Monthly Archives: February 2013

Optionity Daily Report 02/28/2013

Date: February 28, 2013

Daily Market Statistics

Source: Barrons

S&P 500 5-Day Daily Chart

(click to enlarge)

Source: Google Finance

Economic Calendar

(click to enlarge)

Source: Briefing

Options Market Recap

The market sentiment was driven by greed with Fear & Greed Index at 62, which had decreased from the previous day closing of 63. As reported by CBOE, the total put/call ratio was 0.98 for the day. The index put/call ratio was 1.07, and the equity put/call ratio was 0.67. The CBOE volatility index (VIX) put/call ratio was 0.40. The stocks with unusual call activities had been identified through our daily options scanning process, with the scanning criteria where the daily call option volume ratio was above 2.00 (2x of the average call option volume) with a call option volume above 20,000. Unusual option activities can be an indicator or precursor of a major movement for the underlying stock.

Symbol Call Option Volume Average Call Option Volume Daily Volume Ratio Events
GRPN 67,569 22,362 3.02 Earnings
JCP 50,198 20,290 2.47 Earnings
CRM 32,478 6,067 5.35 Earnings
MCP 20,862 9,147 2.28 Earnings

Source: Schaeffer’s Research

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) is showing a bearish sign but the MACD difference continues to converge. RSI (14) is indicating a slightly bullish lean and closed at 51.20 (previous closing of 48.86). MACD Histogram is currently at -0.004. If Option Equity Put/Call Ratio ($CPCE) becomes bullish (bullish RSI and MACD), then the market is expected to decline.(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened flat and closed lower at $151.53 (-0.25%). The volume was 32.61M. On weekly basis, the MACD (12, 26, 9) is showing a bullish trend but the MACD Histogram decreased and closed at 0.633 (previous closing of 0.652). SPY is currently trading above its 200-day MA of $118.76 and its 50-day MA of $139.88. RSI (14) decreased to 67.95 from 68.90 with a decreasing buying momentum. The next resistance is $154.09 (R1), followed by $161.81 (R2).

Optionity Core-20 Options Portfolio (Credit Put Strategy)

Stock criteria:

  1.  Large Cap with low beta
  2.  Fair/Under-valued
  3.  Consistent, strong earnings
  4.  Dividend distribution
  5.  High liquidity, large volume
  6.  Good/strong economic moat

This options portfolio consists of 20 core stocks. The portfolio will employee mainly the credit put strategy with the primary objective of generating consistent cash flow. The portfolio focuses on 1) sufficient sector diversification 2) risk/reward ratio control 3) margin of safety by leveraging options.

Daily portfolio performance will be updated at Seeking Alpha Instablog and Optionity.com.

Transaction details will be updated whenever new position is opened or the existing position is closed/expired/adjusted.

Core-20 Stocks Update

(click to enlarge)

Pending transaction(s) to be setup:

Core 20 Positions:

Credit short put GE May 18, 2013 $20/$21 put (opens if GE pulls back to $21.50 range, Target $0.20)
Credit short put INTC Mar. 16, 2013 $19/20 put (Target $0.20)

Other Options Positions:

N/A

Existing Position(s):

Core 20 Positions:

MDLZ credit short put spread $22/$25 June 21, 2013 ($0.31 credit, established on February 15, 2013)

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013)

Other Options Positions:

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013)

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.51 credit, established on February 14, 2013)

Closed Position(s):

Core 20 Positions:

GLW credit short put spread $11/$12 Mar. 15, 2013 ($0.23 credit, established on February 7, 2013) => Closed short put $12 at $0.07 on February 20, 2013. $0.16 profit (20.78% Return on Margin, 13 days, including non-trading days). $11 put position was sold for $0.04 on February 26, 2013, adding $0.04 to the total profit.

Other Options Positions:

N/A

 

All rights reserved © Optionity 2013

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Strong Buyback For Home Depot And Lowe’s And How To Invest

Both The Home Depot, Inc. (HD) and Lowe’s Companies, Inc. (LOW) had announced a new plan for buyback/share repurchase recently. In this article, both stocks will be analyzed fundamentally and technically. Investing strategies will also be reviewed.

The Home Depot, Inc.

HD was up 0.74% and closed at $68.06 on February 27, 2013. HD had been trading in the range of $46.12-$68.28 in the past 52 weeks. HD has a market cap of $101.76B with a low beta of 0.88.

