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Showing Posts 1 - 15 out of 39 found.

Finding Entry Into A Directional Trade

Finding Entry Into A Directional Trade

An important thing to remember is that my approach to directional trades is different when going into an earnings release cycle, rather than when outside of the earnings cycle.  Outside of the earnings cycle, other factors trigger my entries.  Those factors could be fundamental in nature, or they might be based on unusual options activity. Most of the time, however, my entry is based on a...

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Call Buyers Bet On New Highs In Tyson Food

Call Buyers Bet On New Highs In Tyson Food

Tyson Foods (TSN), a $16B food production and distribution company, announced on November 19th at the Morgan Stanley Global Consumer and Retail Conference they expect to see adjusted 2015 EPS of $3.30-$3.40 per share ($1B+ in free cash flow on $42B in revenue). The company said they are optimistic 2015 will be a record year for earnings and revenue (over $500M of sales coming from Latin...

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An Option Play On Lowes

An Option Play On Lowes

Lowe’s (NYSE: LOW, 58.35) has been building investor portfolio’s in 2014, with shares up over 17% year to date.  The stock has traded in a 52-week range of $44.13-$59.16, having made a new high in Monday’s session.  Lowe’s quarterly earnings report is scheduled for Wednesday morning before market open, with consensus analyst estimates calling for EPS of $0.58 on revenues of $13.55 billion. ...

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Correlated Markets Is Opportunity For Stock Picking

Correlated Markets Is Opportunity For Stock Picking

The recent action in the markets has created a distinct advantage for the stock picker.  How do I know this?  Take a look at the chart below of the implied correlation index, or the ICJ.  Simply put, this is a market-based estimate of the average correlation of stocks that comprise the SPX 500.  When the level is high (above 73%), we see a strong correlation between the market and...

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Sometimes, You Just Gotta Roll Out

Sometimes, You Just Gotta Roll Out

Rolling a position is very simple to do.  You just buy a further out expiration and sell out your existing one.  The hardest part of rolling a position is actually making the decision to execute the trade, and to do that, you have to understand why you are doing it. One of the most difficult things to master as a trader is to admit when you are wrong, which means you have to realize losses. ...

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An Option Play – December E-Mini S&P Call Spread

An Option Play – December E-Mini S&P Call Spread

Just a few weeks removed from the end of the Federal Reserve’s quantitative easing program, the equity markets are holding their own. As the markets have enjoyed a tremendous upside move over the last 20 months, many observers wondered if the rally could continue without the free-flowing money press of the Federal Reserve. Right now, it appears the answer is “yes.” In the last week, we have...

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Owens Corning Shares Are Showing Signs Of Life

Owens Corning Shares Are Showing Signs Of Life

Shares of Owens Corning (OC), a $4B Ohio based construction supplies and fixtures company, are down nearly 15% year to date. However, there are now factors developing that may prove to make Owens Corning an attractive investment. First is the valuation of the company when looking out to next year. The stock trades at a P/E ratio of 14.75x (2015 estimates) with 37.3% EPS growth, price to...

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A Failed Breakdown and Potential Bottom for Z

A Failed Breakdown and Potential Bottom for Z

The second half of 2014 has not been kind for Zillow. After being a high flyer into early summer and having some strong news come out, the stock has sold off from $160 and recently broke $100 per share. A Potential Reversal? A floor has been built right around $98 on the stock, where buyers have been stepping up aggressively. What is more important here is the stock did gap down under that...

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An Option Play on FOSL

An Option Play on FOSL

Fossil Group (NasDaq: FOSL, 103.82) shares are off by nearly 14% in 2014.  The Richardson, TX-based clothing and accessory manufacturer is scheduled to report earnings after the close today.  FOSL stock has recently been trading in the lower part of its 52-week range of $91.84-$129.79.  Consensus analyst estimates project EPS of $1.82 on revenue of $879.05 million, compared with EPS of $1.36...

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The Liquidity Challenge of Options

The Liquidity Challenge of Options

Options offer tremendous leverage opportunities to play high-priced stocks or very active, liquid securities.  Options are not only offered on equities but indices, futures, and commodities.  Market-makers use options as easy hedging vehicles, but that only works best when there is good open interest. This brings me to the issue of liquidity.  These days, it seems there are a limited amount...

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Play An Option Strangle on the E-Mini S&P 500

Play An Option Strangle on the E-Mini S&P 500

The last week has given us quite a bit of volatility in the markets. Thursday’s ECB announcement kept the volatility trend alive for another day. U.S. equity markets also received a bit of a boost from another round of positive labor numbers, with Jobless Claims down 10,000 from the prior week. The U.S. economy continues to improve little by little. At the same time, the Eurozone is facing a...

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Can The Rally In Natural Gas Continue?

Can The Rally In Natural Gas Continue?

Forecasts for a colder-than-expected winter have resulted in a seven day rally in the US Natural Gas Fund ETF (UNG). This 15%+ gain is now bringing the UNG up to a critical level at the $22.00-$22.50 resistance area. Since the correction that occurred in late spring/early summer took out that level, it has acted as a ceiling for the previous four months. This now puts investors and traders...

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The ETF,SMH IS Ready for a Pullback

The ETF,SMH IS Ready for a Pullback

The ETF, SMH (semiconductor index) is at a good level for a contrarian short play. After an ugly correction in October on the back of Microchip Technology’s (MCHP) guidance, investors learned quickly that the semiconductor sector fundamentals weren't that bad as earnings continued to come out. A rally began and those who felt left behind are now chasing the sector higher. But the sector is...

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Tesla: The Option Play of the Week

Tesla: The Option Play of the Week

Tesla Motors (Nasdaq: TSLA, 238.36) shares have accelerated nicely in 2014, up over 58% year to date.  The stock has traded in a 52-week range of $116.10 - $291.42, with shares reaching their all-time high on August 31. Tesla is scheduled to report earnings after the close of Wednesday’s session.  Consensus analyst estimates are forecasting negative EPS of $0.01 on $889.28 million in...

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Unusual Option Activity, A Leverage Play

Unusual Option Activity, A Leverage Play

Over the past 18 months or so, I have discussed Unusual Option Activity (UOA) at length.  My analysis, quite frankly, has not proven UOA to be any sort of panacea.  Should I just ignore it?  I don't think so.  Like most things, the truth is not clear cut.  I have proven, at least to myself that blindly following UOA is a random walk at best.  But there are instances where it can lead to...

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