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U.S. stock market report
1629 ET 05Oct2009-Bulls see CSX recovery on track
analyst
U.S. railroad CSX Corp shares rose 2.28 percent to $42.60 and in the options arena, optimists were drawn to the November contract. 'Bullishness was expressed through put selling as investors appear to expect CSX to continue to thrive through expiration in November,' said Interactive Brokers Group market analyst Andrew Wilkinson. He noticed about 7,300 puts were sold short at the Nov $40 strike for an average premium of $2.03 apiece. Traders selling the contracts retain the full credit as long as CSX shares stay above $40 through expiration. Investors shorting the puts pocket the $2.03 credit in exchange for bearing the risk that shares decline beneath $40. He said if the puts land in-the-money by expiration, traders short the puts will have shares of the stock put to them at a price of $40 apiece. Losses begin to accumulate if shares fall from the current price and breach the break-even point at $37.97.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1548 ET 05Oct2009
Fear gauge gets combination options trade
The drop in the CBOE Volatility Index may have inspired some players to position for further downside momentum in the fear gauge through December expiration, said Interactive Brokers Group options analyst Caitlin Duffy. Near the close, the VIX fell 6.35 percent to 26.86. Trading in the December contract suggests traders are expecting the VIX to head back down to 25, she said. A so-called risk reversal appeared to have been established at the Dec. 25 strike as VIX call options were sold short to finance the purchase of put options. About 5,000 calls were earlier sold for $4.70 each, and spread against the purchase of 5,000 puts for $1.20 per contract, she said. Additional call selling took place at the Dec. 30 strike where 5,000 lots were sold. In another leg of the trade, 5,000 calls were bought at the Dec 42.50 strike, suggesting a partial exit strategy should the VIX rally hard by expiration.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1523 ET 05Oct2009-PREVIEW
Improved revenue could boost U.S. Q3 earnings
If the stock market bulls are right, U.S. third-quarter corporate earnings could show revenue kicked into gear after some disappointing numbers last quarter, sustaining the rally.
As the reporting period approaches, analysts said economic growth in the quarter could lift companies' sales in contrast to the previous quarter, when revenue lagged bottom-line earnings.
For more please double click
Reuters Messaging: caroline.valetkevitch.reuters.com@reuters.net
1421 ET 05Oct2009
Option players eye likely gains in Limited Brands
Call buyers are sizing up Limited Brands Inc, the operator of the Victoria's Secret lingerie chain and Bath & Body Works shops, said WhatsTrading.com option strategist Frederic Ruffy. Its shares rose 6.01 percent to $17.10 in afternoon trade and players are picking up the January 2010 calls at the $17.50 strike. The top trade was 706 contracts for a premium of $1.45 on the International Securities Exchange, which is an opening customer buyer, according to ISEE sentiment data. 'It's a buying spree,' as 4,953 call contracts traded in all with the majority hitting ask-side, he said. Implied volatility for the January $17.50 strike stood at 46.3 percent, up from about 44.9 percent late on Friday. Retailers, including Limited, report their September sale results on Thursday.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1342 ET 05Oct2009
Juniper attracts notable bullish option play
One investor appears to be confident on the prospects of Juniper Networks Inc by rolling out a previously established call position in the October contract to a higher strike in the January 2010 contract. Shares of the network equipment maker rose 2.05 percent to $26.38. The trader originally bought 5,000 calls at the Oct $24 strike for about $1.32 apiece back on Aug. 25, said Interactive Brokers Group market analyst Andrew Wilkinson. In order to remain bullish on the stock the investor initiated a calendar spread to roll the long call position to a higher strike price. The sale of the original position yielded a premium of $2.55 apiece with an average net profit of $1.23 per contract. Next, Wilkinson said the trader rolled the bullish stance forward to the Jan $26 strike and paid $2.75 for each of the 5,000 calls. The investor is maintaining a bullish position but is also taking some profits by moving the position to a higher strike in the January contract, said options trader Steve Smith.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1245 ET 05Oct2009
Susquehanna highlights protective puts in retail ETF
The November $30 puts in the S&P Retail Index exchange-traded fund are attractive for investors who seek near-term protection in the sector, wrote Susquehanna Financial Group in a note. Susquehanna noted implied volatility levels in several specialty retailers and broad-based retail products remains depressed when compared to their recent trading ranges. 'Given the market's recent pullback, many investors appear concerned about protecting gains within the retail space as we approach year-end,' the note said. With S&P Retail Index implied volatility levels at near multiyear lows, the cost of buying options outright remains low on a relative basis heading into next month's same-store sales period and the start of earnings season for a number of the specialty retailers.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1159 ET 05Oct2009
KPN raises buyout offer for iBasis
Royal KPN NV on Monday raised its buyout offer to minority shareholders of iBasis Inc to $2.25 a share from $1.55 a share.
