Monthly Archives: April 2013

Optionity Daily Report 04/30/2013

Date: April 30, 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 58. As reported by CBOE, the total put/call ratio was 0.89 for the day. The index put/call ratio was 0.80, and the equity put/call ratio was 0.62. The CBOE volatility index (VIX) put/call ratio was 0.32. 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.

(click to enlarge)Source: Schaeffer’s Research

Stocks with Unusual Volume

Below is the top 10 list obtained from AVAFIN.com for options alert with the following screening criteria:

  1.  Unusual Volume
  2.  300% spike in volume
  3.  In all sectors and all industries

(click to enlarge)Source: AVAFIN.COM

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) is slightly bullish. RSI (14) has increased but still indicates a slightly bearish lean. RSI (14) closed at 47.89 (previous closing of 46.25). MACD different is converging and is at 0.004. The market is expected to decline if both MACD and RSI are bullish. Watch out for “Sell in May and Go Away” effect.(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened flat and closed higher at $159.68 (+0.24%). The volume was 24.14M. On weekly basis, the MACD (12, 2, 9) is showing a bullish trend and the MACD Histogram decreased in the last trading day and closed at 0.297. SPY is currently trading above its 200-day MA of $121.47 and its 50-day MA of $143.25. RSI (14) increased and closed at 70.24. The next resistance is $161.10 (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)

Source: Seeking Alpha

Existing Position(s):

Core 20 Positions:

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

WFM credit put spread $80.5/$83 May 17, 2013 ($0.68 credit, established on March 13, 2013)

ORCL credit short put spread $29/$31 May 17, 2013 ($0.38 credit, established on March 25, 2013)

INTC short put $21 May 17, 2013 ($0.34 credit, established on April 17, 2013) => Closed short put $21 at $0.10 on April 22, 2013. $0.24 profit => Set up a new INTC short put $22 May 17, 2013 position ($0.30 credit, established on April 22, 2013) => Closed short put $22 at $0.09 on April 29, 2013. $0.21 profit => Set up a new INTC credit short put $21/$23 May 17, 2013 position ($0.24 credit, established on April 29, 2013).

QCOM credit short put spread $57.5/$60 May 17, 2013 ($0.30 credit, established on April 25, 2013)

Other Options Positions:

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

HL credit short put spread $3.5/$4.5 April 19, 2013 ($0.32 credit, established on March 11, 2013) => Acquired HL share at cost of $4.18

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.36 credit, established on March 19, 2013)

ZNGA credit short put spread $2.5/$3 June 21, 2013 ($0.16 credit, established on March 25, 2013)

TEVA credit short put spread $35/$37.5 May 18, 2013 ($0.32 credit, established on April 1, 2013)

NOK credit short put spread $2.5/$3.5 May 17, 2013 ($0.37 credit, established on April 18, 2013) *High Reward/High Risk Position

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.

ORCL credit short put spread $29/$31 May 17, 2013 ($0.32 credit, established on March 21, 2013) => Closed position on April 11, 2013. $0.23 profit (13.69% Return on Margin, 21 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.55 credit, established on March 6, 2013) => Closed position on April 16, 2013. $0.15 profit (7.69% Return on Margin, 40 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.75 credit, established on March 19, 2013) => Closed position on April 16, 2013. $0.35 profit (20% Return on Margin, 27 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013) => Closed short put $52.5 put at $0.05 on April 19, 2013. $0.25 profit (11.36% return on margin, 55 days, including non-trading days)

TEVA credit short put spread $35/$37.5 April 20, 2013 ($0.19 credit, established on March 7, 2013) => Closed short put $37.5 at $0.02 on April 19, 2013. $0.17 profit (7.36% return on margin, 42 days, including non-trading days)

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013) => Closed AKAM short put $32 at $0.03 on April 25, 2013. $0.35 profit (21.60% return on margin, 72 days, including non-trading days)

Other Options Positions:

N/A

 

All rights reserved © Optionity 2013

Optionity Daily Report 04/29/2013

Date: April 29, 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 58, which had increased from the previous day closing of 53. As reported by CBOE, the total put/call ratio was 0.90 for the day. The index put/call ratio was 1.06, and the equity put/call ratio was 0.58. The CBOE volatility index (VIX) put/call ratio was 0.46. 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.

