Today's column includes the latest merger-and-acquisition developments from CF Industries Holdings, Inc. (CF), some brokerage love for Solarfun Power Holdings Co., Ltd. (SOLF), renewed takeover chatter for E TRADE Financial Corporation (ETFC), and a stock sale for Conseco, Inc. (CNO). 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.
CF Industries Holdings, Inc.
There's a new development in Agrium Inc.'s (AGU) bid to acquire CF Industries Holdings, Inc. (CF: sentiment, chart, options). Agrium announced today that 62% of CF's stock has been tendered in support of its $5.1 billion buyout bid, which values CF at $101.90 per share -- a healthy premium to Wednesday's close of $86.29. "We are pleased that once again, CF stockholders have strongly supported our offer," said Mike Wilson, Agrium's president and CEO. "CF stockholders have sent a clear and unambiguous message to CF's board that they want this deal with Agrium."
CF sees things a little differently, though. The reluctant takeover target issued its own response to the tender offer, asserting in a press release, "CF Industries does not believe that the tender results reflect stockholder support for the terms of Agrium's offer. In fact, CF Industries has heard from its stockholders that there is very little support for the terms of Agrium's offer. The tender result does not change the fact that Agrium's offer is far from compelling."
CF has dropped 2.7% in pre-market trading, indicating that traders are frustrated with the company's hard-to-get routine. The equity has retreated from its recently tapped annual high near $95, and it's now attempting to reclaim a position above its formerly supportive 50-day moving average.
With CF dropping down to $84 ahead of the bell, the stock is now staring up at three sizable accumulations of call open interest: 11,068 contracts at the November 85 strike; 13,404 calls at the November 90 strike; and 13,142 contracts at the November 95 call. If the hedges related to this out-of-the-money open interest are unwound ahead of expiration, it could provide an additional headwind for the equity.
Solarfun Power Holdings Co., Ltd.
Solarfun Power Holdings Co., Ltd. (SOLF: sentiment, chart, options) scored two bullish brokerage notes ahead of the open. Oppenheimer hiked its rating on the stock from "perform" to "outperform," and Jefferies raised its price target from $4.50 to $5.75, even as it reiterated an "underperform" opinion. The analyst moves come in the wake of Wednesday's earnings report, wherein SOLF topped third-quarter profit expectations and boosted its fourth-quarter shipment forecast.
SOLF is up nearly 2% in electronic action, continuing yesterday's post-earnings rally. The stock is now in position to finish the week atop its 10-week and 20-week moving averages for the first time since early August.
Following Wednesday morning's well-received earnings statement, some speculators added new bullish bets on SOLF. The stock's most active option strike was the out-of-the-money December 7.50 call, where 1,629 contracts crossed the tape. About 58% of these calls traded near the ask price, suggesting they were purchased, and implied volatility jumped 4.1% as a result. Open interest at this soon-to-be front-month strike rose overnight from 4,093 contracts to 5,017 contracts, confirming that new long calls were added here on Wednesday.
E TRADE Financial Corporation
E TRADE Financial Corporation (ETFC: sentiment, chart, options) is attracting attention this morning as buyout speculation resurfaces for the online broker. The rumors were sparked yesterday when TD Ameritrade (AMTD) CEO Fred Tomczyk told reporters that he would consider a deal to acquire his smaller rival. "We'd be interested but it has to be on the right terms with the right structure," explained Tomczyk. "We have a very clean balance sheet, so we don't want to buy a bunch of problems."
After rallying in after-hours trading on Wednesday, ETFC is holding steady ahead of the bell. The stock is currently sandwiched between tenuous support at its 10-month moving average, and stubborn resistance from its 20-month trendline. The former moving average is docked near $1.43, while the latter is perched at $2.
The parameters of ETFC's trading range haven't gone unnoticed by option speculators. One trader on Wednesday initiated a short strangle on the stock, with two blocks of 2,500 contracts apiece changing hands simultaneously on the equity's December 1.50 put and December 2 call. Both blocks traded at the bid price, indicating they were sold, and both were marked "spread." In this strategy, the trader retains the initial credit as his profit if ETFC remains pinned between the two sold strikes through December expiration.
Conseco, Inc.
Conseco, Inc. (CNO: sentiment, chart, options) announced this morning that it plans to sell up to $230 million in stock in order to boost its balance sheet. Proceeds from the sale will be used, in part, to pay down CNO's senior credit agreement. The insurance issue had $854.6 million of borrowings outstanding under its senior credit agreement as of Sept. 30.
CNO is off 1.9% in pre-market trading, backpedaling to $5.25. The equity recently slipped below support from its 10-week moving average, having now closed two consecutive weeks below this trendline. The shares are in danger of finishing yet another Friday on the south side of this level, which could eventually switch roles to act as resistance.
Investors seem unimpressed by CNO, with pessimism running high among both option players and short sellers. The stock's Schaeffer's put/call open interest ratio (SOIR) weighs in at 1.10, in the 90th annual percentile -- just 10 percentage points from an annual bearish peak -- and short interest accounts for nearly 5% of the security's float.
Discuss this article:
Post your own comment
More articles:
Today's column includes disappointing guidance from Electronic Arts Inc. (ERTS), upbeat clinical trial results from Amgen, Inc. (AMGN), an unexpectedly wide quarterly deficit for Evergreen Solar, Inc. (ESLR), and IPO plans from AgFeed Industries, Inc. (FEED). 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 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 Most Popular Stories
working... 