The new offer is a 73.1 percent premium over the iBasis' July 10 closing price, just before KPN's first offer was made.
For details, see
Shares of iBasis rose 7 percent to $2.29.
Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1027 ET 05Oct2009
Option players eye Brocade call options
U.S. network equipment maker Brocade Communications Systems Inc has put itself up for sale, the Wall Street Journal said on Monday, sparking a 17.65 percent jump in the company's shares. The stock rose $1.35 to $9 in morning trade.
Brocade's call options volume was eight times the norm as about 26,000 contracts changed hands vs. 5,181 puts, according to Trade Alert. Recent trades include a sweep of 6,650 Oct $9 call strikes on the bid-side for a premium of 30 cents and might be a closing seller, said WhatsTrading.com option strategist Frederic Ruffy. He noticed that buyers were likely driving the flow in the Oct $8 call line and $9 call strike for November expiration as some traders positioned for extended gains. The stock's average implied volatility stood at 64 percent from about 54 percent late on Friday as traders brace for more stock movement.
Reuters Messaging: doris.frankel.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
1629 ET 05Oct2009-Bulls see CSX recovery on track
analyst
U.S. railroad CSX Corp shares rose 2.28 percent to $42.60 and in the options arena, optimists were drawn to the November contract. 'Bullishness was expressed through put selling as investors appear to expect CSX to continue to thrive through expiration in November,' said Interactive Brokers Group market analyst Andrew Wilkinson. He noticed about 7,300 puts were sold short at the Nov $40 strike for an average premium of $2.03 apiece. Traders selling the contracts retain the full credit as long as CSX shares stay above $40 through expiration. Investors shorting the puts pocket the $2.03 credit in exchange for bearing the risk that shares decline beneath $40. He said if the puts land in-the-money by expiration, traders short the puts will have shares of the stock put to them at a price of $40 apiece. Losses begin to accumulate if shares fall from the current price and breach the break-even point at $37.97.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1548 ET 05Oct2009
Fear gauge gets combination options trade
The drop in the CBOE Volatility Index may have inspired some players to position for further downside momentum in the fear gauge through December expiration, said Interactive Brokers Group options analyst Caitlin Duffy. Near the close, the VIX fell 6.35 percent to 26.86. Trading in the December contract suggests traders are expecting the VIX to head back down to 25, she said. A so-called risk reversal appeared to have been established at the Dec. 25 strike as VIX call options were sold short to finance the purchase of put options. About 5,000 calls were earlier sold for $4.70 each, and spread against the purchase of 5,000 puts for $1.20 per contract, she said. Additional call selling took place at the Dec. 30 strike where 5,000 lots were sold. In another leg of the trade, 5,000 calls were bought at the Dec 42.50 strike, suggesting a partial exit strategy should the VIX rally hard by expiration.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1523 ET 05Oct2009-PREVIEW
Improved revenue could boost U.S. Q3 earnings
If the stock market bulls are right, U.S. third-quarter corporate earnings could show revenue kicked into gear after some disappointing numbers last quarter, sustaining the rally.
