- Vertex Pharma (VRTX) shares jumped 61.9% to $85.60 on 4-19-13, just 3 days after I highlighted unusual call buying and also went through the upcoming catalysts and other large positions in Open Interest. The VRTX May $60 calls were good for a 1,000% gain. Original Options Radar Report: "Vertex Pharma (VRTX) May IV jumps as 2,000 May $55 calls bought $4.15 and 4,000 May $60 calls at $2.35 to $2.50, bullish action with a near term catalyst expected, Phase 2 VX-661 + Kalydeco data to validate VRTX's CF discovery platform. VRTX has seen a number of large trades in recent weeks; the April $57.50 calls bought $1.20 for 1,075 on 4-12, 3,500 May $60/$65 call spreads at $1.25 on 3-19, April $50/$40 bull risk reversal 5,000X on 2-28 at $0.10 credit, and the October $55 calls bought on 2-25-13, so options market expectations look to be positive. The $11.8B Biotech trades 7.72X Sales, 11.8X Book and 60X FCF, so very dependent on future drug outcomes. Chardan Capital initiated shares at Buy on 4-10-13 with an $80 target."
- Zillow (Z) shares have climbed firmly off its lows and now up 30% in a month. With shares near new lows on 11-9-12 I highlighted unusual buying of 4,500 February $25 calls at $2.40 to $2.60. Those calls are currently priced at $11.50 and some positions rolled to higher strikes, but a 350% gain. Original Options Radar Report: "Zillow (Z) trading 4X daily calls with 4,500 February $25 calls bought to open at $2.40 to $2.60 for $775,000 call premium, Net Delta +150K, major bullish surge in options action with shares cut in half from the September highs, down big after the latest earnings report. Shares are back near post-IPO lows, and seems like an opportunity for a high growth name closely tied to the housing recovery. Shares were hit on a weaker than expected Q4 view. The $803M Co. trades 44.5X forward earnings, 1.86 PEG, 7.85X sales and sees 75% EPS growth for FY13, so one of the top growth names. Zillow does have 32.7% of its float short, so the calls may be hedging a short position. Barclays slashed its target to $35 on 11-6 and Benchmark to $40."
- Cyberonics (CYBX) shares are down 16.85% in a month and comes after I first highlighted unusual put buying on 1-10-13 with the July $50 puts at $4.10 that then saw steady accumulation. The puts have gained to $9.50 from $4.10, more than a 100% gain. Original Options Radar Report: "Cyberonics (CYBX) drawing unusual put buying for the second straight day with 1,500 July $50 puts at $4.10 to $4.20 for $535K put premium. Cyberonics (CYBX)reaffirmed its 2013 outlook yesterday, but today traded 250X daily put volume as a block of 2,500 July $50 puts was bought to open at $4.10 with a $3.50/$4.10 bid-ask. CYBX has been a top performer the past year but could put in a topping candle this week after closing 3.4% lower today and back below the level it broke out past earlier this week. The $1.48B VNS Therapy medical equipment Co. trades at a rich multiple, 29.1X FY13 earnings, 1.8 PEG, 6.27X Sales and 21.5X cash flow. "
- CBS Corp (CBS) was first highlighted by me to subscribers on 1-9-13 and each and every day in the Options Hawk Trading Hub I highlighted unusual large bullish call buying. Shares jumped this week after announcing plans for its Outdoors Business and depending on what strike call was bought gains ranged from 300% to 600%.
Original 1/9 Options Radar Report:
"CBS Corp (CBS) with 6,000 February $39 calls bought to open at $0.90 in an intraday surge for $500K call premium and Net Delta +238K, and a name with large bullish spreads in March and June Open Interest. Shares have pulled back this week to the rising 20 day EMA and re- testing the former cup and handle breakout, a pattern with a target of $42.50. The $23.85B Co. trades 12.9X earnings, 1.16X PEG, and 1.63X sales, and has shown strong earnings momentum, advertising strong into the Super Bowl and with Auto companies strong. Barrington Research raised its target for shares to $48 in November."
- I highlighted unusual call buying accumulating in Cymer (CYMI) in September and it was bought out for a 70% premium in October. The report from September was ""Cymer (CYMI) traded 2,175 calls on Friday which is nearly 20X daily average and 65% offer side for $185,000 in call premium purchased. The focus was on November $60 OTM calls with 2,089 bought against OI 494. On the long term chart CYMI shares are consolidating in a weekly bull flag near the upper end of a 10 year sideways channel that is 40 points in height, so a breakout past $60 could lead to significant upside. The $1.77B Semiconductor has held up much better than peers when the group was under persistent weakness and shares trade at a premium, 29.2X earnings, 3X sales, 2.23X book and 36X free cash flow with 8.75% of the float short. On 8-17 Deutsche Bank initiated Hold with a $58 target. BofA calls CYMI a product cycle story with strong long-term prospects. Cymer's main customers are 3 OEM lithography manufacturers with ASML, Nikon, and Canon. CYMI is developing Extreme Ultraviolet (EUV) technology as the next generation light source. As a long term growth story CYMI could make a nice acquisition target with its $1.77B market cap."
