Schaeffer's Trading Floor Blog

Gold Stocks Get Gashed: Barrick Gold Corporation, Agnico Eagle Mines Limited, and Newmont Mining Corporation

Put buying has picked up on Barrick Gold Corporation (USA) (ABX), Agnico Eagle Mines Ltd (USA) (AEM), and Newmont Mining Corp (NEM)

by 3/6/2015 1:47 PM
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Gold has tanked 2% this afternoon following this morning's standout jobs report. Accordingly, mining stocks are headed lower, and bearish options betting has picked up on a number of notable names -- including Barrick Gold Corporation (USA) (NYSE:ABX), Agnico Eagle Mines Ltd (USA) (NYSE:AEM), and Newmont Mining Corp (NYSE:NEM).

At last check, ABX was down 6% at $11.46, putting the stock on pace for its lowest finish since mid-January. Meanwhile, puts are changing hands at double the usual intraday clip, and traders may be buying new positions at the April 11 put -- where 3,090 contracts are on the tape, more than any other ABX strike. In so doing, the speculators expect ABX to breach $11 by the close on Friday, April 17, when the back-month options expire.

Today's dip isn't catching the brokerage bunch by surprise. Sixteen out of 18 covering analysts rate Barrick Gold Corporation (NYSE:ABX) a "hold" or worse, suggesting high levels of skepticism.

Likewise, AEM was last seen 8.2% lower at $28.75, with the shares now testing their 80-day moving average. Option bears have responded, buying to open the March 29 put -- in the hopes of an extended retreat south of $29 over the next two weeks, which represents the contract's lifespan.

Puts have been popular for a while on Agnico Eagle Mines Ltd (NYSE:AEM). The stock's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 0.49 -- in the bearishly skewed 94th percentile of its annual range.

Finally, NEM is staring at a 7.8% intraday deficit, hovering near $23.33 -- though the shares remain more than 23% higher on a year-to-date basis -- to test their 200-day trendline. As such, puts are trading at quadruple the expected pace for this point in the day. According to Trade-Alert, one speculator bought to open a block of 6,500 May 23 puts, rolling the dice on additional downside through May options expiration.

This appetite for long puts has been common in recent weeks. Newmont Mining Corp's (NYSE:NEM) 10-day ISE/CBOE/PHLX put/call volume ratio of 0.90 outranks more than three-quarters of all other readings from the past year. In a similar vein, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.82 sits just 2 percentage points from a 12-month peak.

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Bullish Stars Align for E*Trade Financial Corporation, Charles Schwab Corp

E*TRADE Financial Corp (ETFC) and Charles Schwab Corp (SCHW) are exploring fresh highs, attracting option bulls

by 3/6/2015 1:20 PM
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The bullish stars are aligning for discount brokerage firms E*TRADE Financial Corp (NASDAQ:ETFC) and Charles Schwab Corp (NYSE:SCHW) today. The duo is bucking the broad-market trend lower to assail new heights, and option players are placing bullish bets at a rapid-fire rate.

ETFC was last seen 3.3% higher at $27.85, and earlier notched a near-six-year high of $28.13, as a bigger-than-expected payrolls jump boosts expectations for a rate hike on the horizon -- a boon for discount brokers. In addition, JMP Securities and Deutsche Bank both hiked their price targets by $3 to $31, and reiterated the equivalent of an "outperform" opinion.

Against this backdrop, ETFC calls are crossing at 15 times the average intraday clip, and have outnumbered puts by a margin of more than 12-to-1. According to Trade-Alert, much of that activity consisted of the rolling of now in-the-money April 25 calls to higher strikes in the same series. Bullish betting is just par for the course for E*TRADE Financial Corp (NASDAQ:ETFC) option buyers, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 9.33 stands higher than 68% of all other readings from the past year.

SCHW has added 3.5% to flirt with $31.28 -- and earlier scored a 14-year peak of $31.73 -- on the aforementioned rate-hike speculation. In addition, Deutsche Bank said SCHW "remains our top pick to higher rates," and lifted its price target by $1 to $40 while underscoring a "buy" opinion.

