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Friday, June 03, 2005

Analysis: Unusual Options Activity

Briefing points out unusual options activity for AMD, PMCS, ABS, AES.

This condition often causes sudden moves in the price of the shares (but not necessarily in the same direction as the options predict). I checked it out and give you the options volume for this moment today:

AMD June $17
calls volume: 13.647
puts volume: 3.057

PMCS July $10
calls volume: 3.771
puts volume: 66

ABS July $22.5
calls volume: 3.993
puts volume: 190

AES July $15
calls volume: 48
puts volume: 3.460

Update 2: Live Action: Google (GOOG) puts

Briefing.com
12:17 GOOG Trader Talk: Google (278.28 -9.62)

-Update- We are hearing from multiple sources that a prominent NY hedge fund had to recently cover a large short position in GOOG, which may have helped fuel strength in the name over the past week. According to contacts, today's weakness in the name is believed to be a sign that these short positions have already been covered, and the stock has run out of gas temporarily.
See also:
Update: Live Action: Google (GOOG) puts
Live Action: Google (GOOG) puts

Update: Live Action: Google (GOOG) puts

Google (GOOG) sell-off continues. Currently, GOOG shares are trading at $278.31 (-3.33%). June $250 puts I bought with $0.80 are worth $1.00/$1.15 at the moment.

See also:
Live Action: Google (GOOG) puts

Off-topic: Feedback from you

Guys, if you see any typos, missing or incorrect text, broken links etc, please let me know (post a comment under the post or send me an e-mail)! Today, there was a typo in the posting about Google options for more than an hour before I noticed it myself, I could have been able to correct it sooner if anyone had written me... :)

Of course, you are welcome to contact me with any other suggetions and problems. Let me know, if there are any particular topics you would like to read. I would like to know which areas are the most interesting for you (real time trading opportunities, general reading materials about trading, technical analysis, ...?).

And thanks for everyone who is reading my blog, especially some of you, who are checking for new postings several times a day!

Update: Live Action: AAPL puts

I sold Apple (AAPL) options (June $37.50 puts) with an average price of $0.91 as AAPL broke intraday resistance at $38.04. Total profit from the trade: +21.33%.

See also:
Live Action: AAPL puts

Live Action: Google (GOOG) puts

Correction to the post (6/3/2005 11:35:00 AM):
I bought Google (GOOG) June $250 puts with $0.80, not July's puts. Sorry for misleading information! July puts would have costed around $2.90.

Original post:
I bought Google (GOOG) July $250 puts with $0.80. Google target was raised to $350 by UBS today, but GOOG dipped on the news. I think we won't see any new highs during the coming days.

Note that this is not a recommendation, but my own trading diary!

Live Action: AAPL puts

I just bought some Apple (AAPL) June $37.50 puts for $0.75.

Note that this is not a recommendation, but my own trading diary!

Apple (AAPL) gapping down

Apple (AAPL) gapping down about 5% today pre-market on the AppleInsider report that shipments of Apple's iPod digital music players appear flat or declining this month.

Is it just one day correction or the start of a new downtrend? I am inclined to think the latter possibility.

Stock Chart: Apple (AAPL)
Chart courtesy of StockCharts.com.

Thursday, June 02, 2005

Update: Live Action: Long Target Corp (TGT)

Target Corp (TGT) has performed very well during the last days, shares closed at $54.65 (+1.52%; +0.97% profit from the position currently) today. I will raise the hard stop to $52.90. In addition I will place the soft stop around $54.05, if TGT should fall down to this level, I will keep close eye on the stock to take any necessary action.

TGT is a classical break out, but there is always a possibility in these situations that the shares may fall back to the previous resistance ($54, $53, $52) before heading to new highs. Therefore, I keep my eye on Target if any of those should levels should be hit.

Stock Chart: Target Corp (TGT)
Chart courtesy of StockCharts.com.

See also:
Live Action: Long Target Corp (TGT)

Update: Live Action: AEOS calls

Sold AEOS calls with $0.80 on the downgrade news (Sanders Morris: downgrade to Hold). Profit from the trade +14.29%. It was maybe not the best decision, because the shares kept rising (after a small sudden dip), but options are very volatile and even a slight drawback in shares price affects the options dramatically.