- The week of 9-24-12 I provided multiple quick hit updates of hot options action in weekly calls on various days for Yahoo (YHOO), General Electric (GE), Silver Wheaton (SLW), and Freeport McMoran (FCX). The gains seens in these were +400% in Yahoo, +500% in GE, +150% in FCX, and +600% in Silver Wheaton. The weekly calls are changing the game and allowing for intraday scalps for 100%+ gains.
- On 7-24-12 I highlighted bullish call buyin in AuthenTech (AUTH) and recommended buying the stock. I noted "AuthenTec (AUTH) trading 3,350 calls which is 30X daily average with $110,000 call premium purchased, the October $5 calls hot with big buyers at $0.80 to $1.10 for 3,050 contracts and IV30 soaring 65% today. In the past week 1,000 of the Oct. 5 and Aug. 5 calls were bought in unusual action as well. I highlighted AUTH on the breakout past $4.10 back in May and shares are making multi-year highs today. Samsung recently chose AUTH for inclusion with its new Android phone and tablets, a built in security system, and with Apple (AAPL) expected to announce news on security for its products, possibly the call buying sees AUTH as a winner once again. There were reports in early June that AUTH could be in the next iPad. The $222M Co. trades 33.3X earnings, 3.1X sales and 4.4X book with no debt and is a forward looking growth play." - Link to Report
Result: Just 3 days later AUTH shares rallied to $8.50 on a proposed takeover from Apple (AAPL) and a small $50,000 position reaped $30,000 in profits.
- On 7-10-12 I highlighted bullish activity in Urban Outfitters (URBN) and the action continued for days after, "Urban Outfitters (URBN) rallying to day highs and nearing a key trend breakout, action in August $28 calls with 2,000 bought on the $1.20 offer, total of 3,270 calls trading, or 3X daily, while September $28 straddles trade 800X as well. A move above $28.15 could see shares back to major resistance at $30. URBN released sales data in June showing Q2 same store sales are higher by a low single-digit percentage. The $4B retailer trades 15.3X earnings, 1.58X sales and 3.58X book with 9.4% of its float short. Recently at the OpCo Conference the CEO said the Company is looking to Amazon (AMZN) to achieve 50% Online sales. URBN disappointed in 2011 but is under new management and seeing some improvements at Anthropology stores." - Link to Report
Result: URBN shares rose to $30.60 by 7-17-12, and the Aug. 28 calls jumped to $3, a quick gain of 150%
- On 7-16-12 I saw a large buyer of Agrium (AGU) calls and wrote "Agrium (AGU) with a surge in action at 2:28pm as 3,000+ August $92.50 calls were bought at the $3.10 offer to open, nearly $900,000 in call premium purchased as shares start to breakout of a bullish flag pattern and the fertilizer group trades strong with grains sharply higher, and ahead of Mosaic (MOS) earnings tomorrow. Agrium will not report earnings until 8/3/12. Shares recently broke out of a 15 point range at $90 that targets a move to new highs at $105. Agrium has long been one of the best names in the industry reporting strong results each quarter and trades cheap still at 9.5X earnings, 0.88X sales, and 13.5X cash flow with a 1.11% yield. Dahlman Rose upgraded to Buy on 6-25-12 with a $98 target. A block of 5,000 August $100 calls traded shortly after the $92.50's as well, large bullish positions." - Link to Report
Result: Agrium (AGU) Guided Q2 Way Above the Street Just Two Days Later and Shares Jumped, a Big Gain in the Calls
- On 6-26-12 I highlighted bullish action in EXXI "Energy XXI Ltd. (EXXI) trading 4X daily call volume with 100% offer side as July $29 calls bought at $0.50 and $0.55 offers for $285K call premium, Net Delta +146K in the bullish action as IV30 jumps 5.7%. Shares are oversold on the weekly and re-testing a breakout level from 2011, also the 61.8% Fibonacci of the 2011 to 2012 range, so support is at this level. The $2.1B offshore and onshore Oil & Gas production Co. trades 5.75X forward earnings, 0.86 PEG, 1.66X book and 9X cash flow, a compelling value. Dahlman Rose raised its target for EXXI to $44 back in April, Buy rated, but reduced to $35 on 6-20, confident in the growth profile and support of proved reserves.. EXXI spoke at the Global Hunter Energy Conf. yesterday." - Link to Report
Result: EXXI shares jumped from to $31 from $26 in 4 days, the calls jumping to $3 or a 500% Gain in a Week!