In the options arena, SCHW calls are trading at eight times the normal intraday pace, and have outnumbered puts by a margin of 8-to-1. As with ETFC, SCHW option bulls looking to the April series, buying to open the April 26 call -- the most popular option thus far -- to bet on an extended run north of $26 through the next six weeks. More aggressive bulls are initiating long positions at the June 31 and 33 calls, hoping SCHW continues its quest for new highs through June options expiration.

From a sentiment standpoint, today's appetite for Charles Schwab Corp (NYSE:SCHW) calls marks a change of pace. The security's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.30 ranks in the 80th percentile of its annual range, indicating traders have bought to open puts over calls at a faster-than-usual clip during the past two weeks.

Daily Chart of SCHW since January 2015

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Analyst Update: American Express Company, Citigroup Inc., and Finisar Corporation

Analysts adjusted their ratings on American Express Company (AXP), Citigroup Inc (C), and Finisar Corporation (FNSR)

by 3/6/2015 12:11 PM
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Analysts are weighing in today on blue chip American Express Company (NYSE:AXP), financial firm Citigroup Inc (NYSE:C), and optical components specialist Finisar Corporation (NASDAQ:FNSR). Here's a quick look at today's brokerage notes on AXP, C, and FNSR.

  • This morning, Susquehanna slashed its price target on AXP to $99 from $107 while underscoring a "positive" rating, sending the shares down 0.6% to $80.69. Year-to-date, American Express Company is down 13.3%. Surprisingly, calls are a popular choice in the stock's options pits. Drilling down, AXP's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.85 stands just 3 percentage points away from the highest such reading taken over the past year.

  • Last night, it was announced that C passed the Fed's latest round of stress tests, joining 30 other major U.S. banks in exceeding all of the capital requirements. In response, KBW upgraded C to "outperform" from "market perform," and raised its price target on the security by $7 to $61. Today, amid weakness in U.S. stocks, the shares are down 0.6% to $53.25, widening their year-to-date loss to 1.6%. Despite the stock's technical woes, call activity is prominent in the options pits, as Citigroup Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.71 sits in the 13th percentile of its annual range. Simply stated, call open interest outweighs put open interest among options that expire in three months or less, and the current skew toward calls is stronger than usual.

  • FNSR reported its fiscal third-quarter earnings last night, revealing profit and revenue figures that were in line with expectations while upwardly revising its forecast for the current quarter. Reacting were no fewer than six brokerage firms, which all increased their price targets on the equity. The most ambitious hikes came from Raymond James and B. Riley, which raised their price targets to $25 and $25.50, respectively. Today, the shares are up 8.5% to $22.06, contributing to a 13.7% year-to-date gain. Today's pop could be the result of a short-squeeze situation, as nearly 13% of Finisar Corporation's available float is sold short, which would take over 10 sessions to cover, at average daily trading volumes.

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Analyst Downgrades: Pacific Ethanol, Inc., Cyberonics, Inc., and Yandex N.V.

Analysts downwardly revised their ratings on Pacific Ethanol Inc (PEIX), Cyberonics, Inc. (CYBX), and Yandex NV (YNDX)

by 3/6/2015 9:27 AM
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Analysts are weighing in today on commodity concern Pacific Ethanol Inc (NASDAQ:PEIX), medical device maker Cyberonics, Inc. (NASDAQ:CYBX), and European Internet issue Yandex NV (NASDAQ:YNDX). Here's a quick roundup of today's bearish brokerage notes on PEIX, CYBX, and YNDX.

  • PEIX gapped nearly 26% higher yesterday, landing at a year-to-date closing high of $11.75, thanks to a solid earnings showing. The shares are poised to ride the broad-market jobs train higher, up 1.9% ahead of the bell, despite an early price-target cut to $15 from $19 at Craig-Hallum (which reiterated a "buy" rating). On the sentiment side, an exodus of option bears could help Pacific Ethanol Inc extend its upward momentum. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.81 ranks in the 88th percentile of its annual range, suggesting short-term speculators are more put-heavy than usual.