As the reporting period approaches, analysts said economic growth in the quarter could lift companies' sales in contrast to the previous quarter, when revenue lagged bottom-line earnings.
For more please double click
Reuters Messaging: caroline.valetkevitch.reuters.com@reuters.net
1421 ET 05Oct2009
Option players eye likely gains in Limited Brands
Call buyers are sizing up Limited Brands Inc, the operator of the Victoria's Secret lingerie chain and Bath & Body Works shops, said WhatsTrading.com option strategist Frederic Ruffy. Its shares rose 6.01 percent to $17.10 in afternoon trade and players are picking up the January 2010 calls at the $17.50 strike. The top trade was 706 contracts for a premium of $1.45 on the International Securities Exchange, which is an opening customer buyer, according to ISEE sentiment data. 'It's a buying spree,' as 4,953 call contracts traded in all with the majority hitting ask-side, he said. Implied volatility for the January $17.50 strike stood at 46.3 percent, up from about 44.9 percent late on Friday. Retailers, including Limited, report their September sale results on Thursday.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1342 ET 05Oct2009
Juniper attracts notable bullish option play
One investor appears to be confident on the prospects of Juniper Networks Inc by rolling out a previously established call position in the October contract to a higher strike in the January 2010 contract. Shares of the network equipment maker rose 2.05 percent to $26.38. The trader originally bought 5,000 calls at the Oct $24 strike for about $1.32 apiece back on Aug. 25, said Interactive Brokers Group market analyst Andrew Wilkinson. In order to remain bullish on the stock the investor initiated a calendar spread to roll the long call position to a higher strike price. The sale of the original position yielded a premium of $2.55 apiece with an average net profit of $1.23 per contract. Next, Wilkinson said the trader rolled the bullish stance forward to the Jan $26 strike and paid $2.75 for each of the 5,000 calls. The investor is maintaining a bullish position but is also taking some profits by moving the position to a higher strike in the January contract, said options trader Steve Smith.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1245 ET 05Oct2009
Susquehanna highlights protective puts in retail ETF
The November $30 puts in the S&P Retail Index exchange-traded fund are attractive for investors who seek near-term protection in the sector, wrote Susquehanna Financial Group in a note. Susquehanna noted implied volatility levels in several specialty retailers and broad-based retail products remains depressed when compared to their recent trading ranges. 'Given the market's recent pullback, many investors appear concerned about protecting gains within the retail space as we approach year-end,' the note said. With S&P Retail Index implied volatility levels at near multiyear lows, the cost of buying options outright remains low on a relative basis heading into next month's same-store sales period and the start of earnings season for a number of the specialty retailers.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1159 ET 05Oct2009
KPN raises buyout offer for iBasis
Royal KPN NV on Monday raised its buyout offer to minority shareholders of iBasis Inc to $2.25 a share from $1.55 a share.
The new offer is a 73.1 percent premium over the iBasis' July 10 closing price, just before KPN's first offer was made.
For details, see
Shares of iBasis rose 7 percent to $2.29.
Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1027 ET 05Oct2009
Option players eye Brocade call options
U.S. network equipment maker Brocade Communications Systems Inc has put itself up for sale, the Wall Street Journal said on Monday, sparking a 17.65 percent jump in the company's shares. The stock rose $1.35 to $9 in morning trade.
Brocade's call options volume was eight times the norm as about 26,000 contracts changed hands vs. 5,181 puts, according to Trade Alert. Recent trades include a sweep of 6,650 Oct $9 call strikes on the bid-side for a premium of 30 cents and might be a closing seller, said WhatsTrading.com option strategist Frederic Ruffy. He noticed that buyers were likely driving the flow in the Oct $8 call line and $9 call strike for November expiration as some traders positioned for extended gains. The stock's average implied volatility stood at 64 percent from about 54 percent late on Friday as traders brace for more stock movement.
Reuters Messaging: doris.frankel.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.