On February 26, 2013, HD reported Q4 adjusted EPS of $0.67, beating analysts’ estimate of $0.64. Revenue of $18.2B was higher than the consensus estimate of $17.66B. HD boosted its dividend 34% to 39 cents, yielding about 2.4 percent currently. HD also approved a new $17B buyback plan, replacing the current one that was in force.

On February 27, 2013, Deutsche Bank upgraded HD to Hold with a price target of $70.00. On February 22, 2013, Oppenheimer upgraded HD from Perform to Outperform. Analysts currently have a mean target price of $70.52 and a median target price of $72.00 for HD.

There are a few positive factors for HD:

  • Higher operating margin of 10.1% and net margin of 5.9% (vs. the industry average of 8.2% and 4.7%)
  • Stronger ROE of 24.2 (vs. the average of 15.6)
  • HD generates an operating cash flow of $6.34B with a levered free cash flow of $4.80B
  • HD offers an annual dividend yield of 1.70%

Read MORE.

3 Stocks With Positive Upgrades And How To Invest [Seeking Alpha]

Google Inc. (GOOG), Barclays Plc (BCS), and Biogen Idec Inc. (BIIB) had received positive upgrades from analysts recently. In this article, these three stocks will be analyzed fundamentally and technically. Investing strategies will also be reviewed.

Google Inc.

Google was up 1.22% and closed at $799.78 on February 27, 2013. GOOG had been trading in the range of $556.52-$808.97 in the past 52 weeks. GOOG has a market cap of $263.66B and a beta of 1.04.

On February 27, 2013, BofA/Merrill Lynch upgraded GOOG from Neutral to Buy with a price target of $920.00 (from $790.00). As reported, “Analysts see multiple expansion and revenue growth at Google in the second half of the year. Gains will be driven by the Enhanced Campaigns rollout and increase revenues from Product Listing Ads, and analysts also see potential for Motorola product launches.” Analysts have a mean target price of $843.60 with a median target price of $835.00 for GOOG.

There are a few positive factors for GOOG:

Strong revenue growth (3-year average) of 28.5

  • Higher operating margin of 25.4% and net margin of 21.4% (vs. the industry average of 17.0% and 18.7%)
  • Stronger ROE of 16.5 (vs. the average of 13.6)
  • Lower P/E, P/B, and P/S of 24.4, 3.6, and 5.1 (vs. the industry averages of 27.5, 3.9, and 5.8)
  • GOOG has a total cash of $48.09B with a total debt of $7.21B
  • GOOG generates an operating cash flow of $16.62B with a levered free cash flow of $10.77B

Read MORE.

Optionity Daily Report 02/27/2013

Date: February 27, 2013

Daily Market Statistics

Source: Barrons

S&P 500 5-Day Daily Chart

(click to enlarge)

Source: Google Finance

Economic Calendar

(click to enlarge)

Source: Briefing

Options Market Recap

The market sentiment was driven by greed with Fear & Greed Index at 63, which had increased from the previous day closing of 61. As reported by CBOE, the total put/call ratio was 0.99 for the day. The index put/call ratio was 1.22, and the equity put/call ratio was 0.63. The CBOE volatility index (VIX) put/call ratio was 0.74. The stocks with unusual call activities had been identified through our daily options scanning process, with the scanning criteria where the daily call option volume ratio was above 2.00 (2x of the average call option volume) with a call option volume above 20,000. Unusual option activities can be an indicator or precursor of a major movement for the underlying stock.

Symbol Call Option Volume Average Call Option Volume Daily Volume Ratio Events
GRPN 112,625 19,354 5.82 Earnings
LCC 47,446 19,350 2.45 Defend Merger
JCP 45,637 19,877 2.30 Earnings
PCS 39,809 12,986 3.07 Earnings
S 37,277 15,785 2.36 Clearwire accepts Financing
PCLN 31,870 9,986 3.19 Earnings
WFM 23,596 4,345 5.43  
MPC 21,686 7,323 2.96  
ENDP 21,025 3,579 5.87 Earnings

Source: Schaeffer’s Research

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) had turned bearish again. RSI (14) closed at 48.86 (previous closing of 55.29). MACD Histogram is currently at -0.007. If Option Equity Put/Call Ratio ($CPCE) becomes bullish (bullish RSI and MACD), then the market is expected to decline.

