Boeing’s (BA) machinist unions, which is responsible for the company’s aircraft assembly employees, have gone on strike over the weekend, after emergency talks to stave of a strike following the union’s vote to reject an employment contract that Boeing (BA) offered, failed.

The strike, which could cause Boeing almost a hundred million dollars a day, will halt production on Boeing’s 737, 747, 767 and 777 planes. The strike will also cause further delays to the company’s 787 Dreamliner on which Boeing is banking on and possibly delay Boeing’s (BA) planned first test flight of the aircraft later this year.

Analysts are estimating that if the stike lasts a month it would cost Boeing (BA) $2.8 billion in sales and an EPS loss of $0.31.

Tag: Boeing strike

The list of potential investors and possible acquirers in Lehman Brothers (LEH) continues to grow. According to Japanese newspaper Yomiuri Shimbun, Nomura (NMR), which is Japan’s largest securities brokerage house, is considering making an investment in Lehman (LEH).

The newspaper quotes Kenichi Watanabe, the President of Nomura (MNR) as saying that Nomura has $1.87 billion that it wants to use to make investments in financial institutions in the United States and Europe, and Lehman is currently one of its considerations.

Korea Development Bank is supposedly in talks to acquire a 25% stake in Lehman (LEH) and China’s CITIC as well as sovereign wealth funds from the Middle East are also rumored interested parties.

On Friday, we recommended that subscribers to our Options Capitalist trading advisory, purchase the October $17.50 calls in Lehman (LEH) we got in at $1.76. At the close of the stock market on Friday, they were quoted at $2.00 on the bid side. We believe some concrete news on either a buyout or a major investment in Lehman (LEH) will soon be announced, so traders might want to either buy Lehman’s (LEH) stock or purchase some October calls.
 

 Tags: Lehman Lehman Takeover

A Wall Street Journal article released after the stock market closed on Friday, is sending financial stocks higher in after hours trading. According to the article which is entitled “Treasury Is Close to Finalizing Plan to Backstop Fannie, Freddie”, while actual details are not yet known, the plan would include a management reshuffle at the GSEs or Government Sponsored Enterprises, and capital infusion. The article also states that an announcement could come this weekend.

Depending on whether the bailout plan is just a cash infusion, shifting of bad balance sheet items that are weighing down Freddie (FRE) and Fannie (FNM) or an actual take over of the companies, shares in both companies could either rally, or tank on Monday.

As it stands right now, stocks in both companies are off about 20% after hours. If the government takes over the companies, the shares might tank as the government will not want to be seen as rewarding rich shareholders and as such, would value the companies below their current market capitalizations.

However, other financials are rallying after hours and the news could help stocks extend today’s modest rally in the Dow Jones Industrials. Stocks on the move in after hours trading including AIG (AIG), Citigroup (C), Merrill Lynch (MER), Morgan Stanley (MS) and the Financial Select Sector Index (XLF).

The Wall Street Journal article can be accessed here

 Tags: Freddie Mac Fannie Mae

While the negative tone has righfully gotten traders nervous, we believe the 300 plus point decline yesterday and the initial 100 plus point decline today, presages a bounce to the upside within days. Quite frankly we were looking for it today but then the unemployment numbers tripped up the market. However, early next week should see a bounce.

Traders with the fortitude to go long this market, should look at call options in stocks like Amazon (AMZN), Potash (POT), Agrium (AGU) Bucyrus (BUCY), Apache (APA) and Devon (DVN). 

We are still preaching however that this is a bear market, so take early profits and play it safe and go with the October options.

 Tags: AMZN  AGU  BUCY  APA  DVN

The Labor Department just reported at 8:30 AM, that the U.S. unemployment rate jumped to 6.1% in August from 5.7% in July and the news is not good for stocks. We are looking at a very weak open and possibly another triple digit decline again today.

U.S Stocks had been holding up well in the last few weeks, as the bad economic news focus had shifted to Europe. The U.S. was being seen as possibly being on the road to recovery, while the Eurozone was seen as just starting to sink into its own economic malaise. As a result, the dollar was rising and stocks were holding up, if not being dragged up in the dollar’s upswing. This unemployment rate numbers just reminded us again that all is not well here as well.