(click to enlarge)Source: Schaeffer’s Research

 

Stocks with Unusual Volume

Below is the top 10 list obtained from AVAFIN.com for options alert with the following screening criteria:

  1.  Unusual Volume
  2.  300% spike in volume
  3.  In all sectors and all industries

(click to enlarge)Source: AVAFIN.COM

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) is slightly bullish. RSI (14) has decreased and indicates a slightly bearish lean. RSI (14) closed at 46.25 (previous closing of 49.21). MACD different is converging and is approaching 0. The market is expected to decline if both MACD and RSI are bullish. Watch out for “Sell in May and Go Away” effect.(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened higher and closed higher at $159.30 (+0.66%). The volume was 19.16M. On weekly basis, the MACD (12, 2, 9) is showing a bullish trend but the MACD Histogram decreased in the last trading day and closed at 0.273. SPY is currently trading above its 200-day MA of $121.47 and its 50-day MA of $143.24. RSI (14) increased and closed at 69.78. The next resistance is $161.10 (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)

Source: Seeking Alpha

Existing Position(s):

Core 20 Positions:

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

WFM credit put spread $80.5/$83 May 17, 2013 ($0.68 credit, established on March 13, 2013)

ORCL credit short put spread $29/$31 May 17, 2013 ($0.38 credit, established on March 25, 2013)

INTC short put $21 May 17, 2013 ($0.34 credit, established on April 17, 2013) => Closed short put $21 at $0.10 on April 22, 2013. $0.24 profit => Set up a new INTC short put $22 May 17, 2013 position ($0.30 credit, established on April 22, 2013) => Closed short put $22 at $0.09 on April 29, 2013. $0.21 profit => Set up a new INTC credit short put $21/$23 May 17, 2013 position ($0.24 credit, established on April 29, 2013).

QCOM credit short put spread $57.5/$60 May 17, 2013 ($0.30 credit, established on April 25, 2013)

Other Options Positions:

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

HL credit short put spread $3.5/$4.5 April 19, 2013 ($0.32 credit, established on March 11, 2013) => Acquired HL share at cost of $4.18

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.36 credit, established on March 19, 2013)

ZNGA credit short put spread $2.5/$3 June 21, 2013 ($0.16 credit, established on March 25, 2013)

TEVA credit short put spread $35/$37.5 May 18, 2013 ($0.32 credit, established on April 1, 2013)

NOK credit short put spread $2.5/$3.5 May 17, 2013 ($0.37 credit, established on April 18, 2013) *High Reward/High Risk Position

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.

ORCL credit short put spread $29/$31 May 17, 2013 ($0.32 credit, established on March 21, 2013) => Closed position on April 11, 2013. $0.23 profit (13.69% Return on Margin, 21 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.55 credit, established on March 6, 2013) => Closed position on April 16, 2013. $0.15 profit (7.69% Return on Margin, 40 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.75 credit, established on March 19, 2013) => Closed position on April 16, 2013. $0.35 profit (20% Return on Margin, 27 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013) => Closed short put $52.5 put at $0.05 on April 19, 2013. $0.25 profit (11.36% return on margin, 55 days, including non-trading days)

TEVA credit short put spread $35/$37.5 April 20, 2013 ($0.19 credit, established on March 7, 2013) => Closed short put $37.5 at $0.02 on April 19, 2013. $0.17 profit (7.36% return on margin, 42 days, including non-trading days)

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013) => Closed AKAM short put $32 at $0.03 on April 25, 2013. $0.35 profit (21.60% return on margin, 72 days, including non-trading days)

Other Options Positions:

N/A

 

Has ConocoPhillips Reached An Inflection Point? [Seeking Alpha]

Despite mixed Q1 results, ConocoPhillips (COP) could be approaching a very significant inflection point for its operation while it continues to improve its bottom line.