- On 6-29-12 I noticed unusual put buying in New Oriental (EDU) and noted "New Oriental Education (EDU) falling hard here and 2,000 January $22.50 puts bought $2.50 to $2.70, same contracts were active on 6-1-12 when 2,800 were bought, and as a Chinese name there could be a fraud report set to come out that hits these names, or some other news. The chart is ugly, shares down in one of the strongest tapes of the year, and forming a bear flag that measures down to $20. Earnings are expected 6-17-12. Shares of the $960M Co. trade rich at 30.1X trailing earnings and 5.36X book, but 1.27X cash value with no debt, so a strong balance sheet and EPS growth of around 30%. Wells Fargo initiated Outperform on 6-20-12." - Link to Report
Result: On 7-17 EDU was named in a SEC Investigiation and shares plunged 35%, and the puts highlighted more than tripled in price.
- On 6-14-12 I highlighted a bullish bias in ONXX ahead of a key FDA Event "Onyx Pharma (ONXX) trades a large spread in July with 3,600 of the $42 puts sold at $1.68 and 2,400 of the $48 calls bought at $2.57, near the offer. Back on 4-25 a trader bought 4,000 January 2013 $40 puts to open at $4.10, and on 6-5 a trader sold 2,440 July $42 straddles at $7.80. I would also note more than 5,000 OI in July $47 strike from 5-22 and 5-30 with the first 2,500 a June/July calendar call spread and the next 2,500 a roll-back of August $44 calls to that strike, so both positioned bullish into July. Onyx's July IV is elevated at 60.7% with a wild IV Skew look due to a 6-20-12 FDA Panel. ONXX shares are hanging out near its recent highs with support seen at $42 and resistance near $47. The $2.93B Biotech has a lot of M&A chatter recently and positive results on 6-20 would likely boost the probability of that outcome. Shares trade 6.5X sales, 3.75X book and 4.9X cash value. On 6-8 BofA raised shares to Buy with a $57 target, and Goldman raised its target to $52 back on 5-3. The 6-20 FDA Panel is for its lead drug carfilzomib for Multiple Myeloma, and a final decision expected by 7-27. Traders are positioning for a big move in July and should see Briefing Documents released early next week." - Link to Report
Result: I provided the July $46 straddle for $7 for a non-directional trade (+255%) and July $50/$55 Call Spreads at $1.15 for a Directional Trade (+335%).
- On 5-14-12 I highlighted bearish action in Linked-In (LNKD) options "Linked-In (LNKD) has been a resilient name today with shares up 3% in a weak tape, but trading 2.1 puts for every call, the June $105/$85 put spreads actively bought today for 5,500 contracts, traders paying $4.75 for the spreads, and more than $2.1M in put premium purchased today. It is possible that the Facebook IPO could take some funds out of LNKD to invest in FB, and also any signs of the jobs picture worsening may also cause Linked-In to reverse. Shares are currently in a strong uptrend but a break of today's lows at $105.50 could start a sell-off back to $95. The $11.1B Co. is seeing great growth, but you are paying a premium at 89.4X earnings, 18X sales and 179X cash flow. Barclays raised its target to $125 on 5-4-12." - Link to Report
Result: The $4.75 Spreads are Trading for $12 as of 6/4/12, a Large Gain and Called the Top in Shares
- On 4-26-12 I highlighted very bullish action in Expedia (EXPE) into earnings with "Expedia (EXPE) trades 430,000 shares of stock as 10,000 January 2013 $35 calls are bought to open at $2.575. The trade comes right ahead of earnings after the bell, a name that has sold off the last two reports. Expedia had a key breakout at the $30 level to start 2012 and since pulled back to the 20 week EMA. Expedia has a $4.3B market cap and trades 10.35X earnings, 1.25X sales and 1.96X book, a value name in the online travel group and 20.25% of the float is short. Stifel raised its target to $38 in February." - Link to Report
Result: As of 6/5/12 the EXPE Calls are Trading $12, a 400% Profit
