Schaeffer's Options Center

Terra Industries (TRA) is up $1.80 to $39.90 and options volume is running 4X the average daily on news Terra stockholders have approved all three of CF Industries' nominees to Terra's Board of Directors. We are pleased that Terra stockholders have voiced their support for CF Industries' proposed acquisition of Terra by voting for all three of our director nominees. It is time to move forward and put these two great companies together, according to a statement from Stephen Wilson, CF Industries' chief executive. TRA investors seem pleased as well. Shares are up. 24K calls and 13K puts traded on the stock. Nov 40, Dec 39, and Dec 40 calls are the most actives.

Permalink

Close Article

96,000 calls traded on Yahoo (YHOO) today, or 8X the expected. A lot of the activity was due to two strategists. At about 12:20, one bought 20K January 2011 calls at 95 cents apiece against a position in 465K YHOO shares at $15.53. Thirty minutes later, a strategist sold Jan 2011 20 - 30 call spreads at 87 cents, 22000X, and also sold the Jan 2011 12.5 - 15 strangle at $2.75, 20000X, against a position in 520K shares at $15.53.

Permalink

Close Article

Allstate (ALL) is down 10 cents to $28.77 and Dec 31 calls are active, with almost 12K traded. One player bought 5000 at 20 cents and another 6000 at 20 cents. The contract has almost 40K of open interest and the most OI of any ALL contract. So, the actoin might be closing.

Permalink

Close Article

A massive butterfly spread surfaced in BofA (BAC) a few moments ago. Shares are down 2 cents to $16.06 and the strategist is focused on the January 2011 calls. To be specific, they sold 100000 Jan11 30 calls at 37 cents to create the body of the fly. They bot half as many (50K each) of both the Jan11 20 calls and Jan11 40 calls, at $1.82 and 12 cents, respectively, for the wings. Consequently, they paid $1.20 per fly and are positioned for shares to move towards $30 during 2010.

Permalink

Close Article

Alliant Techsystems (ATK) sees a bullish 3-legged trade Thursday, as 1,250 February $75/$80 put spreads are sold for $1.20 to help finance the purchase of 1,250 February $90 calls for a net debit of $1. Shares have pulled back in recent days after posting great earnings and running higher on big volume recently, but this low volume pullback looks healthy. The military ammunition, weapon, and vehicle supplier trades just 9.45X earnings, 0.59X sales, and 12.5X cash flow.

Permalink

Close Article

Stocks are set to open lower on weakness in overseas markets and disappointing earnings forecast from Dell Computer (DELL). Forty-five minutes before the start of trading in New York, stock index futures indicate that the Dow Jones Industrial Average might lose 60 or 70 points at the open. \n
\nOverseas markets are mostly lower ahead of the weekend. After slipping 1.3 percent Thursday, Japans Nikkei lost another .5 percent after the Japanese government said the economy was back in deflation for the first time since 2006. Hong Kongs Hang Send slipped .8 percent.\n
\nMajor averages are broadly lower across Europe for a second day. Frances CAC 40 is pacing the decline with a .7 percent loss. \n
\nIn the US, the news is light. Dell Computer shares are taking a hit after the computer maker reported a quarterly profit of 28 cents per share, which missed Street estimates by a nickel. Dell blamed a slowdown in business IT spending for the 54 percent drop in net profits. \n
\nMetals, mining and energy names might see weakness for a second day after crude oil fell 73 cents to $76.73 a barrel and gold lost $4.20 to $1137.70 an ounce. \n
\nNo economic data is scheduled for today and bonds are holding modest gains in light early action. The benchmark is up 1/32nd and now yields 3.33 percent. \n
\nThe dollar is flat at 88.98 against the Yen. The euro fell .0092 to 1.4830 against the buck. \n
\nMeanwhile, the options expiration might add a little volatility to the mix for the equity market. Today is the last day to trade any remaining November 2009 options before they expire Saturday morning and volume is likely to pick up as players square positions. \n

Permalink

Close Article

Some less actively traded names seeing bullish order flow: Nordic Tankers (NAT), Cogent Comm. (CCOI), ArcSight (ARST). Bearish order flow: Cypress Bioscience (CYPB), Blackrock (BLK), GSI Commerce (GSIC). Post Earnings Activity: Sears Holding (SHLD), Netease (NTES), NetApp (NTAP), Suntech Power (STP), Gamestop (GME), Trina Solar (TSL), Williams Sonoma (WSM), the Limited (LTD). Pre-Earnings Activity: Dell Computer (DELL), Gap Stores (GPS), Dress Barn (DBRN). Ex-Div Activity: J&J (JNJ), Prudential (PRU).

Permalink

Close Article

Bunge shares have crossed into positive territory and showing good relative strength amid the ag names like POT, MOS, and CF which are pulling back from recent gains. Like yesterday, it could be potential takeover talk is also driving a pick up in call buying in the No. $65 calls which have trade over 1,600 contracts, mostly in small lots. Likely speculation that a bid might emerge before end of week as the three way battle between CF, AGU and TRA is coming to a shareholders vote today and tomorrow.

Permalink

Close Article

Pre-Paid Legal Services (PPD) shares spiked down about 10 minutes ago and are getting slammed midday on news the co. has received a complaint letter from the FTC related to Identity Theft Shield and Affirmative Defense Response System (ADRS) Program. PPD is down $5.91 to $35.22 and options activity is running 11X average daily on increasing interest in Nov 35, Dec 30 and Dec 35 puts.

Permalink

Close Article

Salesforce.com (CRM) options have been busy over the past few days after the company unveiled its new enterprise collaboration application called Salesforce Chatter. The product is unique; as it is designed for business, but also includes the ability to use popular social networking tools like Twitter and Facebook. It leverages the popularity of social networking apps to help a companys employees communicate more effectively in this new media world (link to additional details.)\n
\n"Why do I know more about strangers on Facebook than my own employees? Now, through Salesforce Chatter, my business is tweeting me. My employees can use the models they love to get the collaboration they need," according to Marc Benioff, chairman and CEO of salesforce.com.\n
\nThe action in the Salesforce.coms share price has been interesting. While the stock has been performing well in 2009, up 94.4 percent year-to-date, it is down over the last few days despite a lot of hype about the companys latest foray into social networking. CRM is down $1.28 to $62.32 today and off 6.8 percent since Monday. Moreover, as the chart below shows, there has been a steady increase in interest in CRM puts. Put open interest, a measure of outstanding options contracts, is up from 72K contracts on Nov 11 to 105K contracts today, an increase of 43 percent.\n
\n\nA falling stock price and increasing interest in puts is a sign that bearish sentiment is building. It seems kind of odd for a company in the midst of launching a true breakthrough product. Perhaps its a case of buy the rumor, sell the news? For whatever reason, the action in CRM stock and options doesnt seem to reflect a lot of enthusiasm for the new product. Next, investors will be tuning in to the companys second Keynote address at Dreamforce 2009 beginning at noon eastern time and then its final presentation at 7:15 p.m. \n

Permalink

Close Article