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U.S. stock market report
1145 ET 20Nov2009 Goldman Sachs: Sell Jan
2011 Yahoo strangles
Selling January 2011 $15/$20 covered strangles in Internet giant Yahoo Inc are attractive to enhance yield, wrote Goldman Sachs derivative strategists in a note. By selling the strangle, recently at $3.07 with shares at $15.61, holders collect 20 percent upfront. 'We expect a fundamental decline in Yahoo volatility,' they said. The conclusion of the Microsoft agreement and appointment of a new chief executive creates stability in YHOO's strategy for the medium-term and structurally changes the outlook for volatility over the next year, Goldman said. Microsoft and Yahoo earlier this year signed a 10-year global web search partnership to challenge market leader Google Inc, a pact that U.S. and European antitrust regulators are evaluating. As investors become more comfortable that management is unlikely to make large near-term changes in strategy, Goldman expects Yahoo implied volatility to fall sharply, benefiting investors who have sold options.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1125 ET 20Nov2009
Griffon Corp jumps after results
Griffon Corp shares climbed 12 percent to $10.14 after the company reported fourth-quarter earnings that topped Wall Street expectations.
The manufacturing company reported earnings per share of 21 cents on revenue of $328.24 million, above analysts' expectations of 16 cents per share and $326.5 million.
Reuters Messaging:rm://Charles.mikolajczak.reuters.com@reuters.net
1114 ET 20Nov2009 Susquehanna suggests Priceline risk reversal
Investors seeking insurance on some of their largest performing stocks through year-end at a limited cost could turn to a so-called risk reversal as an alternative to buying puts.
A good candidate for the strategy is Priceline.com, given its strong year-to-date performance and low put skew levels, wrote Susquehanna Financial Group in a note.
In a risk reversal, the cost of the protective put is offset by the sale of an out-of-the-money call. With Priceline shares now up 20 percent since the company's November earnings release, long shareholders may be eager to protect recent gains. 'We recommend the January $180/$230 risk reversal as a low cost way to do so,' SFG said. 'We note that the strategy entails protection through year-end, but should not incorporate the company's next earnings release for those investors who may be hesitant to cap upside into this event.'
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1058 et 20Nov2009
Charts show rally is uneven, S&P 500 lags the Dow
U.S. stocks have rallied sharply from the 12-year lows of early March as investors bet that the recovery will justify loftier equity prices.
But digging a bit deeper, charts show that the rally has been uneven and mostly dependent on just a few stocks.
On a relative basis, the 30-stock Dow Jones industrial average -- back above 10,000 -- has outperformed the broader S&P 500, according to Reuters chart data. The Dow's relative performance is at a 7-month high versus the S&P 500's.
'That means that there's an imbalance in equity indexes,' Ashraf Laidi, chief market strategist at CMC Markets in London said. 'That means the rally in U.S. equities is not broad-even.' he told Reuters.
Reuters Messaging rm://ellis.mnyandu.reuters.com@reuters.net
1032 ET 20Nov2009
Equities turn defensive
U.S. equity markets took on a more defensive stance on Friday as investors worried about the strength of the recovery following worse-than-expected quarterly results from computer maker Dell Inc and homebuilder D.R. Horton Inc.
Classic defensive stocks -- utilities, healthcare and consumer staples -- were gainers in the S&P 500.
Merck & Co Inc was up 2.3 percent to $36.12, and Pfizer Inc added 1.6 percent to $18.39 and were top boosts to the Dow. The S&P healthcare sub index rose 0.5 percent and utilities edged up 0.1 percent.
'The market has had a huge run, people are probably going into a defensive mode, and the market's likely not going to do a whole lot the next six weeks,' said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.
Reuters Messaging:rm://Edward.Krudy.reuters.com@reuters.net
Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Real-time Equity news
U.S. stock market report
1145 ET 20Nov2009 Goldman Sachs: Sell Jan
2011 Yahoo strangles
Selling January 2011 $15/$20 covered strangles in Internet giant Yahoo Inc are attractive to enhance yield, wrote Goldman Sachs derivative strategists in a note. By selling the strangle, recently at $3.07 with shares at $15.61, holders collect 20 percent upfront. 'We expect a fundamental decline in Yahoo volatility,' they said. The conclusion of the Microsoft agreement and appointment of a new chief executive creates stability in YHOO's strategy for the medium-term and structurally changes the outlook for volatility over the next year, Goldman said. Microsoft and Yahoo earlier this year signed a 10-year global web search partnership to challenge market leader Google Inc, a pact that U.S. and European antitrust regulators are evaluating. As investors become more comfortable that management is unlikely to make large near-term changes in strategy, Goldman expects Yahoo implied volatility to fall sharply, benefiting investors who have sold options.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1125 ET 20Nov2009
Griffon Corp jumps after results
Griffon Corp shares climbed 12 percent to $10.14 after the company reported fourth-quarter earnings that topped Wall Street expectations.
The manufacturing company reported earnings per share of 21 cents on revenue of $328.24 million, above analysts' expectations of 16 cents per share and $326.5 million.
Reuters Messaging:rm://Charles.mikolajczak.reuters.com@reuters.net
1114 ET 20Nov2009 Susquehanna suggests Priceline risk reversal
Investors seeking insurance on some of their largest performing stocks through year-end at a limited cost could turn to a so-called risk reversal as an alternative to buying puts.
A good candidate for the strategy is Priceline.com, given its strong year-to-date performance and low put skew levels, wrote Susquehanna Financial Group in a note.
In a risk reversal, the cost of the protective put is offset by the sale of an out-of-the-money call. With Priceline shares now up 20 percent since the company's November earnings release, long shareholders may be eager to protect recent gains. 'We recommend the January $180/$230 risk reversal as a low cost way to do so,' SFG said. 'We note that the strategy entails protection through year-end, but should not incorporate the company's next earnings release for those investors who may be hesitant to cap upside into this event.'
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1058 et 20Nov2009
Charts show rally is uneven, S&P 500 lags the Dow
U.S. stocks have rallied sharply from the 12-year lows of early March as investors bet that the recovery will justify loftier equity prices.
But digging a bit deeper, charts show that the rally has been uneven and mostly dependent on just a few stocks.
On a relative basis, the 30-stock Dow Jones industrial average -- back above 10,000 -- has outperformed the broader S&P 500, according to Reuters chart data. The Dow's relative performance is at a 7-month high versus the S&P 500's.
'That means that there's an imbalance in equity indexes,' Ashraf Laidi, chief market strategist at CMC Markets in London said. 'That means the rally in U.S. equities is not broad-even.' he told Reuters.
Reuters Messaging rm://ellis.mnyandu.reuters.com@reuters.net
1032 ET 20Nov2009
Equities turn defensive
U.S. equity markets took on a more defensive stance on Friday as investors worried about the strength of the recovery following worse-than-expected quarterly results from computer maker Dell Inc and homebuilder D.R. Horton Inc.
Classic defensive stocks -- utilities, healthcare and consumer staples -- were gainers in the S&P 500.
Merck & Co Inc was up 2.3 percent to $36.12, and Pfizer Inc added 1.6 percent to $18.39 and were top boosts to the Dow. The S&P healthcare sub index rose 0.5 percent and utilities edged up 0.1 percent.
'The market has had a huge run, people are probably going into a defensive mode, and the market's likely not going to do a whole lot the next six weeks,' said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.
Reuters Messaging:rm://Edward.Krudy.reuters.com@reuters.net
Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.