(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened flat and closed strongly higher at $151.91 (+1.26%). The volume was 30.65M. On weekly basis, the MACD (12, 26, 9) is showing a bullish trend and the MACD Histogram increased and closed at 0.652 (previous closing of 0.532). SPY is currently trading above its 200-day MA of $118.76 and its 50-day MA of $139.89. RSI (14) increased to 68.90 from 63.15 with an increasing buying momentum. The next resistance is $154.09 (R1), followed by $161.81 (R2).

Optionity Core-20 Options Portfolio (Credit Put Strategy)

Stock criteria:

  1.  Large Cap with low beta
  2.  Fair/Under-valued
  3.  Consistent, strong earnings
  4.  Dividend distribution
  5.  High liquidity, large volume
  6.  Good/strong economic moat

This options portfolio consists of 20 core stocks. The portfolio will employee mainly the credit put strategy with the primary objective of generating consistent cash flow. The portfolio focuses on 1) sufficient sector diversification 2) risk/reward ratio control 3) margin of safety by leveraging options.

Daily portfolio performance will be updated at Seeking Alpha Instablog and Optionity.com.

Transaction details will be updated whenever new position is opened or the existing position is closed/expired/adjusted.

Core-20 Stocks Update

(click to enlarge)

Pending transaction(s) to be setup:

Core 20 Positions:

Credit short put GE May 18, 2013 $20/$21 put (opens if GE pulls back to $21.50 range, Target $0.20)
Credit short put INTC Mar. 16, 2013 $19/20 put (Target $0.20)

Other Options Positions:

N/A

Existing Position(s):

Core 20 Positions:

MDLZ credit short put spread $22/$25 June 21, 2013 ($0.31 credit, established on February 15, 2013)

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013)

Other Options Positions:

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013)

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.51 credit, established on February 14, 2013)

Closed Position(s):

Core 20 Positions:

GLW credit short put spread $11/$12 Mar. 15, 2013 ($0.23 credit, established on February 7, 2013) => Closed short put $12 at $0.07 on February 20, 2013. $0.16 profit (20.78% Return on Margin, 13 days, including non-trading days). $11 put position was sold for $0.04 on February 26, 2013, adding $0.04 to the total profit.

Other Options Positions:

N/A

 

All rights reserved © Optionity 2013

China Mobile: Stabilized 3G And Ready To Dominate 4G-LTE Market In China [Seeking Alpha]

China Mobile (CHL), currently has over 722 million subscribers and is accelerating its deployment of 4G TD-LTE in China. By working with Alcatel-Lucent (ALU), lightRadio Metro Radio will bring high-performance 4G services to Shanghai, Nanjing and Qingdao, three of the fastest growing cities in China. Alcatel-Lucent’s lightRadio portfolio of products will achieve the reduction of costs and power-consumption, as well as the size of LTE network elements, thus helping China Mobile to meet the growing demand for mobile video and data with increased speeds and performance.

Higher Network Capacity Achieved by Small Cells

While it was traditionally too difficult or too costly to deploy a macro cell base station in busy indoor and outdoor locations, lightRadio Metro Radio now provides a cost-effective alternative. This will alleviate the capacity problem for cellular networks as more subscribers use mobile devices to access high-bandwidth services. Small cells will enable China Mobile to provide high-quality, consistent services to customers without the need to build costly and logistically challenging cell towers.

Read MORE.

Enhance Income With These 3 Low Beta Tobacco Stocks [Seeking Alpha]

In this article, three low beta, high-dividend tobacco stocks are presented, including Philip Morris International Inc. (PM), Lorillard, Inc. (LO), and Altria Group, Inc. (MO). All three stocks generate strong cash flow and will enhance investors’ portfolios with consistent income.

Philip Morris International Inc.

Philip Morris International Inc. is a holding company, engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside the United States of America. According to the report from Morningstar, Philip Morris International’s premium positioning of its strong brands, global scale, and addictive products give the firm a wide economic moat, where Asian operations will continue to be an engine for the firm’s future growth. PM was up 0.04% and closed at $91.60 on February 26, 2013. PM had been trading in the range of $81.10-$94.13 in the past 52 weeks. PM has a beta of 0.86.