- On 2-23-12 I highlighted a very bullish trade in Cost-Co (COST) ahead of earnings, noting: "Cost-Co (COST) reports earnings next week on 2-29-12 and a trader puts on 4,700 March $85/$82.50 bullish risk reversals at $0.52 debit, bullish play as shares have based along its 20 and 50 day EMAs. More than $650,000 in call premium bought and $325,000 in put premium sold. Shares have closed lower each of its last 3 earnings reports, but remains a well-liked stock on the Street. The $36.67B Co. trades 19.25X earnings, 1.9 PEG, 0.4X sales and 3.1X book and stronger growth than most large cap retailers, potential positive read through from Target (TGT) results earlier today. Costco has continued to grow membership and International growth is increasing. Raymond James was out saying all the positives are priced in earlier in February and SIG said to buy put options, while Piper reiterated Overweight on 2-21 with a $97 target, and noted that with gas prices contributing 10% to revenues for Costco it could post strong results on recent price increases." - Link to Report
Result: At March expiration COST shares reached new heights and these risk reversals gained 1200%, a $2.8M Gain
- On 2-22-12 I picked up on very unusual buying in P&G (PG) weekly calls, noting: "P&G (PG) very unusual with 11,900 of the February $65 weekly calls trading against OI 2,037, large buyers at $0.15 looking for a short term move higher. P&G presents at the CAG Conf. tomorrow at 12:30pm and recently sold it's Pringles business to Kellogg's. Shares recently held long term trend support off the prior lows and pulled back the last few days after rallying. The $177.44B Co. trades 14.7X earnings, 2.1X sales and 49.65X cash flow and could use tomorrow to announce guidance, or buybacks/dividend raises, already yielding 3.26%." - Link to Report
Result: I told clients these calls were a great "lotto ticket" on the action. The next day P&G shares jumped 2.4% and the calls gained 1,000%
- On 12-15-11 I highlighted on Twitter to the public unusual activity in Altispurce Portfolio (ASPS) with 1,000 April $50 calls bought to open at $2.30, more than 50X daily average call volume. The link to the comment is at http://stocktwits.com/OptionRadar/message/6124128
Result: As of 2-24-12 ASPS shares are reaching new highs on a daily basis and the calls are up more than 600%
- On 1-3-12 I highlighted bullish action in a lagging stock, Devon Energy (DVN) with "Devon Energy (DVN) shares higher on news of a $2B+ deal with Sinopec out this morning, and traders positioning bullish with 5,000 April $67.50/$62.50 bullish risk reversals trading at $0.30 net credits. Options volume 2X daily average just 10 minutes into trading. Shares put in a double bottom recently and broke above its 50 day EMA today. The $25B Oil & Gas Co. trades 9X earnings, 2.3X sales and 1.2X book with a 1.1% yield. Barclay's has an $85 target on shares, Overweight rated."
Result: Devon shares jumped sharply in February on earnings and production cuts, reaching $75, the $0.30 trade reaching $8, earning more than 25X your money on the trade.
- On 2-16-12 in the last hour of trading I highlighted to clients an unusual buy of 5,000 General Mills (GIS) $0.20 and also on the Daily Freebies, noting it looked like an interesting lotto ticket trade with just one day until expiration
Result: On 2-17-12 General Mills (GIS) cut earnings guidance and shares dropped, the puts jumping to $1.80, a trade that profited 9X the investment.
- On 2-3-12 I highlighted Dry Dhips (DRYS) March $2.50 calls being bought late in the day at $0.16.
Result: DRYS shares rallied the next few days and the calls jumped to $0.80, +400%
- On 1-23-12 I highlighted unusual call buying in Zynga (ZNGA) with "Zynga (ZNGA) March $12 call buying was the earliest action with 1,700 bought and now more than 5,150 with IV30 up 11.5% today and call volume 5X daily with 65% on the offer, very far OTM lotto tickets with shares at $8.90. The recent IPO has struggled but a move past $9.50 and it could see a big move higher. The $6.36B Co. is a big time growth play in the online gaming market, and although trading 7.7X earnings and 8.1X book it does trade cheap at 13.9X cash flow, and any sign of better than expected earnings and shares would rally, also remains a potential acquisition target for EA. Zynga is seeking partner for an Online Gambling initiative which could be a big growth driver. Morgan Stanley owns 16% of the Company stock and was a big buyer at the $14 private value."
