Schaeffer's Market Mashup: Prime Day, Vaccine Problems, Earnings Season

Capitalize on Amazon Prime Day with options trading

Managing Editor
Oct 15, 2020 at 1:12 PM
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On the latest episode of the Schaeffer's Market Mashup podcast, Patrick is back for a solo episode of Market Mashup! He tackles: the stimulus gridlock in D.C. (0:52), the Tweeter-in-Chief (2:30), Amazon.com's Prime Day options trading (6:17), options traders unfazed by vaccine problems for JNJ and LLY (8:15), and earnings season! (11:21)

 

Transcript of Schaeffer's Market Mashup Podcast: October 15, 2020

Ladies and gentlemen, welcome back to the Schaeffer's Market Mashup. It is just me today. I don't have any distinguished cool genius guests from Cboe Global Markets this week. I am Jason Derulo, riding solo. Do not fret. I've got a lot of fun people coming on in the future though. So you'll just have to deal with me for one week. Okay, cool. We've got a ton to talk about. 

So let's jump right into it. It is Wednesday. The market just closed and there is no second round COVID-19 stimulus yet. Gridlock in Washington, DC continues to grind into the election. If I'm a betting man, I'm betting on nothing getting passed until after November 3rd. You truly hate to see it because it's so desperately needed for the American people. But there is unfortunately too much at stake between Democrats and Republicans to concede anything. The optics are just so monumental and too important for either side.

You don't want to come across as giving into anything. It's basically like the world's most frustrating staring contest or just a game of chicken that lasts way too long. And it's going to result in a head-on collision. One thing's for sure if something does happen, expect investors to react favorably to it. You have dozens of economic experts out there from all different sides of the aisle clamoring for something, anything, cash, weekly checks, IOUs from dumb and dumber, something. When that happens, I think markets will react favorably. You saw just today, treasury secretary, Steve Minchau around mid day says he does not see a stimulus package being passed by election day. And right after that, the Dow traded at its session lows. 

So conversely, hopefully when something does happen, it's a nice little bump for the stock market. You know what markets also don't favorably react to? Tweet storms, especially tweet storms from our commander in chief. The Washington post recently ran a fascinating tome about Trump's Twitter presidency essentially highlighting his nine most impactful tweets. It's a great article. I encourage you to give it a look. For example, they talk about January, 2017. He tweeted about general motors, ticker GM, ordering them to make cars in the US or face a border tax. All of a sudden Google searches for GM shot up 200% and general motors stock went down by 24 cents. The impact goes beyond the numbers. I mean, we all know Kofefi or however you say it. It sent Q Anon and keyboard warriors everywhere, cobbling together, conspiracy theories. You know, most of these conspiracy theories are silly and fun to laugh at, but in this day and age, some can be dangerous. See the recent Michigan governor kidnapping plot, but wherever you're looking to play the market, it's amazing that you should probably have to check Twitter first and see what the president tweeted or what is trending. It could literally dictate your investing strategy and it also makes Twitter, ticker TWTR an interesting stock to watch going forward.

Does a possibly new president and Joe Biden who doesn't tweet as much every day impact Twitter stock? Does a return to normalcy get people off the social media app in a way, looking for the latest dopamine fix of whatever controversy is going on? These are questions that I think it would be wise to start to form as the election gets closer and closer. And speaking of the election Schaeffer's has an upcoming vote 20 report, which features tons of election day 2020 investing content. It will be released Saturday, this Saturday October 17th. So be sure to sign up via our live chat on the website to get access to the report as soon as it drops. The live chat I looked at it to make sure that even I could use it. Just go to Schaeffersresearch.com, entering your name and entering your email and one of our agents will hit you up in no time and have that dropped into your inbox. 

So enough about the election, because you've no doubt been beaten over the head with it. Instead, let's talk Apple, ticker AAPL. That's a nice little chaser. The Fang name had its big product reveal earlier this week, launching the iPhone 12 with its super special, brand new 5g connectivity, ticker APL hasn't moved much in response despite receiving three price target hikes this morning, including Jeffrey's bumping apple all the way up to 140 from 135. But what it did do was see a sizable bump from chip maker, Qualcomm, ticker QCOM, which closed today up 1.9%. Even the most basic investor knows apple stocks, technical tenacity. They're as solid as the green bay Packers offensive line, but 5g is prevalence is something to keep an eye on for chip stocks and apple suppliers and any other tech names going forward that could be involved in this emerging technology.

We'll stick with the Fang theme for a moment. In case you're living under a rock or you're just strictly anti-consumerism, amazon.com ticker AMZN kicked off its vaunted prime day yesterday, and it ends tonight. So it's a two day event, not to be confused with celebrating auto bot leader Optimist prime, prime day is an event that features millions of deals on amazon.com. It's everything from discounted premium TV subscriptions to the latest gadgets, whatever. You know Amazon at this point, if you want it's discounted right now. It's pretty overwhelming to be honest, I won't get into the details because, you know, hashtag no free ads. So let's focus on the stock. AMZN gap tire by 4.8%, the session before prime day kicked off and it remains now just a chip shot from it's September 2nd, all-time peak of $3,552.25 cents. The most active stock options to start the week for Amazon have been the standard expiration 3,500 call followed by the 3,400 call.