See also:
Live Action: AEOS calls

Live Action: AEOS calls

I bought some AEOS June $30 calls with $0.70, AEOS broke technical resistance.

Technical Analysis: Viacom (VIA)

Trader Mike gives a technical analysis for Viacom (VIA) chart in his blog.

I basically agree with him that Viacom's chart is ominous and VIA is near to brake the support. If this should happen, shorting VIA could make some profit.

In addition to his chart, I'll give 2 other possible support areas:
Stock Chart: Viacom (VIA)
Chart courtesy of StockCharts.com.

See also:
Trader Mike: Chart Request: Viacom, Inc. (VIA)

Wednesday, June 01, 2005

Update 2: Live Action: Long DIOD

Sold Diodes (DIOD) at $30.90 before closing. This was purely speculative trade and I did not want to leave it open over night. Profit of 0.75% in a little more than 30 minutes.

See also:
Update: Live Action: Long DIOD
Live Action: Long DIOD

Trading halted on NYSE

15:58 Trading halted on NYSE due to telco problems - CNBC

Update: Live Action: Long DIOD

There was a sudden sell-off with Diodes (DIOD) without news, I purchased the shares after the recovery started. If DIOD should start falling, I will quickly close the position; otherwise I expect it to rise to around $32.

See also:
Live Action: Long DIOD

Live Action: Long DIOD

I would go long with DIOD at $30.67.

This is not a real trade, I am just checking my trading strategy.

Update: News: Earthquake

Tsunami play Taylor Devices (TAYD) shares back at the initial levels, currently +2.14% from yesterday's close. Not so surprising move at all, could have been played on both ways.

See also:
News: Earthquake

Technical Analysis: Eyetech Pharmaceuticals (EYET)

Eyetech Pharmaceuticals (EYET) shares dropped below support at $12.80 and making new day lows. Even if very oversold, it still might amplify the down trend.

Stock Chart: Eyetech Pharmaceuticals (EYET)
Chart courtesy of StockCharts.com.

News: Earthquake

6.0 magnitude earthquake reported in Northeastern Taiwan - Bloomberg
Tsunami/earthquake play: TAYD surged 25%.

Update 2: Live Action: Mylan Labs (MYL) calls

I sold Mylan Labs (MYL) options at average price of $0.333 (the total loss from this trade -4.76%).

I missed the right time to sell (calls were traded even at $0.55). MYL raised well on the news, but I was too greedy to sell. At least this is a good lesson for me: don't let the profit fade if the market turns against you.

See also:
Update: Live Action: Mylan Labs (MYL) calls
Live Action: Mylan Labs (MYL) calls

Live Action: Long Target Corp (TGT)

I would go long Target Corp (TGT) at $54.13, as it just broke through the resitstance.

This trade is not with real money, I am just checking my trading strategy.

See also:
Analysis: Target Corp (TGT)

Update: Live Action: Mylan Labs (MYL) calls

Mylan (MYL) June $17.50 calls currently trading at $0.45/$0.50, while MYL itself at $17.36.

Icahn says stands by $20/shr offer to buy Mylan
Reuters

Wed Jun 1, 2005 09:54 AM ET

NEW YORK, June 1 (Reuters) - Investor Carl Icahn on Wednesday reiterated his proposal to acquire Mylan Laboratories Inc. (MYL.N: Quote, Profile, Research) , a generic drugmaker, for $20 a share.
Read further:
Yahoo (Reuters): Icahn says stands by $20/shr offer to buy Mylan

See also:
Live Action: Mylan Labs (MYL) calls

Live Action: Mylan Labs (MYL) calls

I just bought Mylan Laps (MYL) June $17.50 calls at $0.35 on Briefing news "Mylan Labs: Icahn-led group offers $20/share for Mylan Labs - DJ ". Due to the very high risk of losing it all, I took a very small amount of it. If I had reacted a little faster, I could get those options with $0.30.

Note that this is not a recommendation, but my own trading diary!

Update 3: Live Action: Long CMX

I closed Caremark (CMX) at $43.80. The loss from this trade was -1.1%.