Result: Zynga Shares Rocketed the Next 2 Weeks on the Facebook IPO and the Calls Pricing $2, Up 550%+
- On 1-30-12 I noticed a surge in Exxon (XOM puts into earnings, saying "Exxon (XOM) shares are 1.1% lower into earnings tomorrow morning and shares are below its 20 day EMA today for the first time since late November when the rally started. On the day 40,000 puts and 23,425 calls trading with $1.7M in put premium purchased and a -803K Net Delta, very bearish bias in the options flow into results. A notable buy of 5,000 February $85 weekly puts at the $1.03 offer sticks out, while February $85/$80 put spread bought 500X at $1.47 also. More than 19,500 of these weekly $85 puts trading today which is incredible. Exxon is likely to face similar earnings shortfalls that Chevron saw, weakness in the refining segments. Exxon trades 10.3X earnings, 0.88X sales and 2.64X book with a 2.19% yield, so downside fairly limited, but potential to move back to $80 in the short term. Howard Weil downgraded to Perform on 1-17-12. Exxon announced a $3.9B sale of its Japan refining unit today, a signal that refining is an issue."
Result: We picked up the XOM Puts at $0.96 into Earnings and Shares Fell the Next 2 Days, a Quick Move to $1.50 in the Puts
- On September 21, 2011 I saw large buyers in Manitowoc (MTW) calls, noting "Manitowoc (MTW) opening buyer of 3,500 March 2012 $10 calls at $1 offer, and then followed up with bigger buys as 15,000 now trading. Shares are climbing back after making new year lows, and trading 10X daily call volume now, as 15,000 December $12 calls sold to close, traders looking longer term and rolling out to March $10 with a higher Delta. We have seen a ton of notable call buying in MTW, a name that smells of M&A interest at 7.37X earnings, 0.33X sales and 2.18X book with a $1.1B market cap, and a leader in the Crane market."
Result: The Action Nearly Marked the Bottom in Shares and with Patience the Calls are Now Worth $5, +400% as of 2-1-12
- On January 20th, 2012 I highlighted large buying in Marathon Petro (MPC) Calls with "Marathon Petro (MPC) trading 11,097 calls which is 7X average after Jana Partners took a 5.5% stake in the Company, and late day February IV is jumping with big blocks of February $37.50 calls bought to open, more than 5,000 of those trading and IV30 jumping 17.6%. Since the spin-off from Marathon shares have not performed well, but up big this past week on volume as refiners benefit with Crude back under $100. The $12.8B Co. is a clear value at 4.77X trailing earnings, 0.13 PEG, 0.17X sales and 3.7X cash flow, but sees a 25% fall in EPS in 2012 and the whole group has been cutting guidance. Barclay's brought down its target to $43 last week, while Deutsche Bank is at a Buy and $50 target. Jana is an activist investor and a history of pressing companies to break-up, and could fight for separation within the refining business."
Result: On February 1st, MPC Announced the Break-Up I Predicted and the Calls Jumped More than 300%
- On January 2nd, I noted unusually bullish call buying in Agilent (A) with "Agilent (A) seeing call volume 1.5X daily with 70% offer side, the February $40 calls bought 2,000X today at $1.44, over $215,000 in call premium purchased. Agilent has put in a strong base, and remains in a multi-year uptrend, now breaking its 50 week EMA and looking to move higher with a bullish ADX cross on the weekly. Agilent is a $13.76B maker of medical and scientific instruments that trades 11.3X earnings, 0.96 PEG, 3.2X book and 12.83X cash flow, a fairly good value name seeing 10% EPS growth for FY12. Longbow reiterated a Buy today and raised the target to $50 from $44. The consolidation of shares this week looks healthy to the trend-up."
Result: By February 1st, the Agilent (A) Calls were +200%
- On January 19th I noted bullish action in Covidien (COV) with "Covidien (COV) shares are higher today and broke a key descending trend line after a base was put in near $42, so measuring to $54 from here and earnings set for 1/26/12. The Company announced an expanded recall this morning, but bulls seem to like the name with 6,160 calls trading, 66% on the offer and over $340,000 in call premium purchased, also looking ahead to the planned spin-off the Company recently announced. The February $45 puts did see buyers last week for 2,400+ contracts, but July $50 calls today bought 4,715X at $1.65. Covidien trades at 10X earnings, 1.93X sales and 2.27X book with a 1.95% yield, cheap on valuation and a $57 target and overweight rating at Barclay's. The planned spin-off of it's Pharma unit is expected to create shareholder value."
Result: The $1.65 Calls saw a lot more attention the next few days, currently 16,413 in OI and at $3.50, more than a 100% Gain in a Week
- On January 13th, 2012 I highlighted early morning action in Agrium (AGU): "Agrium (AGU) was green yesterday despite the crop report that hit the other fertilizer names and today IV is pushing higher as 5,800 January $77.50 calls trade against OI of 2,333, far OTM and remember that February $80 calls were bought more than 4,000X recently. Shares formed a rounded bottom and starting to make a run with strong volume supporting the move. The $11.7B Co. trades 8X earnings, 0.8X sales and 1.9X book and with these names expected to be acquired by global mining Co's, Agrium is a name seeing the bullish OTM positioning lately, the type of action seen before buyouts often."