On February 13, 2013, Nomura Securities upgraded PM from Reduce to Neutral with a price target of $94.80 (from $92.80). Analysts have a mean target price of $97.19 and a median target price of $96.00 for PM. Analysts, on average, are expecting an EPS of $1.35 with revenue of $7.55B for the current quarter, ending in March, 2013. For 2013, analyst are predicting an EPS of $5.78 with revenue of $32.66B, which is 4.10% higher than 2012. Analysts are estimating the growth rate of 11.60% for the next five years (per annum).

Read MORE.

3 Utilities Stocks For A Conservative Portfolio [Seeking Alpha]

3 Utilities Stocks in the regulated electric sector with a low beta will be presented in this article, including Duke Energy Corp (DUK), The Southern Company (SO), and American Electric Power Company, Inc. (AEP). With increasing market volatility, investors can consider these defensive, non-cyclical, and low beta stocks for their conservative portfolio. The stocks in the utility sector hold relatively better compared to other sectors during difficult economic conditions.

Duke Energy Corp

Duke Energy Corporation, the largest regulated utility company in the United States following its merger with Progress Energy, provides regulated utility operations in 5 states in the Southeast and Midwest United States. DUK was up 0.69% and closed at $69.59 on February 26, 2013. DUK had been trading in the range of $59.63-$71.13 in the past 52 weeks. DUK has a very low beta of 0.32.

On February 21, 2013, Drexel Hamilton initiated coverage on DUK with a Hold rating and a price target of $69.00. According to Yahoo Finance, analysts have a mean target price of $71.08 and a median target price of $71.00 for DUK. Analysts are expecting an EPS of $1.06 with revenue of $5.61B for the current quarter ending in March, 2013. For fiscal 2013, analysts are predicting an EPS of $4.34 with revenue of $24.89B, 26.80% higher than 2012.

Read MORE.

Optionity Daily Report 02/26/2013

Date: February 26, 2013

Daily Market Statistics

Source: Barrons

S&P 500 5-Day Daily Chart

(click to enlarge)

Source: Google Finance

Economic Calendar

(click to enlarge)

Source: Briefing

Options Market Recap

The market sentiment was driven by greed with Fear & Greed Index at 61, which had increased from the previous day closing of 53. As reported by CBOE, the total put/call ratio was 1.10 for the day. The index put/call ratio was 0.87, and the equity put/call ratio was 0.75. The CBOE volatility index (VIX) put/call ratio was 0.47. The stocks with unusual call activities had been identified through our daily options scanning process, with the scanning criteria where the daily call option volume ratio was above 2.00 (2x of the average call option volume) with a call option volume above 20,000. Unusual option activities can be an indicator or precursor of a major movement for the underlying stock.

Symbol Call Option Volume Average Call Option Volume Daily Volume Ratio Events
VIX 822,791 309,082 2.66 Fear
MCD 216,265 16,377 13.21 Ex-dividend
INTC 91,984 37,292 2.47  
PEP 57,051 7,152 7.98 Ex-dividend
HD 38,218 8,608 4.44 Earnings
MET 36,619 11,461 3.20  
KORS 32,274 15,555 2.07 New analysts coverage initiated
PCLN 28,792 8,996 3.20 Earnings

Source: Schaeffer’s Research

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) had turned bullish. RSI (14) closed at 55.29 (previous closing of 54.33). MACD Histogram is currently at 0.001 and will confirm a bullish trend if it continues to converge in the next few trading days, along with the picking up of RSI (14). If Option Equity Put/Call Ratio ($CPCE) becomes bullish, then the market is expected to decline.(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened higher and closed higher at $150.02 (+0.68%). The volume was 40.93M. On weekly basis, the MACD (12, 26, 9) is showing a bullish trend and the MACD Histogram increased and closed at 0.532 (previous closing of 0.466). SPY is currently trading above its 200-day MA of $118.75 and its 50-day MA of $139.85. RSI (14) increased to 63.15 from 60.41 with an increasing buying momentum. The next resistance is $154.09 (R1), followed by $161.81 (R2).

Optionity Core-20 Options Portfolio (Credit Put Strategy)

Stock criteria:

  1.  Large Cap with low beta
  2.  Fair/Under-valued
  3.  Consistent, strong earnings
  4.  Dividend distribution
  5.  High liquidity, large volume
  6.  Good/strong economic moat

This options portfolio consists of 20 core stocks. The portfolio will employee mainly the credit put strategy with the primary objective of generating consistent cash flow. The portfolio focuses on 1) sufficient sector diversification 2) risk/reward ratio control 3) margin of safety by leveraging options.