See also:
Update 2: Live Action: Long CMX
Live Action: Long CMX

Update 2: Live Action: Long CMX

Caremark RX (CMX) is trading significally lower today in pre-market. The main reason is that U.S. Justice Department joined the lawsuit against Caremark.

I will close the position if the shares open below the stop level ($43.85) and there is no instant recovery.

Read further:
Yahoo (Reuters): UPDATE 1-US joins whistleblower lawsuit against Caremark
Yahoo (AP): Justice Joins Caremark Whistleblower Suit

See also:
Update: Live Action: Long CMX
Live Action: Long CMX

Analysis: Target Corp (TGT)

Marc Gerstein at Reuters.com analyzes Target Corp (TGT) shares and finds TGT to be a reasonable long term investment.

It may be good idea to wait until technical break-out at $54.06 (all time high) before starting to buy. TGT may slide downwards around $54 level at first, which also takes RSI back to lower levels.

Stock Chart: Target Corp (TGT)
Chart courtesy of StockCharts.com.

Challening the king
Reuters.com

by Marc Gerstein
01 Jun 2005

When it comes to retail, Wal-Mart (WMT) is unbeatable. Right? When it comes to mass-discount retailing, WMT is absolutely positively unbeatable. Right? Actually, there are some dissenting views floating around nowadays.

I'm not ready to suggest that TGT is about to take over the world, or even replace WMT as the entity viewed as most likely to try. But from the stock point of view, that need not happen. I estimate that TGT's share price would be reasonable if EPS could grow at or better than 9.5 percent over the next five years.

Of the 25 analysts that cover TGT, 20 (a reasonably high percentage) publish long-term growth projections ranging from 12 percent to 19 percent, with a consensus figure of 15.17 percent. My estimated required EPS growth hurdle is well below even the low end of the analyst range.
Read further:
Reuters: Challening the king

Tuesday, May 31, 2005

Update: Live Action: Long CMX

Today, CMX closed at $44.66 (+1.02%). The current profit from the position would be +0.8%. This certainly is not satisfying at the moment, but I don't see big downside risks also. I set the stop at $43.85.

Chart of Caremark RX (CMX):
Stock Chart: Caremark RX (CMX)
Chart courtesy of StockCharts.com.

See also:
Live Action: Long CMX

Update: Live Action: Long VPHM

Closed VPHM at $4.55 (loss of -3.4%).

See also:
Live Action: Long VPHM

Live Action: Long VPHM

I would go long with VPHM at $4.71 (Piper Jaffray upgrade: target $7).

This trade is not with real money, I am just checking my trading strategy.

Hedge fund instant messaging should be scrutinized

Hedge fund instant messaging should be scrutinized
Reuters

By Herbert Lash
Wed May 25, 2005 01:10 PM ET

NEW YORK, May 24 (Reuters) - Instant messaging, a conduit some say is used to spread rumors and cause market volatility, should come under regulatory scrutiny after last week's crackdown on insider trading by hedge funds, an executive at American Century Investments said on Tuesday.

The secretive funds, which will become subject to SEC examinations in February, may find they have not been keeping adequate records of electronic messaging, Bradley said in an interview.

"Hedge funds are wonderful at understanding where there are holes in the rules and using regulatory arbitrage to make money and act like they're geniuses," he said.
Read further:
Reuters: CORRECTED - Hedge fund instant messaging should be scrutinized

Monday, May 30, 2005

Algorithmic trading adds up to affect 25% of US equities

Algorithmic trading adds up to affect 25% of US equities
Financial Times
By Andrei Postelnicu
Published: May 27 2005 03:00

About a quarter of US equity trading is executed through using algorithms at various points, according to Goldman Sachs - up fivefold in three years. Goldman predicts this strong growth to continue this year.

Fears that algorithms would displace human traders have been replaced by an understanding that they are a "survival tool that improves traders' efficiency and quality of life", says Manny Santayana, who is charged with selling CSFB's algorithmic trading services. Algorithms cannot replace trading savvy.

Read further:
Financial Times: Algorithmic trading adds up to affect 25% of US equities