ConocoPhillips, with a market cap of $71.93B, is the largest independent U.S. oil and natural gas producer. COP operates as an integrated energy company, exploring for, producing, transporting and marketing crude oil, natural gas, natural gas liquids and liquefied natural gas, globally. COP is organized into Exploration and Production, Midstream, Refining and Marketing, LUKOIL Investment, Chemicals, and Emerging Businesses segments.

Mixed Results

For Q1, 2012, COP’s net income fell to $2.14B ($1.73 per share) from $2.94B ($2.27 per share). Excluding discontinued operations, COP earned $1.42 per share. After spinning off Phillips 66 (PSX), COP’s downstream business, in Q2, 2012, COP’s income was negatively impacted by $700M. Excluding PSX’s impact, the earnings were about the same a year ago. Total revenues fell 10% to $14.65B, from $16.08B the previous year. According to FactSet, analysts, on average, expected adjusted net income of $1.42 per share on revenue of $12.79B.

Falling Production

Earlier in January, the management indicated that oil and gas production may reach a low point this year as the company completes a multi-year restructuring and asset sale program. Oil and gas output from continuing operations declined to 1.56 million barrels oil equivalent ((boe)) per day from 1.58 million boe per day a year earlier.

Read MORE.

Alcatel-Lucent: A Volatile Stock Requiring Lots Of Patience [Seeking Alpha]

Alcatel-Lucent (ALU), a France-based company with a market cap of $3.13B, is a provider of telecommunications technology and services, which also engages in mobile, fixed, Internet Protocol and optics technologies, applications and services. With disappointing Q1 numbers, it may be still too early to give up ALU.

Disappointing Numbers

For Q1, 2013, ALU reported a net loss from continuing operation of $0.20 per ADS, which is lower than the Zacks Consensus Estimate of -$0.10 per ADS. Sales were nearly flat at $4.21B (€3.23B Euros) with a loss of $461.72M €353M Euros) as compared to a gain of $337.49M (€259M Euros) a year earlier. FactSet had forecast a Q1 loss of $345.31M (€265M Euros) on sales of $4.17B (€3.2B Euros).

As the company continues to be on a $1.63B (€1.25B Euros) restructuring program, cutting 5,000 jobs, new CEO Michel Combes still has a tough road ahead for his plan of “one month of listening, two months of defining a project, and three years of transformation.” Combes just became CEO earlier this month.

Geographic and Segment Breakdowns

Geographically, North America was up 15.1% while Asia Pacific region had a low single-digit decline (5.8%) year-over year. Europe continued to suffer with a decline of 10.1% in revenue. Lastly, revenue from the Rest of World decreased 13.3% due to poor performance in Central and Latin America, the Middle East and Africa.

Optionity Daily Report 04/26/2013

Date: April 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)

(click to enlarge)Source: Briefing

Options Market Recap

The market sentiment was neutral with Fear & Greed Index at 52, which had decreased from the previous day closing of 54. As reported by CBOE, the total put/call ratio was 0.89 for the day. The index put/call ratio was 1.02, and the equity put/call ratio was 0.65. The CBOE volatility index (VIX) put/call ratio was 0.30. 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.