Amazon is always featured in Schaeffer's senior quantitative analyst, Rocky White's most 10 day options volume table, which we write an article about every Monday. In this latest table was no exception. In the last 10 days there were over 980,000 calls and over 750,000 puts changing hands, in with Amazon closing at 3363.71 there's a lot of options bulls sniffing around. I'm going to try to avoid for as long as I can tonight any prime deals. Light a candle for me and hope that the next episode, I'm not talking about some $350 air fryer that I bought for 250 bucks. 

We have some vaccine updates, but to quote my favorite gift, they're not great Bob. Two Titans of the drug-making industry and recipients of Dr. Evil quotes, operation warped speed saw their COVID 19 vaccine trials halted this week. First up it was Johnson and Johnson, ticker J&J, forced to pause a clinical trial of its coronavirus vaccine candidate. After a participant in the study, came down with an unexplained illness. A day later, Eli Lilly, ticker LLY according to a router's report, US food and drug administration halted Eli Lilly's antibody treatment after it uncovered some serious quality control problems at the company's manufacturing plant. So this seriously hindered Eli Lilly's bid to get emergency use authorization for its treatment. Nevertheless, Eli Lilly does have other ongoing trials. However, these could be less beneficial for patients with serious cases. 

Now, from what I gather, and let's not forget that I think I maybe got a C in biology, halts are less severe than clinical holes, but it's nevertheless disappointing news, especially when a certain specialist somebody is touting that we'll have a vaccine by the conveniently and totally random date of November 3rd. Ticker J&J only shed 2.3% the day it's news broke, partly because the blue-chip pharma giant also reported a third quarter, top line earnings and revenue beat. October 155 calls that expire this week, that's standard exploration are so far the most popular in the first three days of this week. With J&J last seen trading at $148.10 cents, that's awfully ambitious two day rise for those options bulls, but there's also some activity around the $152.50 cent call from the same series, which makes a bit more sense. 

Switching over to ticker LLY, the stock hasn't been battered yet, shedding less than a 10th percent and down only 4.4 for the week so far. LLY's most active options this week are the December 155 and 170 calls as standard exploration, with LLY last seen trading at $148.46 cents buyers of these calls are clearly undeterred by this week's missed up.  As always it's unclear how this is all going to unfold. Honestly, it's almost as if we need commissioner Adam silver of the NBA, which has reported zero COVID cases inside its bubble to take over the vaccine project. I'm joking of course, but not really, lost in the shuffle of the election COVID and everything else that's going on out there, is there's another earning season underway. Whew. 

We already mentioned Johnson and Johnson's earnings were poor, but bank giants are typically among the first to try out their corporate reports. This week we've had the likes of Goldman Sachs, JP Morgan chase, Bank of America, US bank core, Wells Fargo, Citi, among many others step up to the plate. It's a veritable murderer's row of ATM's. JP Morgan and Citigroup, both hit alarm bells, really with their reports, despite third quarter earnings beats. CEO, Jamie diamond of JP Morgan did his best to kind of warn us by talking about building cash reserves in the event of a double dip recession, should Debree a lack of a STEMI part do, which as we know is probably not going to happen until the election. Citigroup CEO essentially echoed the same thing, day after JPM dropped 1.6% and Citigroup ticker C, dropped 4.8%. 

Shifting over into more bank earnings, Goldman Sachs, ticker GS closed up .2% today because its bond trading was stronger than expected and really that's the only good news. Bank of America missed its revenue goals and closed down 5.3% today. Wells Fargo had a complete third quarter earnings with low interest rates impacting its interest income. They took a 5.9% hit today. US bank dropped by 0.4%. I won't put you to sleep and run through the interesting options activity going on with each of those stocks. Instead, I want to look at the financial select SPDR fund, ticker XLF, that's the exchange traded fund for financial bank stocks. As of this morning, XLF was down 15% in 2020, which might seem bad, but isn't as catastrophic as other ETFs, like the travel or oil and gas sectors. But it's not necessarily blowing the top off either. Anyway the top trade for XLF this week has been the November 29 call. But the most volume has occurred so far this week at the October 26 call, which expires at the end of this week. XLF was last seen trading at $24 and 78 cents. But for some context, it hasn't closed above 26 since early June. So someone out there is banking on this earning season to really kickstart XLF,  Shout out Molly grew.

That's about it for me today. So to close, I want to plug our upcoming vote 20 report one more time. Once again, it's released Saturday, October 17th. Be sure to sign up via our live chat. Schaeffersresearch.com, enter your name, email, phone number in one of our agents will get it to you. Thank you for listening. Don't forget to check us out on Twitter, Facebook, Instagram, YouTube. Personally I'm a big fan of pulling up YouTube on the smart TV. I would highly recommend that. LinkedIn for the professional folks, you name it, we're there. Also don't forget to keep wearing those masks and stay socially distant. Have a great weekend.


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