Market will probably tank Thursday - Buy Puts
I loaded up on QQQQ puts this week in preparation for Thursday.
Binary Options - New Type of Options
New type of Option started trading today. Fast Money article explains
Binary options for the S&P S&P 500 INDEX.SPX
1284.91 4.91 +0.38% Chicago
Quote | Chart | News | Profile
[.SPX 1284.91 4.91 (+0.38%) ] and VIX CBOE MKT VOLATILITY IDXVIX
23.65 -0.30 -1.25% Chicago
Quote | Chart | News | Profile
[VIX 23.65 -0.30 (-1.25%) ] began trading at the CBOE for the first time on Tuesday. So what the heck are binary options.
Binary options (also called all or nothing options) are a type of trade where the payoff is either all or nothing, explains optionMonster and Fast Money favorite Jon Najarian. There’s no in-between.
CBOE binary options contracts, on which calls will be listed first, will pay either a fixed cash settlement amount if the underlying index settles at or above the strike price at expiration, or nothing at all if the underlying index settles below the strike price at expiration.
These binaries expire on the Wednesday of each month. However, they’re not knock out options. So, if you’re betting to the upside on the S&P, then the S&P has to be on your strike price or above it at the time of expiration.
The products are expected to attract a broad range of participants, including individual investors, hedge funds and institutions, who have an opinion, one way or another, on future price movements in the SPX or the VIX, said CBOE chairman and Chief Executive William Brodsky in a statement.
And if your eyes have glazed over from the explanation above just look at binary options as training wheels for other types of options.
T - AT&T going back up
Fast Money on CNBC tonight picks AT&T to go back up.
QQQTT - POWERSHARES QQQ -AUG -$ 46 PUT-
The Market is going down, down, down. I want to still make money so I am now buying option PUTS.
I am buying QQQTT PUT option on stock QQQQ
T - AT&T at bargin prices
AT&T outlook not so grim, analyst says
By Jeffry Bartash
Jun 25, 2008 13:33:00 (ET)
WASHINGTON (MarketWatch) — In a full-fledged defense of AT&T Inc., the brokerage Bernstein Research raised its rating on the company’s stock and said that concerns about the carrier’s financial well-being are overdone.
In a lengthy report, Bernstein analyst Craig Moffett raised his rating to outperform from market perform and said that AT&T should weather the current economic slowdown better than most rivals.
The good word temporarily halted a retreat in AT&T (T, Trade ) stock, which was up 2.5% to $35.12 Wednesday. Before the day’s gains, the value of AT&T shares had fallen 15% over the past month relative to the S&P 500 Index (SPX ).
Concerns about AT&T were triggered in large part by the company’s recent announcement that handset subsidies for the latest version of the Apple iPhone could cost as much as 12 cents in earnings per share in the current fiscal year.
Other worries abound. Investors are concerned about slower growth in U.S. wireless market, rumors of higher network spending and an erosion in AT&T’s traditional wireline business.
“In short order, sentiment in the telecom sector has gone from bullish to guarded to … well, slightly queasy,” Moffett wrote.
He believes all those concerns are overblown. Start with the wireless market: With most Americans now owning cell phones, it’s true that growth in new subscribers is likely to slow. What’s more, rivals such as Sprint Nextel Corp. (S, Trade ) and T-Mobile USA have cut the cost of some monthly plans, raising the prospect of an industry price war.
Yet Moffett believes that AT&T’s strategy to cut the up-front cost of the iPhone in half to start at $200 will help immunize the carrier.
“AT&T’s aggressive handset pricing on the iPhone means AT&T is likely a share gainer in wireless, which will help buffer AT&T from industry-wide subscriber-growth deceleration,” he said.
Moffett also discounts the possibility that AT&T will adopt a more costly approach to connecting its customers via fiber-optic cable, the goal of which is to provide faster Internet speeds and pay-TV service.