Result: The calls jumped 300% by days end, showing that these trades are also often successful in short timeframes
- On November 28th, 2011 with shares at $8.50, I noted bullish action in Cobalt Energy (CIE): "Cobalt International Energy (CIE) with an opening buyer of 2,000 April $12.50 calls on the $1.25 offer at the PHLX, paying the offer on a $0.40 wide bid-ask, aggressive bull. Shares have resistance at the 200 day EMA just above $11 where shares failed recently, and an inverse head and shoulders reversal pattern has formed. The $3.5B Gulf of Mexico and West Africa Oil Exploration Co. trades 1.63X book value and 3.66X cash value, expected to lose $0.38/Share next year. There is also 4,000 January $12.50 calls in Open Interest. JP Morgan lowered its price target on 11/2, but the Cameia #1 drilling results due in December offshore Angola, a potential positive catalyst."
Result: By January CIE Shares Traded Above $18.50 on Strong Well Results, the Calls Gained 480%
- On September 26th 2011 I highlighted a large bullish trade in El Pase (EP): "El Paso (EP) with a 10,000 contract November $18/$15 bull risk reversal for $0.29 to open. El Paso shares are trading at its lower acceleration band, oversold and due for a bounce, also near key support that has held 3 times in 2011. The $13.2B Natural Gas Co. trades 13.5X earnings, 3X sales and 2.44X book, and has a ton of open interest in longer term options, potentially seen as an acquisition target. Third Point, who has been active lately, raised its stake in EP during Q2. Traders may be positioning ahead of its planned E&P spin-off."
Result: In October El Paso (EP) was Acquired in a Large Takeover, a $6.71 million Gain on the Trade
- On November 22, 2011, well ahead of any of the other providers I noted action in Inhibitex (INHX) "Inhibitex (INHX), featured on Bloomberg's Real M&A this morning following the Gilead (GILD) acquisition of Pharmasset (VRUS for a big premium, is trading 10,244 calls today, 50X daily average with one large spread accounting for most of the action. A trader sold 2,810 January $12.50 calls at $1.20 to buy 5,610 May 2012 $12.50 calls at $2.80 in the bullish ratio calendar spread. Shares are nearing the $12.76 all time highs from 2004, gaining 200% the last few weeks. The spread appears tied to a large block of 315,000 shares of stock that traded near the same time. The $830M Biotech had its price target raised to $15 at Deutsche Bank on 11-7. The key catalyst will be 7 day data for on-going 100mg + ribavirn study and Phase 2 genotype 2/3 4 week data expected in Q1 2012. INHX is becoming a player in the lucrative Hepatitis C market and its drug is oral and has shown no nasty side effects."
Result: On January 7th, 2012 INHX was acquired by Bristol Myers at $26/Share, a 150%+ Move, a $5.6 million Gain
- On January 5th, 2012, at 10am I noted "Ciena (CIEN) IV jumping as more than 2,000 January $12.50 calls are bought, already a lot of Open Interest, and shares trying to breakout after flagging on its 50 day EMA, an optical name that could lift after Oclaro (OCLR) provided shockingly good guidance in a group that has been looking for good news. The $1.19B Co. trades 0.68X sales, 13X earnings and 2.2X cash value, potentially attractive as a takeover target. Deutsche Bank reiterated a Buy in December, $16 target. Shares have near term upside to channel top at $14.50."
Result: We bought these calls at $0.48 and Sold an Hour Later at $0.60, +25%. Note, the Calls Reached $0.96 by the Close, +100%, and were pricing $1.80 by 1/11/12
- On January 4th I highlighted call activity in Netflix (NFLX) and Tweeted the Info, noting to clients "Netflix (NFLX) is near the lead with over $2.7M in call premium bought today and a large positive Net Delta in trading, action really heating up after a block of more than 6,100 March $100 calls was bought on the PHLX at $2.65 offer, and more than 8,000 of those contracts trading. Shares traded in a narrow range for weeks and based around $65/$70 area, and we could see some expansion here with resistance at the 50 day EMA well above at $85, and a gap from $90 to $115. The name has been noted today as a Company Yahoo (YHOO) could look to buy with new Mgmt., and I would believe it could be a bidding war with Google and Amazon also likely interested. Although subscriber rates took a hit, Netflix is still a leading brand presence for video streaming, and now trades 16.4X trailing earnings, 0.8 PEG, and 1.37X sales with jsut a $4B market cap. The Company had a PR this morning announcing 2B hours of Movies/TV Shows watched in Q4. The options action along with the technical breakout, and potential for M&A, gives possibility to Netflix getting it's swagger back."
