Intel Corporation (NASDAQ: INTC) shares fell today with most other tech stocks after Nvidia Corporation (NASDAQ: NVDA) lowered its second-quarter revenue outlook to a range between $875 million and $950 million, well below analysts' expectations of $1.1 billion. NVDA cited end-market weakness for the lower forecast, which could be a bad sign for INTC. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on INTC.
After hitting a one-year high of $27.99 in December, the stock hit a one-year low of $18.05 in January. This morning, INTC opened at $20.62. So far today the stock has hit a low of $20.26 and a high of $20.80. As of 12:10, INTC is trading at $20.65, down 0.28 (-1.3%). The chart for INTC looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $23 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.0% return in six weeks as long as INTC is below $23 at August expiration. Intel would have to rise by more than 11% before we would start to lose money.
After hitting a one-year high of $60.00 in December, the stock has hit a new one-year low today. This morning, AET opened at $36.98. So far today the stock has hit a low of $36.01 and a high of $37.99. As of 11:55, AET is trading at $37.29, down 2.50 (-6.3%). The chart for AET looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in six weeks as long as AET is below $45 at August expiration. AET would have to rise by more than 20% before we would start to lose money.
GE July option implied volatility is at 38, August is at 32; above its 26-week average of 29 according to Track Data, suggesting larger price movement.
Starbucks (NASDAQ: SBUX) indicated plans to close 600 unprofitable domestic stores and incur pre-tax charges of $328-$348 million, including asset write-downs of $200 million.
Deutsche Bank says: "With US consumers still reeling and McDonalds (NYSE: MCD) on the cusp of a nationwide specialty coffee rollout, it is too early to call a bottom on fundamentals – maintain Hold."
SBUX July option implied volatility of 42 is near its 26-week average of 39 according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Procter & Gamble (NYSE: PG) is recently up 26 cents to $61.09. PG is expected to report Q4 EPS in early August.
PG announced on June 30 that Derek Jeter, of the New York Yankees, will join Tiger Woods, Roger Federer and Thierry Henry as Gillette Champion ambassadors.
PG call option volume of 5,770 contracts compares to put volume of 38,520 contracts. PG August option implied volatility of 23 is above its 26-week average of 20 according to Track Data, suggesting price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Celgene Biopharma (NASDAQ: CELG) shares are trading higher today after an analyst on CNBC's Fast Money recommended the stock last night, adding that the company could be getting some good news related to the development of its Lymphoma treatment soon. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CELG.
After hitting a one-year high of $75.44 in October, the stock hit a one-year low of $41.26 in December. CELG opened this morning at $65.90. So far today the stock has hit a low of $65.16 and a high of $66.93. As of 12:50, CELG is trading at $66.73, up $2.86 (4.4%). The chart for CELG looks bearish and improving slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just seven weeks as long as CELG is above $55 at August expiration. Celgene would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
Sherwin-Williams (NYSE: SHW) shares are trading higher today after the Rhode Island Supreme Court overturned a $2.4 billion ruling against SHW and two other former lead-paint producers that would have ordered the companies to inspect and clean thousands of homes built before 1980 that were likely to contain lead paint. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SHW.
After hitting a one-year high of $73.96 last July, the stock hit a one-year low of $45.89 yesterday. SHW opened this morning at $48.29. So far today the stock has hit a low of $45.82 and a high of $48.86. As of 11:55, SHW is trading at $47.36, up $1.43 (3.1%). The chart for SHW looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just seven weeks as long as SHW is above $55 at August expiration. Sherwin-Williams would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
Barrick Gold (NYSE: ABX) shares are trading higher today as gold futures have advanced by almost 2%. Gold is being propped up by yet another record high for crude, which investors expect to drive inflation. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ABX.
After hitting a one-year low of $28.89 in August, the stock hit a one-year high of $54.74 in March. ABX opened this morning at $46.42. So far today the stock has hit a low of $46.00 and a high of $47.00. As of 12:05, ABX is trading at $46.55, up $1.05 (2.3%). The chart for ABX looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just seven weeks as long as ABX is above $37.50 at August expiration. Barrick would have to fall by more than 19% before we would start to lose money. Learn more about this type of trade here.
CIT Group (NYSE:CIT) is recently trading at $7.60 in pre-open trading, above its close of $6.81. CIT agreed to sell its home lending business to hedge fund Lone Star for $1.5 billion and its manufactured housing portfolio to Vanderbilt Mortgage and Finance Inc. for $300 million. BMO Capital say's "Although this removes one of the risks to the CIT story, we continue to view its funding risk as being paramount, particularly given CIT's $7 billion in net unfunded commitments that it must find a way to fund if drawn upon." CIT July option implied volatility of 124 is above its 26-week average of 91 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Boeing (NYSE:BA) closed at $65.72. BA is expected to report Q2 EPS in late July. BA's 787 Dreamliner first delivery is expected the third quarter of 2009. BA August option implied volatility of 38 is above its 26-week average of 30 according to Track Data, suggesting larger price fluctuations.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Fortune Brands (NYSE:FO) is recently trading at $58.16 in pre-open trading, below its close of $62.41. FO announced a reduction to its Q2, 2008 earnings outlook on challenging consumer environment. Wachovia has a valuation range of $55 to $60. FO over all option implied volatility of 25 is near its 26-week average according to Track Data, suggesting non-directional price fluctuations.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
EBAY is scheduled to report Q2 EPS on July 16. Deutsche Bank say's "Listing +29% in week 13 but sellers feel the squeeze: Sell." EBAY July option implied volatility of 46 was above its 26-week average of 43 according to Track Data, suggesting larger movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Wachovia (NYSE:WB) is recently down 87c to $15.35. WB call option volume of 56,113 contracts compares to put volume of 37,393 contracts. WB July option implied volatility of 100 is above its 26-week average of 54 according to Track Data, suggesting larger price movement.
Washington Mutual (NYSE:WM) is recently up 20c to $5.00. WM entered into a definite agreement to raise $7 billion through direct sale of securities to TPG Capital and other investors on April 8. WM call option volume of 41,183 contracts compares to put volume of 14,010 contracts. WM July and August option implied volatility of 133 is above its 26-week average of 76 according to Track Data, suggesting larger movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Intel Corporation (NASDAQ: INTC) shares fell today with most other tech stocks after Nvidia Corporation (NASDAQ: NVDA) lowered its second-quarter revenue outlook to a range between $875 million and $950 million, well below analysts' expectations of $1.1 billion. NVDA cited end-market weakness for the lower forecast, which could be a bad sign for INTC. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on INTC.
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