While Verizon Communications Inc. (VZ, Trade ) is spending $20 billion-plus to bring fiber cable to the curbside, AT&T has chosen a much cheaper, though often ridiculed strategy that relies heavily on software improvements.
From Moffett’s standpoint, AT&T’s so-called U-Verse strategy makes sense. The analyst pointed out that AT&T’s customers are more geographically dispersed compared with Verizon’s (VZ, Trade ).
“Despite rumors to the contrary, we believe there is virtually no chance that AT&T will abandon its U-Verse strategy in favor of a more capital-intensive” approach similar to Verizon’s, according to Moffett.
As for the company’s traditional wireline business, Moffett said there’s a good chance that rising demand from business customers could offset weakness in the consumer market.
Network bandwidth has become more constricted as data-intensive video applications become more widespread on the Internet, he added. The result is rising demand for capacity and growth in the enterprise market for the first time in years.
“We believe the enterprise segment is likely also much less vulnerable to recession than it has been in the past,” Moffett commented.
To be sure, he acknowledged that AT&T “is too big to hide” from negative trends in the telecom industry and the U.S. economy. In Moffett’s view, though, phone companies still represent a safer haven for investors “than the market as a whole.”
MEE - MASSEY ENERGY CORP - Hot Coal Stock
I bought MEE today. This is a great long play for the coal sector
FXAIQ-CURRENCYSHARES AUSTRALIAN DLR SEP $ 95.000 CALL
symbol FXAIQ
3.38 % increase in stock price equals a Call Option Double
AGU - Agrium - Interview with CEO
Grain prices continues to vex investors as the crop-growing region of our nation struggles with the worst floods in 15 years. To make matter worse, the Mississippi River could jump over the top of as many as 33 levees, threatening hundreds of thousands of acres of farmland if sandbagging efforts fail, according to a map released by the U.S. Army Corp of Engineers.
Although the price of corn fell Wednesday on speculation that flooding will soon ease current prices have sparked concerns that demand from ethanol makers and those who make livestock feed will diminish.
For further insights into the damage and what it means for the ag trade we turn to Agrium AGRIUM AGU
CEO Mike Wilson. Following is a synopsis of his main points.
Are your prices sustainable?
”Prices are sustainable as long as the grain fundamentals stay strong,” says Wilson. “If crops stay up then (farmers) can afford to use our products.”
Why do farmers choose your product?
“We’re selling increased yield. We provide the latest technology in seeds, fertilizer, and nutrients. We give the farmer increased yield and higher return,” explains Wilson.
What are farmers telling you about the floods?
“Some farmers are going back to the field and others are saying I’ll take what I can get,” he says.
How’s the future look?
“Our priority is growth. We’ve done 7 acquisitions in the last 2 years. We’re unique because we bridge the whole value chain. We buy into the retail sector, into the specialty environmental sector, and the nutrient sector,” Wilson explains.
SLB & BJS - High volume options action- Upward move
Unusual options action in Schlumberger SCHLUMBERGER SLB and BJ Services BJS
reveals OptionMonster Jon Najarian. The call buying suggests to me both are going higher. I can’t think of a reason why you wouldn’t want to be in on these. There could be a lot of upside here.
MON - Monsanto
Monsanto (MON) popped 5%. The agriculture products company submitted its SmartStax insect and weed platform to the EPA for approval. – Could go to $150
CREE - Possible Takeover by IBM
CREE popped on Tuesday on speculation that the firm is a takeover target. How much truth is there to this market rumor?
According to Cannacord Adams analyst Jonathan Dorsheimer, Cree is often a target of takeover talk and he doesn’t think this one is true. Dorsheimer likes Cree long term, but thinks “the shares are overvalued” at the present moment.