Result: NFLX Rallied Sharply and 2 Days Later on 1/6 the March 100 Calls Priced as High as $6.70, Nearly Tripling
- On January 3rd, 2012 I wrote "LSI Corp (LSI) call volume running at 8X daily average with 4,300 of the January $6 calls bought to open at the $0.30 offer in a multi-exchange sweep. Barclay's raised shares to Overweight this morning. LSI shares are breaking out of a triangle and past longer term trend resistance. The $3.35B Semi trades 11.9X earnings, 1.7X sales and 14.5X cash flow with 13.65% FY12 EPS growth seen. As disk drive capacity returns following the Thai floods, LSI could be set to benefit, and bulls are expecting a strong 3 weeks ahead for shares."
Result: By January 5th, two days later, shares were trading up to $6.70 from $6 on multiple upgrades, calls at $0.75, +150%
- On December 28th, I noted late in the day "Silver Standard Resources (SSRI) a late day surge with 2,500 February $12 calls bought to open on the $1.65 offer in a multi-exchange sweep. Silver (SLV) is off 5.8% today and broke technical support, however SSRI has held up down just 0.6% and holding prior lows. The $1B Silver miner trades 11.11X forward earnings, 1.05X book and 2.65X cash value, started Accumulate at Global Hunter on 12-16 with a $23 target."
Result: Shares Bottomed that Day and Jumped from $12.40 to $15 in 5 Days, Calls Moving to $3.30, +100%
- On December 14th, I wrote "Acme Packet (APKT) is trading 6,450 puts on the day, 2X daily with $1.9M in put premium purchased, mostly from a block of 3,500 February $32.50 puts bought on the $4.30 offer while the $37.50 puts also with some buyers at $7.30 offers. Shares continue to fail at its 50 day EMA on bounced and now struggling at the 20 day EMA, potential for a break of $30 and for shares to head to $25. Shares were higher initially this morning on a Morgan Keegan upgrade to Outperform with a $45 target, while Mizuho cut its target to $28 on 12-1. Acme Packet remains rich on valuation at 47.5X earnings, 7.7X sales and 52X cash flow, and a tough market for growth stocks."
Result: APKT Cut Earnings Guidance on 1/3/12 and Shares Crashed to New Lows, Puts Trading to $7.50 and the Trader Actually Closed the Puts and Bought 14,000 February $25 Puts
- On December 9th, I highlighted a trade to clients "Monsanto (MON) traded large blocks of calls in the January contracts yesterday and today with the Open Interest changes it is easier to see the strategy, an adjustment trade. The Trade sold to close 12,000 January 2012 $72.5/$82.5 call spreads and opened the January $70/$82.5 call ratio spread for 12,000X20,000 contracts, paying $2.18 for the $70's and selling the $82.50's at $0.27. Monsanto shares have pulled back to support despite a recent positive earnings outlook for 2012, and the Company has been subject to some negative press regarding its lead product being ineffective against bugs. Shares have major support with the 200 day EMA now around $69 and $76 was a major top, while $63 is a major bottom of a long channel, so now back near the mid-point. Shares need to clear $73 to break the short term trend down, and a move past $76 would target $85. Monsanto shares trade 17.34X forward earnings, 2 PEG, 3.17X sales and 22.1X cash flow, fairly expensive, and offering just a 1.72% dividend yield. UBS started shares Neutral on 11-2 with a $72 target, while Citi reiterated a Buy and $81 target on 11-11."
Result: MON Reported Strong Results on 1/5 and Shares Hit $77.50 on 1/6. The Ratio Call Spread Gained Big!
- On December 7th, I wrote " Joy Global (JOY) puts trading above daily average and $275,000 in put premium purchased this morning with December $87.50 puts seeing a few large buys with 1,800 trading. Earnings were confirmed today for December expiration on the 14th, and front month volatility is rising today. Shares are 1.7% lower today, and apparently changed its ticker from JOYG to JOY. Shares have gained in 6 of the last 7 earnings reports. JOY shares are struggling at $92.50 resistance with a large bull flag set-up, some bearish divergence on RSI and MACD with the October highs. The $9.4B Farm & Construction Machinery Co. should report solid results after CAT and DE were strong, and at 12.5X earnings, 0.99 PEG, and 2.3X sales shares are still attractive on valuation. Morgan Stanley started shares Equal Weight on 11-2. Shares were subject of takeover chatter on 11/23.