(click to enlarge)Source: Schaeffer’s Research

Stocks with Unusual Volume

Below is the top 10 list obtained from AVAFIN.com for options alert with the following screening criteria:

  1.  Unusual Volume
  2.  300% spike in volume
  3.  In all sectors and all industries

(click to enlarge)Source: AVAFIN.COM

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) continues to be bullish. RSI (14) has increased but still indicates a slightly bearish lean. RSI (14) closed at 49.21 (previous closing of 47.59). MACD different is converging. The market is expected to decline if both MACD and RSI are bullish. Watch out for “Sell in May and Go Away” effect.(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened slightly lower and closed lower at $158.26 (-0.22%). The volume was 24.33M. On weekly basis, the MACD (12, 2, 9) is showing a bullish trend but the MACD Histogram decreased in the last trading day and closed at 0.279 SPY is currently trading above its 200-day MA of $121.09 and its 50-day MA of $142.60. RSI (14) decreased and closed at 68.42. The next resistance is $161.10 (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)

Source: Seeking Alpha

Existing Position(s):

Core 20 Positions:

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

WFM credit put spread $80.5/$83 May 17, 2013 ($0.68 credit, established on March 13, 2013)

ORCL credit short put spread $29/$31 May 17, 2013 ($0.38 credit, established on March 25, 2013)

INTC short put $21 May 17, 2013 ($0.34 credit, established on April 17, 2013) => Closed short put $21 at $0.10 on April 22, 2013. $0.24 profit => Set up a new INTC short put $22 May 17, 2013 position ($0.30 credit, established on April 22, 2013)

QCOM credit short put spread $57.5/$60 May 17, 2013 ($0.30 credit, established on April 25, 2013)

Other Options Positions:

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

HL credit short put spread $3.5/$4.5 April 19, 2013 ($0.32 credit, established on March 11, 2013) => Acquired HL share at cost of $4.18

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.36 credit, established on March 19, 2013)

ZNGA credit short put spread $2.5/$3 June 21, 2013 ($0.16 credit, established on March 25, 2013)

TEVA credit short put spread $35/$37.5 May 18, 2013 ($0.32 credit, established on April 1, 2013)

NOK credit short put spread $2.5/$3.5 May 17, 2013 ($0.37 credit, established on April 18, 2013) *High Reward/High Risk Position

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.

ORCL credit short put spread $29/$31 May 17, 2013 ($0.32 credit, established on March 21, 2013) => Closed position on April 11, 2013. $0.23 profit (13.69% Return on Margin, 21 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.55 credit, established on March 6, 2013) => Closed position on April 16, 2013. $0.15 profit (7.69% Return on Margin, 40 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.75 credit, established on March 19, 2013) => Closed position on April 16, 2013. $0.35 profit (20% Return on Margin, 27 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013) => Closed short put $52.5 put at $0.05 on April 19, 2013. $0.25 profit (11.36% return on margin, 55 days, including non-trading days)

TEVA credit short put spread $35/$37.5 April 20, 2013 ($0.19 credit, established on March 7, 2013) => Closed short put $37.5 at $0.02 on April 19, 2013. $0.17 profit (7.36% return on margin, 42 days, including non-trading days)

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013) => Closed AKAM short put $32 at $0.03 on April 25, 2013. $0.35 profit (21.60% return on margin, 72 days, including non-trading days)

Other Options Positions:

N/A

 

All rights reserved © Optionity 2013

Corning: Riding Multiple Uptrends, Lifted By Gorilla Glass

Corning Incorporated (GLW) is a global, technology-based corporation, operating in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. With better-than-expected earnings and strong buyback, Corning is marching up, lifted by Gorilla Glass.

Bottom Formed

On April 25, 2013, Corning’s chairman and CEO Wendell P. Weeks told shareholders in the annual meeting that Corning’s performance over past two quarters is a strong indication that the Corning has successfully formed the bottom and is ready to march up. Despite a tough 2012, Corning is ready for growth in 2013. The growth opportunities mainly come from 1) the proliferation of mobile devices, which increases the demand for thin, tough cover glass; 2) increasing demand for bandwidth, creating needs for fiber optic networks; 3) evolution to higher-resolution display devices, requiring more specialty glass to meet rigorous technical requirements; 4) increasing demand for emissions-control products due to tighter environmental regulations; 5) increasing need for more effective drug therapies due to gaining global population. The company is progressing well and is introducing new glass compositions for high-performance displays and launching new products such as ultra-thin Corning Willow Glass.