  • CYBX, on the other hand, is bracing for a 1.9% dip out of the gate, after Jefferies downgraded the stock to "hold" from "buy," and sliced its price target to $75 from $83. The new target implies expected upside of just 4.1% from Cyberonics, Inc.'s current perch at $72.03. On the charts, CYBX has added 29.4% in 2015, thanks to an M&A-inspired bull gap on Feb. 26, which sent the equity to a record high of $76.48. As such, the security's 14-day Relative Strength Index (RSI) stands at a lofty 89 -- deep into overbought territory, suggesting a short-term respite may have been due. Should CYBX resume its uptrend, an unwinding of short interest could translate into tailwinds, as it would take nearly 12 sessions to repurchase these bearish bets, at the equity's average pace of trading.

  • Finally, YNDX is flat at $15.48 ahead of the bell, even as Barclays shaved its price target to $19.39 from $20. The brokerage firm also underscored an "overweight" rating, echoing the bullish bias among the analyst community. More specifically, Yandex NV boasts five "strong buys," compared to two "holds" and no "sells." Technically speaking, YNDX's latest earnings report ultimately did nothing for the shares, which have spent most of the past two months dawdling between $15 and $17. From a longer-term standpoint, the stock has surrendered more than half its value over the past year. Should YNDX continue to linger near new lows, more negative analyst notes could hit the wires.

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Buzz Stocks: Apple Inc., Orexigen Therapeutics, Inc., and Calithera Biosciences, Inc.

Today's stocks to watch in the news include Apple Inc. (AAPL), Orexigen Therapeutics, Inc. (OREX), and Calithera Biosciences Inc (CALA)

by 3/6/2015 9:21 AM
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Despite nonfarm payrolls surging more than expected in February -- and the unemployment rate dropping to 5.5% -- U.S. equities appear headed for a choppy end to the week. In company news, today's stocks to watch include iPad parent Apple Inc. (NASDAQ:AAPL), as well as biopharmaceutical firms Orexigen Therapeutics, Inc. (NASDAQ:OREX) and Calithera Biosciences Inc (NASDAQ:CALA).

  • Ahead of the bell, S&P Dow Jones Indices has announced AAPL will be added to the Dow Jones Industrial Average this month, replacing AT&T Inc. (NYSE:T). Meanwhile, in advance of next Monday's Apple Watch event, AAPL's mobile payment system is reportedly being used by scammers to purchase expensive items -- especially at Apple Store locations. Criminals are supposedly setting up Apple Pay accounts with stolen credit card data, helped by a relatively lax cardholder verification process. Technically speaking, the company's stock is a long-term outperformer, advancing nearly 67% year-over-year to perch at $126.41, after hitting a record high of $133.60 on Feb. 24. As such, the brokerage bunch is firmly behind Apple Inc., with 24 of 30 analysts doling out "buy" or better recommendations. Ahead of the bell, the shares are up 1.5%.

  • OREX shot higher earlier this week -- and hit a four-year high -- on positive results for its obesity drug Contrave. However, in an interview with Forbes, one top Food and Drug Administration (FDA) official called the study into question, describing the data as "highly unreliable" and "likely false." As such, Orexigen Therapeutics, Inc. -- which closed at $8.01 yesterday -- is pointed 12.2% lower ahead of the bell. This is good news for short sellers. One-third of OREX's float is dedicated to short interest, roughly equivalent to 30.5 times the stock's average daily trading volume.

  • Finally, CALA is ready to surge 34.5% of the gate, after the company inked a global licensing deal with TransTech Pharma. The agreement gives Calithera Biosciences Inc the rights to develop and commercialize a pair of hexokinase II inhibitors, which can be used to slow tumor growth. A gap higher would represent a change of pace for the shares, which have tumbled 34.1% year-to-date to trade at $13.31. This could put pressure on shorts, too. Short interest on CALA jumped 13% during the latest reporting period, and now accounts for 6% of the stock's total float. At average daily trading volumes, it would take about two weeks to cover these bearish bets.

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