Schaeffer's Trading Floor Blog
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U.S. stock futures are lower this morning, pressured by rising tensions between Russia and Ukraine. In company news, today's stocks to watch include drug giant GlaxoSmithKline plc (ADR) (NYSE:GSK), discount retailer Dollar General Corp. (NYSE:DG), insurance company American International Group Inc (NYSE:AIG), and financial firm JPMorgan Chase & Co. (NYSE:JPM).

  • GlaxoSmithKline plc (ADR) (NYSE:GSK) is fast-tracking human trials of its experimental Ebola vaccine, with studies set to begin within the next few weeks in the U.S., U.K., Gambia, and Mali. GSK is also rushing the drug into production, in hopes of making doses immediately available to the World Health Organization (WHO) if the trials are a success. (The Guardian)

  • Dollar General Corp. (NYSE:DG) reported earnings this morning, and simultaneously said it's committed to pursuing a deal to acquire Family Dollar Stores, Inc. (NYSE:FDO). Last week, FDO rebuffed a $9 billion takeover attempt from DG, opting instead to accept a smaller offer from rival Dollar Tree, Inc. (NASDAQ:DLTR). (Reuters)

  • Robert Benmosche, the outgoing CEO of American International Group Inc (NYSE:AIG), told Bloomberg TV that he accelerated his retirement plans after doctors told him in May that he had only nine months to a year to live. The 70-year-old executive is handing over the AIG reins to Peter Hancock as of Sept. 1, after initially planning to keep the top job until early 2015. (Bloomberg)

  • The FBI is reportedly investigating recent cyberattacks against two to five major banks, including JPMorgan Chase & Co. (NYSE:JPM). Sources suggest the attacks were more sophisticated than most, with the breach going "far beyond the capability of ordinary criminal hackers." JPM acknowledged that companies of its size are subject to cyberattacks "nearly every day," but declined to offer any further details. (BBC News)

  • Actress Jessica Alba's The Honest Co. has raised $70 million toward an initial public offering, valuing the company at nearly $1 billion. Alba's co-founder, Brian Lee, says The Honest Co. -- which specializes in eco-friendly home goods and baby products -- is on pace to bring in more than $150 million in revenue this year. (USA Today)

  • In earnings news, Abercrombie & Fitch Co. (NYSE:ANF), Williams-Sonoma, Inc. (NYSE:WSM), and Guess?, Inc. (NYSE:GES) will be in focus today after reporting their latest quarterly results. (MarketWatch)

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Analyst Upgrades: Alcatel Lucent SA (ADR), Express, Inc., and Workday Inc

Analysts upwardly revised their ratings on ALU, EXPR, and WDAY

by 8/28/2014 8:46 AM
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Analysts are weighing in today on Paris-based tech firm Alcatel Lucent SA (ADR) (NYSE:ALU), apparel retailer Express, Inc. (NYSE:EXPR), and cloud-based management expert Workday Inc (NYSE:WDAY). Here's a quick roundup of today's bullish brokerage notes on ALU, EXPR, and WDAY.

  • It's been a tough year for ALU, which -- at $3.36 -- is staring at a 2014 deficit of nearly 24%. In recent sessions, the shares have been battling back from a year-to-date low of $3.14. Bernstein apparently thinks Alcatel Lucent SA (ADR) has room to run, raising its rating to "outperform" from "market perform," and its price target to $4.63 from $3.97. The rest of the brokerage bunch isn't so sure -- 70% of covering analysts have doled out "hold" or worse opinions on ALU.

  • EXPR soared yesterday -- following a strong second-quarter earnings report -- and closed almost 13% higher at $16.45. The Street took notice of this move, as no fewer than five brokerage firms upped their price targets on the equity -- including Janney, which is eyeing the $22 level for the shares. Should Express, Inc. sustain Wednesday's momentum, short sellers may be forced to cover. Short interest on the stock spiked 23.3% during the two most recent reporting periods, and now makes up 8% of EXPR's float.

  • Finally, WDAY is trending higher ahead of the bell, after reporting stronger-than-expected growth in quarterly revenue and upping its full-year sales outlook. Meanwhile, analysts are jumping on the stock's bandwagon, with six firms raising their price targets on Workday Inc -- including Cantor Fitzgerald, which revised its expectation to $121 from $108. Elsewhere, options traders have shown skepticism toward the security, as its 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.95 ranks just 2 percentage points from an annual bearish acme. On the charts, WDAY has advanced 8.6% year-to-date to trade at $90.30.

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Options Check-Up: Yahoo! Inc., Keurig Green Mountain Inc, and Big Lots, Inc.

Analyzing recent option activity on YHOO, GMCR, and BIG

by 8/28/2014 7:51 AM
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Among the stocks attracting attention from options traders lately are Internet issue Yahoo! Inc. (NASDAQ:YHOO), coffee concern Keurig Green Mountain Inc (NASDAQ:GMCR), and discount retailer Big Lots, Inc. (NYSE:BIG). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on YHOO, GMCR, and BIG.

  • YHOO rose 1% on Wednesday to close at $38.18, after Alibaba Group Holding Ltd. -- of which Yahoo! Inc. owns a major stake -- posted a strong quarterly profit. In the stock's options pits, put buyers have been active, despite YHOO's impressive year-over-year gain of 41%. Specifically, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.37 ranks in the 83rd percentile of its annual range. Front-month YHOO options are pricing in relatively lukewarm volatility expectations at the moment, per the security's Schaeffer's Volatility Index (SVI) of 41%, which ranks in the middling 53rd percentile of its annual range.

