Real-time equity news
U.S. stock market report
1721 ET 19Oct2010
Economic calendar for Oct. 20
Economic events scheduled for Wednesday include The U.S. Federal Reserve's Beige Book of economic data gathered from its 12 regional banks. Reuters Messaging: Charles.mikolajczak.thomsonreuters.com@reuters.net
1633 ET 19Oct2010
Player bets on Pilgrim's Pride rebound
U.S. chicken producer Pilgrim's Pride Corp has had a rough summer with the spike in corn prices threatening the company's bottom line. 'Since the beginning of June, the stock has seen a 26 percent drop in share price while the S&P 500 has risen 10 percent,' said Patrick Mortimer, director of options trading at Pipeline Trading Systems. 'Today's option activity shows that at least one investor believes the company will begin to turn the corner over the next 8-1/2 months.'
The June $7.50 calls traded 6,000 times with 90 percent of the volume on the offers and nearly all opening transactions, at an average price of 80 cents per contract. The size of this trade doubles the total option open interest and amounts to 50 times the stock's average daily contract volume. These option owners will need Pilgrim's Pride to rise nearly 40 percent by June 2011 to reach profitability. The stock slipped 6 cents to $5.96. The company is set to report results on Oct. 29.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1601 ET 19Oct2010
Options risk gauge jumps as stocks slump
Risk perceptions rose as the so-called VIX jumped more than 9 percent to 20.94. The CBOE Volatility Index earlier at 21.09 tested the Oct. 15 intraday highs of 21.59, said Scott Fullman, director of derivative investment strategy at WJB Capital Group. 'If we get above that level, we are probably looking at a move back toward the early October highs of 24.34,' he said. The slump in U.S. stocks was accompanied by a rise in the VIX, a 30-day risk forecast of stock market volatility. Fullman said a technical signal from the VIX last week appeared to be an early warning sign of a potential correction in the stock market. A divergence was noted by an increase in implied volatility on VIX options while the spot VIX eased slightly on that day. The market sell-off appears now to be driven by profit taking after earnings reports and a rise in the dollar. 'Investors should not have been surprised of a downturn after six weeks of strength in stock prices,' he said. 'We believe at this time that the decline presents an opportunity to buy shares ahead of an end-of-year rally.'
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1517 ET 19Oct2010
Demand for put options on CVB Financial soars
Demand for put options on CVB Financial Corp soared on Tuesday, just two days ahead of the company's earnings report. Caitlin Duffy, options strategist at Interactive Brokers Group, said the overall reading of options implied volatility on the stock is up 20.3 percent at 65.23 percent, and the high demand for puts are contributing to the uncertainty. The stock was down 4.7 percent at $7.68.
Options traders purchased approximately 30,000 puts outright at the December $5.0 strike for an average premium of 24 cents per contract, she said. 'Roughly 33,400 puts changed hands at that strike versus total previously existing open interest on the stock of 24,488 contracts. Investors holding the contracts are prepared to make money, from an expiration standpoint, should shares plummet 40.8 percent from the current price of $8.05 to breach the effective breakeven point to the downside at $4.76 by December expiration.' However, investors may take profits ahead of expiration if the stock falters following earnings because the value of the puts will appreciate in this scenario whether or not the contracts land in-the-money, Duffy said. The sharp decline in options implied volatility that often follows firms' earnings announcements may adversely impact put buyers by weighing down premium on the puts, particularly if shares fail to decline substantially by expiration in December.
Reuters Messaging: angela.moon.reuters.com@reuters.net; Editing by Andrew Hay Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2010. 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.
U.S. stock market report
1721 ET 19Oct2010
Economic calendar for Oct. 20
Economic events scheduled for Wednesday include The U.S. Federal Reserve's Beige Book of economic data gathered from its 12 regional banks. Reuters Messaging: Charles.mikolajczak.thomsonreuters.com@reuters.net
1633 ET 19Oct2010
Player bets on Pilgrim's Pride rebound
U.S. chicken producer Pilgrim's Pride Corp has had a rough summer with the spike in corn prices threatening the company's bottom line. 'Since the beginning of June, the stock has seen a 26 percent drop in share price while the S&P 500 has risen 10 percent,' said Patrick Mortimer, director of options trading at Pipeline Trading Systems. 'Today's option activity shows that at least one investor believes the company will begin to turn the corner over the next 8-1/2 months.'
The June $7.50 calls traded 6,000 times with 90 percent of the volume on the offers and nearly all opening transactions, at an average price of 80 cents per contract. The size of this trade doubles the total option open interest and amounts to 50 times the stock's average daily contract volume. These option owners will need Pilgrim's Pride to rise nearly 40 percent by June 2011 to reach profitability. The stock slipped 6 cents to $5.96. The company is set to report results on Oct. 29.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1601 ET 19Oct2010
Options risk gauge jumps as stocks slump
Risk perceptions rose as the so-called VIX jumped more than 9 percent to 20.94. The CBOE Volatility Index earlier at 21.09 tested the Oct. 15 intraday highs of 21.59, said Scott Fullman, director of derivative investment strategy at WJB Capital Group. 'If we get above that level, we are probably looking at a move back toward the early October highs of 24.34,' he said. The slump in U.S. stocks was accompanied by a rise in the VIX, a 30-day risk forecast of stock market volatility. Fullman said a technical signal from the VIX last week appeared to be an early warning sign of a potential correction in the stock market. A divergence was noted by an increase in implied volatility on VIX options while the spot VIX eased slightly on that day. The market sell-off appears now to be driven by profit taking after earnings reports and a rise in the dollar. 'Investors should not have been surprised of a downturn after six weeks of strength in stock prices,' he said. 'We believe at this time that the decline presents an opportunity to buy shares ahead of an end-of-year rally.'
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1517 ET 19Oct2010
Demand for put options on CVB Financial soars
Demand for put options on CVB Financial Corp soared on Tuesday, just two days ahead of the company's earnings report. Caitlin Duffy, options strategist at Interactive Brokers Group, said the overall reading of options implied volatility on the stock is up 20.3 percent at 65.23 percent, and the high demand for puts are contributing to the uncertainty. The stock was down 4.7 percent at $7.68.
Options traders purchased approximately 30,000 puts outright at the December $5.0 strike for an average premium of 24 cents per contract, she said. 'Roughly 33,400 puts changed hands at that strike versus total previously existing open interest on the stock of 24,488 contracts. Investors holding the contracts are prepared to make money, from an expiration standpoint, should shares plummet 40.8 percent from the current price of $8.05 to breach the effective breakeven point to the downside at $4.76 by December expiration.' However, investors may take profits ahead of expiration if the stock falters following earnings because the value of the puts will appreciate in this scenario whether or not the contracts land in-the-money, Duffy said. The sharp decline in options implied volatility that often follows firms' earnings announcements may adversely impact put buyers by weighing down premium on the puts, particularly if shares fail to decline substantially by expiration in December.
Reuters Messaging: angela.moon.reuters.com@reuters.net; Editing by Andrew Hay Keywords: MARKETS STOCKSNEWS
COPYRIGHT Copyright Thomson Reuters 2010. 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.