Natural Gas Plays
UNG -United States Natural Gas Fund
APA - Apache Corporation
DVN - Devon Energy Corporation
CHK - Chesapeake Energy Corporation
DWSN - Dawson Geophysical Company - Oil Services play
Dawson Geophysical company is a provider of onshore seismic data services. Do your homework, this stock has upside potential. http://www.dawson3d.com/
T - AT&T Beaten down to bargin basement prices
Written on Engadget.com today:
AT&T (well, Cingular at the time) and Apple entered into a very peculiar marriage of convenience to bring the original iPhone to American airwaves whereby AT&T shelled out cash to Cupertino each and every month for iPhone subscribers on its network (the exact terms were never publicized). Very simply, Apple had something good; they knew it and leveraged it to the very maximum of their ability, dangling the tantalizing prospect of endless publicity and droves of new customers in exchange for the deal. That same logic left Apple struggling to find partners in Europe, though, ultimately deploying the 2.5G model in just five markets there under AT&T-like terms.
Fast forward to July 2008 and the iPhone 3G, and the picture has changed just a bit. At least 70 countries will see the updated version before the year’s out, but why the sudden change of heart by the world’s carriers? Turns out the answer might lie in a revamped sales model that more closely mirrors the deals carriers set up with other manufacturers. AT&T has gone on the record saying that it’ll take a huge revenue hit — 10 to 12 cents per share both this year and next before finally planning on profitability in 2010 — in order to deeply subsidize the phone on its own accord, taking Apple and its precious monthly kickbacks out of the picture. This is presumably the same kind of setup Apple is offering to carriers around the globe, a setup that they’re already well acquainted with that provides a clear path to black ink (or so they would hope, anyway).
T - AT&T - Wall Street needs to read the GEEK Blogs - IPhone is a huge success
AT&T has been beaten down due to the cost of discounting the iPhone. This action will cost the company earnings in the short run but will pay off BIG Long term. Apple and AT&T basically wiped out the competion today in one huge price reduction. Load up on AT&T for September earnings.
T - AT&T Beaten down by Wall Street today - Long term buy opportunity
Summary of IPhone deal on thestreet.com today:
Though AT&T (T - Cramer’s Take - Stockpickr) has exclusive access to provide service for Apple’s (AAPL - Cramer’s Take - Stockpickr) 3G iPhone in the U.S., the telecom giant’s contract is about to extract a hefty price in the near term.
The new 3G iPhone is cheaper than the original version, costing $199 for the 8-gigabyte version and $299 for the 16-gigabyte phone, and AT&T says at those prices its earnings and margins will be pressured through 2009.
“Under the revised agreement, which is consistent with traditional equipment manufacturer-carrier arrangements, there is no revenue sharing, and both iPhone 3G models will be offered at attractive prices to broaden the market potential and accelerate subscriber volumes,” AT&T said in a statement. Following the news, AT&T shares fell 1.7% to $37.56.
AT&T said it expects earnings to be cut by 10 cents to 12 cents a share in 2008 and next year. This year’s adjusted consolidated operating income margin should be about 24%. For this year, analysts expect AT&T to post earnings of $3.12 a share, according to Thomson Reuters.
However, AT&T believes the new device will bolster its results after the initial hit. “As recurring revenue streams build without any further revenue sharing required, AT&T expects the initiative to turn accretive in 2010,” the company said.
AT&T also said that unlimited iPhone 3G data plans for consumers will be available for $30 a month, while business users will have to pony up $45 a month, in addition to a voice plan.
ABT - Cramer likes Abbott
Jim Cramer writes on thestreet.com
Abbott Laboratories (ABT:NYSE) is off about a half of a percent today, and I am going to buy another 300 shares on that weakness. This is an excellent-quality health care play, and I have been waiting for the shares to pull back to own more.
This story is about the diversity of its product portfolio as well as continued market share growth in its largest drug, Humira. Humira, which treats rheumatoid arthritis, is a $4 billion drug and has six indications. The company also has other drugs in its pipeline, as well as three other divisions that are poised for good growth — diagnostics, vascular and nutrition.