Result: JOY shares plummeted under $75 on earnings and the $87.50 puts gained to above $13, only costing $2.80 on the day I highlighted the action.
On November 25th I wrote that Arcelor Mittal (MT) traded 9,060 calls which is 2X daily and 85% on the offer with more than 7,000 in the December $15 calls, a large block of more than 3,000 of those calls bought to open at $1.45 started the action. Arcelor shares are back to the October lows and Steel stocks generally bottom in Q4 so traders playing for the double bottom. The $24B Steel Co. trades 5.96X earnings, 0.5 PEG, 0.26X sales and 0.4X book with a 4.86% dividend yield, extremely cheap and attractive on valuation. Dahlman Rose raised to Buy in October with a $34 price target, more than double from current price.
Result: Arcelor (MT) Shares Climbed to $19 from $15 in the Next 5 Days, the Calls at $4.15, a large gain.
- Idenix Pharma (IDIX) was highlighted on October 17th with shares at $5.30 noting that 7,500 November $5 puts were sold to open, and 7,500 January $7.50 calls were bought to open in a very bullish spread. The trade came after Anadys (ANDS) was acquired for a 270% premium, putting other Hepatitis C names in the spotlight for acquisitions. The spread resulted in 160X daily options volume and traded for a net credit. I added that " Shares have since experiences a few sharp sell-offs but have recovered each time, and now looking to spring higher after breaking a short term downtrend with $7 long term resistance. The $487.5M Biotech has 7.44% of its float short, and trades with ugly fundamentals, expected to lose $0.57 per share next year. Idenix was reiterated a Buy with a $9 target at BofA in August, and is one of the main Hepatitis C fighting Biotech's, in a league with Vertex (VRTX) and Pharmasset (VRUS). Idenix is developing a "nucleotide" drug against Hop C known as IDX184, currently on FDA hold due to liver toxicity during a study, but believed to be a result of IDX320. Phase2b studies underway and should be presented in Q4, and if successful will likely lift the FDA hold and could see a major pop in shares to be considered more fairly valued to peers VRUS and VRTX."
Result: IDIX hit $14.40 by January 13th, the Spread Valued at $7,a Huge Gain
- 20 Year Treasury (TLT) was highlighted on the morning of September 21st when more than 5,000 December $115 calls were bought at $4.30 to open within the first 5 minutes of trade, and noted that it was a day when the FOMC was scheduled to make an announcement, so Treasuries were expected to make a big move when the Fed's new plans were detailed in the release. The TLT was trading around $115 before the release and then jumped to above $118 that day and to $123 the following day.
Result: TLT Calls Gained to $10.60 from $4.30, a 145% Gain
- On September 16th, 2011 with MDVN at $19.70 I noted " Medivation (MDVN) big buyer of 200,000 shares of stock that sells 2,000 December $30 calls at $1.55 and buys the $19/$13 put spread 2,000X at $3, protecting the stock position and willing to let shares go at a $30 price tag. Shares are breaking out as I write intraday and on the daily chart, traders looking to October where IV is at 227% as results from Phase 3 of MDVN301, its prostate cancer drug, are expected shortly. Morgan Joseph started shares with a Buy and $30 target this month, also one of the main players in Alzheimer's, although a recent set-back, shares have recovered from $9."
Result: MDVN jumped to $45 in November on Drug Results, trader to have shares called away for big gain
- First Solar (FSLR) December $100 puts were highlighted on August 3rd with 3,000 bought at $7.85 to open, a $2.355M position the day ahead of earnings. The chart also was bearish and the fundamental picture becoming bleak with uncertainty regarding subsidies as the Eurozone governments faced a debt crisis. Shares of First Solar traded lower on earnings, and then continued lower for weeks.
Result: By late September, the puts were trading as high as $45, a 470% gain.
- Metals (XME) December $50 puts were highlighted on September 19th when a block of 8,900 was bought at the $3.35 offer on the PHLX to open, a $2.937M position. The trade happended after the market failed at key resistance, and also notable put buying in other industry ETFs, noting that Metals are considered a risky assets and high Beta, so if looking for short exposure a good place to start if you are predicting a market sell-off. Within days the market sold off sharply and Metals traded more than 10% lower in a week. The XME was also nearing an uptrend break, so noted to clients to set an alert for a break of $54, which triggered later that day.
Result: By September 23rd the XME puts traded above $7, more than a 100% move in a few days of trading.