 Tags: Economy

With the bloodletting on Wall Street yesterday, some market participants, will no doubt be taking a cautious stance and looking for the other shoe to drop. We do have an active slate for the day, on the economic calendar with Non-farm Payrolls, Unemployment rate, Hourly Earnings and Average Workweek all due to be reported today.

The bad news is; initial jobless claims numbers were reported yesterday and an unexpected rise in the number of people filing for unemployment for the first time, a rise of 15,000 from the prior week, was a major contributing factor to the big decline in stocks yesterday.

The good news is that all the economic news releases will be out at 8:30 AM, before the market opens, so traders get to plan their day after the fact.

But for the jobs numbers that will be reported today, we would look for stocks to rebound somewhat from the steep drop yesterday. So hopefully, its not its not all doom and gloom on the jobs front, even though we do expect another monthly decline, the eight consecutive one, in non-farm payrolls. Hopefully, Wall Street deems the numbers not negative enough to warrant another drop in stock prices.

If stocks open to the upside, we recommend traders buy call options on the S&P Deposit Receipts (SPY), more specifically, the September 124 calls. However, initiate the trade only if stocks look strong on the day, but before major moves, assuming we get any, and look to exit early. The symbol is (SPYIT) and the current price is $2.39. Enter at current prices up to $2.50 – stocks most likely won’t open at Thursday’s closing price and enter a price to sell after you place the trade, at 25% above where you entered.

Tags: Economic Calendar  S&P

Stocks are tanking today, with the Down down over 300 points on more of the same as unemployment data and retail sales numbers released today, showed that the economy is weak.

With the carnage on Wall Street today, we are looking for a temporary rebound tomorrow/Monday and traders should position themselves ahead of that move. Here are a couple trading ideas:

IBM (IBM) September 115 calls.

Amazon (AMZN) September 80 calls.

Tags: Options

Yesterday, we recommended that readers of the Navivest blog buy the Boeing (BA) September 65 puts because a Boeing (BA) employees union was going to be voting on whether to accept a contract that Boeing (BA) had offered.

The union voted to reject the deal and the stock is dropping today, currently off $1.65 to $64.42. The September 65 puts which we entered into at $1.50 are now up about 26%.

We will be getting crude inventories report today at 11 AM. If those numbers are bullish for oil prices and stocks continue to drop on the day, we suggest those that missed on the Boeing September 65 puts options trade yesterday get in, as we could see further decline in Boeing tomorrow. However, those in the trade, need to be out by close of markets on Friday, as Boeing (BA) might come back with an offer that the union accepts.

Tags: Boeing

Yesterday on the Navivest blog, we recommended an options trade on Joy Global (JOYG), as the company was going to be releasing its third quarter 2008 earnings this morning. We formulated the trade so that we’d make money, regardless of which way the stock moved after the earnings.

We told our subscribers and readers of the blog to buy the September 60 puts and September 70 calls according to the following ratio; a minimum of 6 puts for every 4 calls. The calls were going for $2.24 and the puts $1.20.

The earnings disappointed Wall Street expectations and the stock dropped almost 20%. We sent out an alert to our subscribers today and they exited the puts at $7.50! Factoring in our purchase of the calls, which cost $896 in total for those who went with the minimum of 4 calls and 6 puts, our profits were $2884 on a total cost of trade of $1616. This was a 178% profit in just one day.

While this was a rather exceptional trade, our Options Capitalist which goes out twice a week to our subscribers, does target 15 to 20% profit on each trade. We are offering a free two week trial to The Options Capitalist. To start your free trial, click here.

Boeing’s (BA) International Association of Machinists and Aerospace Workers union will be voting this evening on a labor contract that Boeing (BA) submitted to the union. The contract is Boeing’s “best offer”, but some union leaders are calling for a rejection of the contract. If the union rejects the contract, Boeing’s (BA) stock should lose some ground.

This is a risky trade as we don’t know if the union might reject the contract, but those with some risk capital, should buy the Boeing September 65 puts. The current ask price is $1.30. Enter if you can risk the $780 to $1040 for a minimum of 5 to 8 contracts.

Tags: Boeing