  • Call buying has been popular on GMCR of late, as evidenced by the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.83, which ranks higher than 88% of similar readings taken in the past month. This isn't too surprising, though, considering the stock has rallied more than 78% year-to-date to trade at $134.73. With a healthy 8.2% of the security's float sold short, a portion of this activity could be a result of shorts hedging against any additional upside for Keurig Green Mountain Inc. Regardless, now is an opportune time to purchase GMCR's front-month options at a relative bargain, as the stock's SVI of 30% ranks just 7 percentage points from an annual low.

  • Option traders are betting on some earnings-induced upside for BIG, which takes its turn in the earnings confessional Friday morning. At the ISE, CBOE, and PHLX, speculators have bought to open 7.78 BIG calls for every put over the past 50 sessions. What's more, the resultant call/put volume ratio sits just 6 percentage points from a 52-week peak, meaning long calls have been initiated over puts at a near-annual-high clip in recent months. Despite the uncertainty surrounding the scheduled announcement, the stock's SVI of 44% ranks lower than 88% of comparable readings taken in the past year, meaning premium on front-month BIG options are inexpensive at the moment, historically speaking. On Wednesday, Big Lots, Inc. tagged a 16-year peak of $48.52, before settling the session at $47.96. The stock could be poised to extend this record-setting run after it unveils its second-quarter results on Friday. In fact, over the past seven quarters, the security has averaged a single-session post-earnings gain of 4.9% -- including last quarter's 13.1% pop.

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Stocks On the Move: Express, Inc., Sturm, Ruger & Company, and Level 3 Communications, Inc.

EXPR, RGR, and LVLT are moving sharply in Wednesday's trading

by 8/27/2014 1:59 PM
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U.S. stocks are just barely north of breakeven this afternoon, with the major equity indexes taking a mid-week breather. Among the names making notable moves are apparel retailer Express, Inc. (NYSE:EXPR), firearm firm Sturm, Ruger & Company (NYSE:RGR), and telecom services specialist Level 3 Communications, Inc. (NYSE:LVLT). Here's a quick look at how EXPR, RGR, and LVLT are faring on the charts today.

  • EXPR has surged nearly 14% to trade at $16.61, paring its year-to-date loss to 11%. The stock is capitalizing on a well-received earnings report, with Express, Inc. swinging to a surprise profit and topping second-quarter revenue expectations. The equity is likely benefiting from some short-covering activity today, as 6.8% of its available float is sold short -- representing 4.1 times EXPR's average daily trading volume.

  • Following a dismal outlook from its sector peer, RGR has tumbled 3.9% to $49.05. Early this morning, CRT Capital downgraded the stock to "fair value" from "buy," and simultaneously lowered its price target to $55 from $75. Shares of Sturm, Ruger & Company have shed roughly one-third of their value in 2014, significantly underperforming the broader equities market. There could be more negative analyst notes in store, as the average 12-month price target for RGR stands at $59.00 -- a 20.3% premium to the equity's current price.

  • LVLT has rallied 3.7% to trade at $44.58, thanks to an upgrade to "outperform" at Macquarie, as well as a price-target hike to $51 from $49. It's a rare bullish endorsement for Level 3 Communications, Inc., as only 17% of analysts tracking the shares have handed out a "strong buy" recommendation -- even though LVLT has notched a market-beating gain of 34.4% year-to-date. Meanwhile, a capitulation by the shorts could help the security extend its climb; currently, no less than 8.3% of LVLT's float is sold short.

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Analyst Update: Caesars Entertainment Corp, Tiffany & Co., and Trina Solar Limited (ADR)

Analysts adjusted their ratings on CZR, TIF, and TSL

by 8/27/2014 1:21 PM
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Analysts are weighing in today on casino king Caesars Entertainment Corp (NASDAQ:CZR), jewelry merchant Tiffany & Co. (NYSE:TIF), and alternative energy specialist Trina Solar Limited (ADR) (NYSE:TSL). Here's a quick look at today's brokerage notes on CZR, TIF, and TSL.

  • CZR is down 2.5% this afternoon to trade at $13.37, following a price-target reduction to $9 from $17 at Imperial Capital. Longer term, it's been a rough year for the shares, which have shed nearly 38% in 2014. As such, short interest on Caesars Entertainment Corp is on the rise, growing 13.3% during the two most recent reporting periods to 29.5% of the equity's float. At the stock's typical daily trading rate, it would take almost three weeks to cover these bearish bets.

  • TIF is fresh off a record high of $105.66, after announcing strong second-quarter results and forward guidance. The news was met with price-target hikes from no fewer than four brokerage firms -- including Sterne Agee, which boosted its target to $110 from $108. Additional upward revisions may be in the cards, too, considering Tiffany & Co.'s consensus 12-month price target of $105.05 is just a stone's throw away from the stock's current perch. The shares were last seen 1.5% higher at $102.28.

  • TSL has partially recovered from yesterday's earnings-induced sell-off, up 2.2% this afternoon at $12.57. This, despite the stock seeing its price target lowered to $18 from $21 at Cowen. Taking a step back, shares of Trina Solar Limited (ADR) are off nearly 8% on a year-to-date basis. Not surprisingly, short sellers have taken a liking to the security, as 22.6% of its float is sold short -- a quantity that would take more than a week to buy back, at TSL's average daily trading volume.

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