There is an article today that suggests the FDA is reviewing all arthritis drugs on the market because they are linked to cancer in children. The FDA has received 30 cases in more than 10 years, but it was unclear as to how many children had taken the drugs or whether the cancer incidence among them was higher than would be expected. The FDA also said that the potential benefits of the medicines outweighed the potential risks at this age level. I think a lot of this is noise, and ABT management has said there have been no instances of cancer in children in clinical trials while taking Humira.
I think that this issue is not material to the growth of Humira, nor will it impact the market share gains that it has achieved. There are also many other products that the company has to fuel its growth in the future. The valuation is attractive, especially relative to big pharmaceutical companies, so I will add more shares to the portfolio on the weakness today.
ABTHK - ABBOTT LABS - AUG 2008 $ 55.000 CALL OPTION
Stock price has to rise 8.29% for option to double
HOT - MAR –Hotel Chains Beaten down to bargin prices
HOT symbol for Starwood Starwood Hotels & Resorts Worldwide - rumors of possible takeover bid.
MAR - Marriott Marriott International - Great company who have been beaten down by economy.
Both stocks are great long plays. Buy on lows
NSC - NORFOLK SOUTHERN - Buy on pull back
Rails are going to be a good long term investment the rest of 08. Norfolk is pulling back this week. Watch and buy on the lows.
AIR - AAR CORP - Airline support company
AAR is a airline services company. With the airlines cutting cost AAR will gain more outsourced business. Check this stock out, do your homework.
Four undervalued stocks worth watching
UA Under Armour
BID Sotheby’s
JST Jinpan International
MVC MVC Capital
Start a watch list on these four stocks
ACOR - ACORDA THERAPEUTICS -
I bought this at $19.21 weeks ago and wow what a jump.
KMBGM-KIMBERLY CLARK CORP JUL 2008 $ 65 - OPTION CALL
Stock price only has to rise 4.25% to double option price
EP - EL PASO CORP - Jim Cramer is buying EP on pullback
Jim Cramer is adding to his position on EP during this pull back. I also am a buyer.
IGT - Morningstar likes International Game Technology
International Game Technology
IGT designs and manufactures computerized gaming equipment (primarily slot machines), network systems, and licensing and services for the casino gaming industry. North American operations contributed 77% of consolidated revenue in fiscal 2007.
What Gives It an Edge: Morningstar analyst Bradley Meeks believes International Game Technology benefits from a wide economic moat, as evidenced by its 70% share of the slot machine industry. IGT derives its advantages from its product-development capabilities (spending nearly 4 times more than its next competitor), and significant barriers to entry in the industry, including time-consuming and costly local and federal gaming regulatory requirements, a wealth of patents, and significant economies of scale. Further making Meeks’ case for a wide economic moat, IGT is extremely profitable with operating margins in the mid-30% range, and the firm converts an average of 18% of revenues into free cash flow.
JMBA - JAMBA INC - CHEAP $2 Speculative Food Play
Take a look at JMBA, large volume stock could break out.
Large volume of option interest today.
PEP - PEPSICO INC -
Take a look at Pepsi, it is breaking out. The consumer food plays are going to make the money during this down turn in the economy
Friday was Bargin Day
I watched the market slide lower and lower Friday. I made two purchases in the last 30 minutes. I was very happy with the lower prices with my purchases. We need to watch the market Monday and see if we get a correction. Many investors are buying airline stocks due to the low prices. This is a short play that the investors will sell once the gas bubble breaks and the airline stocks correct. If you get into this play make sure to set your sell orders for a quick correction in the airline stock. These are volatile stocks so be careful. EP was beaten down, it is a buy at a lower price.
Market will be slow Friday - Holiday weekend will lead to slow down -
Look for bargins Friday. Look in Coal and Natural Gas stocks. EP is still a hot buy.
Have a great holiday weekend!!!
