had expected earnings of $3.33 a share.
What was interesting was the action in the Transocean May options. Bets were being placed on the May 160 calls (RIGEL, $2.60, down $1.34) for the bulls while the 145 puts (RIGQI, $0.35, down $0.80) were active for the bears. With the May options expiring next Friday, the stock could be stuck between these two targets until expiration. However, there was heavy volume in the out-of-the-money August 170 calls (RIGHN, $8.20, up $0.60) and even the August 200 calls (RIGHW, $2.25, up $0.40) saw some action.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Add new tag, offshore oil drilling, Transocean
Posted in Earnings | No Comments »
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