Daily portfolio performance will be updated at Seeking Alpha Instablog and Optionity.com.

Transaction details will be updated whenever new position is opened or the existing position is closed/expired/adjusted.

Core-20 Stocks Update

(click to enlarge)

Pending transaction(s) to be setup:

Core 20 Positions:

Credit short put GE May 18, 2013 $20/$21 put (opens if GE pulls back to $21.50 range, Target $0.20)
Credit short put INTC Mar. 16, 2013 $19/20 put (Target $0.20)

Other Options Positions:

N/A

Existing Position(s):

Core 20 Positions:

MDLZ credit short put spread $22/$25 June 21, 2013 ($0.31 credit, established on February 15, 2013)

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013)

Other Options Positions:

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013)

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.51 credit, established on February 14, 2013)

Closed Position(s):

Core 20 Positions:

GLW credit short put spread $11/$12 Mar. 15, 2013 ($0.23 credit, established on February 7, 2013) => Closed short put $12 at $0.07 on February 20, 2013. $0.16 profit (20.78% Return on Margin, 13 days, including non-trading days). $11 put position was sold for $0.04 on February 26, 2013, adding $0.04 to the total profit.

Other Options Positions:

N/A

 

All rights reserved © Optionity 2013

3 Solid, Low Beta Biotechnology Stocks To Buy On Dip [Seeking Alpha]

In this articles, three solid, large-cap biotechnology stocks with strong fundamentals are presented, including Gilead Sciences, Inc. (GILD), Amgen Inc. (AMGN), and Celgene Corporation (CELG). All three stocks have a strong ROE and a low beta and are great long-term holdings.

Gilead Sciences, Inc.

Gilead Sciences, Inc., with a market cap of $63.78B, is a research-based biopharmaceutical company, which develops and markets therapies to treat life-treating infectious diseases with the core portfolio focused on HIV, liver diseases, such as hepatitis B and C, and cardiovascular/metabolic and respiratory conditions. GILD was down 0.85% and closed at $42.09 on February 25, 2013. GILD had been trading in the range of $22.33-$43.35 in the past 52 weeks. GILD has a very low beta of 0.46.

On February 19, 2013, Credit Suisse upgraded GILD from Neutral to Outperform. Analysts have a mean target of $46.96 and a median target price of $46.00 for GILD. Analysts are expecting an EPS of $0.50 with revenue of $2.57B for the current quarter ending in March, 2013. For 2013, analysts are predicting an EPS of $2.02 with revenue of $10.59B, which is 9.20% higher than 2012.

Read MORE.

Nokia: Lumia Receiving Positive Updates And Offering Value At More Competitive Prices [Seeking Alpha]

Nokia Corporation (NOK) continues to receive positive updates for its Lumia phones around the world. In this article, positive developments will be updated for Lumia phones and the speculation for two new lower-cost Lumia phones, Lumia 720 and Lumia 520, will be reviewed.

Positive Updates for Lumia

Lumia 620: Lumia 620 are sold out in UK and is one of the top selling phones at Singtel, Singapore. Black, white, and Lime Green Lumia 620 are in stock at official Nokia Shop in Germany now. Lumia is reported to take surprisingly good “close to real” photos in low-light and daylight. Lumia 620 now holds “top 5 ranks” in the Top selling phone list at Expansys USA. Nokia Lumia 620 is an excellent choice for younger phone fanatics or just those wanting to take their first steps into Windows Phone 8.

Lumia 822: Lumia 822 are in demand and are the most popular phone at Verizon and RadioShack Wireless

Lumia 920: Nokia is upgrading AT&T Lumia 920 with LTE Band 2 and Band 5. Yellow Lumia 920 phones are sold out at Nokia Shop in India. Red Lumia 920 phones are sold out at AT&T. Nokia’s Lumia 920 has stolen the Mall of America from BlackBerry, and was voted Smartphone of the Year by Engadget readers.

India: Nielsen consumer rankings rates Nokia as the most preferred mobile handset brand in India.

Brazil: Brazil welcomes Lumia 920, 820, and 620 launch with long in-store queues, where Lumia 920 phones are sold out in-store and online.

China: Lumia 920T are in stock at China Mobile’s GuangDong stores, where the phone climbs back to the top of best sellers list.

Read MORE.