Today's column includes merger-and-acquisition news from American Express Company (AXP), disappointing drug news from Genzyme Corporation (GENZ), a more cautiously bullish outlook for Baidu, Inc. (BIDU), and a downbeat brokerage note for Research In Motion Limited (RIMM). Each day, Options Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd.
American Express Company
American Express Company (AXP: sentiment, chart, options) announced this morning that it agreed to acquire Revolution Money, an Internet-based payment platform, for $300 million. The buyout is expected to close during the first quarter of 2010, pending regulatory review. Jason Hogg will stay on board as Revolution Money's president and CEO.
"New payments products and platforms are evolving rapidly, and it's important for us to keep identifying cutting-edge technologies that can extend our leadership beyond the traditional payments arena," explained Kenneth Chenault, AXP's chairman and CEO. "While Revolution Money is a young and relatively small company, we believe it has big potential. This is a smart, nimble business."
AXP is little changed in pre-market trading, but the stock has racked up an impressive year-to-date gain of 123%. The shares recently accelerated higher, and they're now hovering several points beyond support from their 10-week and 20-week moving averages.
Despite AXP's stellar price action in 2009, call players have relatively modest expectations for the equity. In the November series, which is due to expire on Friday, peak call open interest of 11,714 contracts lies at the in-the-money 38 strike.
Genzyme Corporation
Genzyme Corporation (GENZ: sentiment, chart, options) said today it will cease development on its experimental advanced phosphate binder, because the drug did not show a significant improvement over the company's existing drug, Renvela, in a phase II/III trial. Both preparations are meant to treat a condition known as hyperphosphatemia, which can occur in patients with chronic kidney diseases.
GENZ is down 1.1% ahead of the bell, with the shares continuing their long-term trek south beneath pressure from their 10-month moving average. This trendline hasn't been toppled on a monthly closing basis since September 2008.
Speculative investors seem undeterred by GENZ's lackluster performance on the charts, with calls dominating the equity's near-term open interest. The stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.41, which ranks within four percentage points of an annual optimistic peak.
Baidu, Inc.
Baidu, Inc. (BIDU: sentiment, chart, options) was booted from the "conviction buy" roster at Goldman Sachs today, even as the brokerage firm raised its price target on the shares from $435 to $500. Analyst James Mitchell cited BIDU's valuation as the impetus behind the downgrade to "buy," explaining, "Baidu stock has risen 274 percent since we added it to the Conviction Buy List on Dec. 15, 2008, versus the S&P 500 up 28 percent, and 229 percent over the last 12 months, versus the S&P 500 up 31 percent."
BIDU has shed a couple of points in electronic trading, but the shares aren't exactly struggling -- support from their 10-day and 20-day moving averages is close at hand. These short-term trendlines could soon help to propel the stock through technical pressure in the $440 area.
Meanwhile, investors seem increasingly unsure about BIDU's ability to keep climbing the charts, as puts have recently become the options of choice. During the past 10 days, traders on the International Securities Exchange (ISE) have bought to open 1.16 puts for every call on the stock. This ratio ranks higher than 93% of comparable readings taken during the past year, indicating that bearish bets are far more popular than usual.
Research In Motion Limited
Research In Motion Limited (RIMM: sentiment, chart, options) was hit with a downgrade late yesterday, with BMO slicing its rating on the stock from "outperform" to "market perform." To reinforce his pessimistic stance on the shares, analyst Tim Long dropped his price target on RIMM from $100 to $64 -- indicating that the brokerage firm expects less than 5% upside from Tuesday's closing price. In a note to clients, Long said he expects RIMM will lose market share at Verizon (VZ) to up-and-coming competitors; namely, Motorola's (MOT) Droid.
RIMM has shed about 1% ahead of the bell, extending a recent period of technical weakness. Since late September, the security has been guided lower by resistance from its formerly supportive 10-week and 20-week moving averages.
Short sellers have seized on this decline, with the number of RIMM shares sold short jumping by 27.8% during the past month. For their part, option players also appear to be looking for a continued swoon from the BlackBerry parent -- peak put open interest for November can be found at the 60 strike, with 36,497 contracts in residence. As of yesterday's close, these puts were out of the money by a slim margin.
Discuss this article:
Post your own comment
More articles:
Today's column includes the latest quarterly results from China Green Agriculture, Inc. (CGA), a prolonged tender offer from Green Mountain Coffee Roasters Inc. (GMCR), regulatory troubles for Cell Therapeutics, Inc. (CTIC), and a negative write-up on Under Armour, Inc. (UA). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes technical difficulties for Ford Motor Company (F), an optimistic note for Molson Coors Brewing Company (TAP), a bullish endorsement for ReneSola Ltd. (SOL), and the latest quarterly results from YRC Worldwide Inc. (YRCW). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes a narrowed fourth-quarter loss from Bunge Limited (BG), a negative note for Continental Airlines, Inc. (CAL), an upgrade for Apple Inc. (AAPL), and regulatory approval for Teck Resources Limited (TCK). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes new Prius woes for Toyota Motor Corporation (TM), a rosy forecast from GT Solar International, Inc. (SOLR), a bullish note for Alcoa Inc. (AA), and disappointing quarterly results from Origin Agritech Ltd. (SEED). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes a surprisingly slim quarterly loss from Patriot Coal Corporation (PCX), pre-earnings optimism for MasterCard Incorporated (MA), an executive's departure from CIT Group Inc. (CIT), and a dismal fourth-quarter preview from ValueClick, Inc. (VCLK). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes the latest quarterly results from Exxon Mobil Corporation (XOM), a bullish note for Research In Motion Limited (RIMM), a pair of brokerage comments for Baidu, Inc. (BIDU), and disappointing earnings from Sohu.com Inc. (SOHU). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes an uninspiring forecast from SanDisk Corporation (SNDK), words of warning about Burger King Holdings, Inc. (BKC), a narrowed quarterly loss for Synovus Financial Corp. (SNV), and high hopes for Wal-Mart Stores, Inc. (WMT). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes an impressive quarterly performance from Netflix, Inc. (NFLX), a negative note for Chesapeake Energy Corporation (CHK), a slimmer fourth-quarter loss for E-Trade Financial Corporation (ETFC), and a high-profile analyst endorsement for SunTrust Banks, Inc. (STI). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes the latest quarterly results from Yahoo! Inc. (YHOO), a bullish initiation for Human Genome Sciences (HGSI), a bit of good fortune for Ford Motor Company (F), and pre-earnings optimism on Potash Corp. of Saskatchewan (POT). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's column includes a fourth-quarter disappointment from Delta Air Lines, Inc. (DAL), a bullish note for China Sunergy Co., Ltd. (CSUN), a boosted price target for Wynn Resorts, Limited (WYNN), and a positive earnings surprise from Zions Bancorporation (ZION). Each day, Early Edge focuses on the hot stocks in the news and gives you a unique insight into each stock's sentiment backdrop. Our time-tested contrarian approach centers on options, and gives you the trading tools to approach the day with a much-needed edge over the investing herd. read more...
Today's Most Popular Stories
working... 