Read MORE.

Akamai: Hitting A Home Run With Expanding Margins [Seeking Alpha]

Akamai Technologies, Inc. (AKAM) provides content delivery and cloud infrastructure services for the delivery of content and applications over the Internet. Many companies spend money on web acceleration and content delivery technologies, such as the services provided by market leader Akamai, to avoid lost sales and customers due to slow web pages. Despite the controversial guidance earlier from the management, Akamai delivers with solid numbers.

Surprising Home Run

Akamai reported Q1 revenue of $368M, 15% increase from the year-earlier quarter, beating analysts’ estimate of $357.7M. The management forecasts revenue of $368M to $378M in Q2 compared with a $363M analyst estimate. Q1 profit, including an 8-cent tax benefit, rose to 51 cents a share from 36 cents a year earlier, topping the average estimate of 46 cents, according to data compiled by Bloomberg. AKAM also forecasts Q2 profit excluding some items of 44 cents to 46 cents, compared with a 44 cents estimate.

Read MORE.

Optionity Daily Report 04/25/2013

Date: April 25, 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 neutral with Fear & Greed Index at 54, which had increased from the previous day closing of 48. As reported by CBOE, the total put/call ratio was 0.97 for the day. The index put/call ratio was 1.13, and the equity put/call ratio was 0.61. The CBOE volatility index (VIX) put/call ratio was 0.70. 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.

(click to enlarge)Source: Schaeffer’s Research

Stocks with Unusual Volume

Below is the top 10 list obtained from AVAFIN.com for options alert with the following screening criteria:

  1.  Unusual Volume
  2.  300% spike in volume
  3.  In all sectors and all industries

(click to enlarge)Source: AVAFIN.COM

Market Volatility and Analysis

(click to enlarge)

For Option Equity Put/Call Ratio, the MACD (12, 26, 9) continues to be bullish. RSI (14) has increased and is indicating a slightly bearish lean. RSI (14) closed at 47.59 (previous closing of 46.45). MACD different is converging. The market is expected to decline if both MACD and RSI are bullish. Watch out for “Sell in May and Go Away” effect.(click to enlarge)

SPDR S&P 500 ETF Trust (SPY)

SPY opened higher and closed higher at $158.61 (+0.45%). The volume was 32.49M. On weekly basis, the MACD (12, 2, 9) is showing a bullish trend and the MACD Histogram increased in the last trading day and closed at 0.297. SPY is currently trading above its 200-day MA of $121.09 and its 50-day MA of $142.60. RSI (14) increased and closed at 68.76. The next resistance is $161.10 (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)

Source: Seeking Alpha

Existing Position(s):

Core 20 Positions:

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

WFM credit put spread $80.5/$83 May 17, 2013 ($0.68 credit, established on March 13, 2013)

ORCL credit short put spread $29/$31 May 17, 2013 ($0.38 credit, established on March 25, 2013)

INTC short put $21 May 17, 2013 ($0.34 credit, established on April 17, 2013) => Closed short put $21 at $0.10 on April 22, 2013. $0.24 profit => Set up a new INTC short put $22 May 17, 2013 position ($0.30 credit, established on April 22, 2013)

QCOM credit short put spread $57.5/$60 May 17, 2013 ($0.30 credit, established on April 25, 2013)

Other Options Positions:

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

HL credit short put spread $3.5/$4.5 April 19, 2013 ($0.32 credit, established on March 11, 2013) => Acquired HL share at cost of $4.18

NOV credit short put spread $60/$62.5 May 17, 2013 ($0.36 credit, established on March 19, 2013)

ZNGA credit short put spread $2.5/$3 June 21, 2013 ($0.16 credit, established on March 25, 2013)

TEVA credit short put spread $35/$37.5 May 18, 2013 ($0.32 credit, established on April 1, 2013)

NOK credit short put spread $2.5/$3.5 May 17, 2013 ($0.37 credit, established on April 18, 2013) *High Reward/High Risk Position

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.

ORCL credit short put spread $29/$31 May 17, 2013 ($0.32 credit, established on March 21, 2013) => Closed position on April 11, 2013. $0.23 profit (13.69% Return on Margin, 21 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.55 credit, established on March 6, 2013) => Closed position on April 16, 2013. $0.15 profit (7.69% Return on Margin, 40 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.75 credit, established on March 19, 2013) => Closed position on April 16, 2013. $0.35 profit (20% Return on Margin, 27 days, including non-trading days).

CHL credit short put spread $50/$52.5 April 19, 2013 ($0.30 credit, established on February 25, 2013) => Closed short put $52.5 put at $0.05 on April 19, 2013. $0.25 profit (11.36% return on margin, 55 days, including non-trading days)

TEVA credit short put spread $35/$37.5 April 20, 2013 ($0.19 credit, established on March 7, 2013) => Closed short put $37.5 at $0.02 on April 19, 2013. $0.17 profit (7.36% return on margin, 42 days, including non-trading days)

AKAM credit short put spread $30/$32 May 17, 2013 ($0.38 credit, established on February 13, 2013) => Closed AKAM short put $32 at $0.03 on April 25, 2013. $0.35 profit (21.60% return on margin, 72 days, including non-trading days)

Other Options Positions:

N/A

 

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Zynga: Dumping Or Buying? A $1.7 Billion Dollar Question [Seeking Alpha]

Zynga (ZNGA) is a leading provider of social game services with 253M average monthly active users over 175 countries. With declining revenue and a disappointing forecast, it may still be too early to dump ZNGA.

The Good and Bad

For Q1, Zynga reported net income of $4.1M (break-even on a per share basis) compared with a net loss of $85.4M (loss of 12 cents per share) for the same period last year. Adjusted net income was $9.1M (1 cent per share) for Q1. However, revenues declined nearly 18% to $263.6M while bookings fell to $229.8M. Analysts were expecting revenue of $264.5M with a loss of 3 cents per share.

ZNGA generated $230M in bookings, exceeding the management’s expectations. FarmVille 2 outperformed with audience engagement and bookings hitting near peak levels in the quarter seven months after launch. The FarmVille 2 team was able to drive multiple days with growth bookings exceeding $1 million per day, including the amount retained by Facebook (FB). Web bookings were down 37% year-over-year and 15% quarter-over-quarter driven primarily by lower web user pay. On the other hand, mobile bookings were up 21% year-over-year, but down 8% quarter-over-quarter driven by a light slate of new game launches over the past two quarters that would normally offset aging live games.

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Broadcom: Numbers Are Connecting For Investors Now [Seeking Alpha]

Broadcom Corporation (BRCM), with a market cap of $19.96B, is a global semiconductor solution for wired and wireless communications, providing system-on-a-chip, and software solutions. Broadcom continues to benefit from strong smartphone/mobile device sales, whereas BRCM’s chips provide short-range wireless connectivity in Apple (AAPL)’s iPhone and iPad, as well as Samsung’s Galaxy line of mobile devices. Apple and Samsung contribute for more than 30 percent of BRCM’s sales, which was helped by stronger iPhone sales.

Strong Revenue and Profit

BRCM posted Q1 revenue of $2.01B, up 9.7 percent from the year-earlier period and beating analysts’ expectation of $1.91B. BRCM reported net income of $191M (33 cents per share), up from $88M (15 cents per share) in Q1, 2012. Excluding one-time costs, BRCM earned 65 cents per share, beating analysts’ estimate of 56 cents per share. Solid results were due to strong demand for wireless base band and connectivity chips. The management also sees sequential growth ahead in broadband business. BRCM expects Q2 revenue of $2.02B-$2.18B, beating analysts’ average projection of $2.05B.

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