We hope all the readers of the blog entered into the free Dynamic Materials (BOOM) earnings play trade that we suggested earlier in the day. We hit it right on the money. The company came out with incredible earnings, but the stock is down in after hours trading, currently off $4.95. We hope and pray this holds, because we would be looking at profits of over 50% and if the stock continues dropping as we expect, we realize triple digit gains. Here’s hoping the market does not do something crazy and throw off the trade. The stock is now down $5.23. Keep dropping.

For those who would like more trading ideas like this, visit the Navivest site at http://www.navivest.com/services.htm and fill out the form for a free two week trial subscription to our options trading advisory services or just send us an email at navivest(@)navivest.com Be sure to remove the brackets.

Dynamic Materials (BOOM) will be reporting Q2 earnings at 5pm this evening. We have structured a can’t lose options trade to take advantage of any earnings related move in the stock over the next couple trading days. The trade is all but guaranteed to make money, so we encourage traders to enter into this one. The only way we could lose money is if tomorrow, the stock only moves up $1, in which case, as structured, we lose $30. A move of 2 points or more to the upside and any move to the downside guarantees profits.

To get the trade, click http://www.navivest.com/boomtrade.pdf It is in pdf format. Readers with questions can email us at navivest at navivest.com. Change the “at” to @ and remove spaces. You can also send us an email to send you alerts about the trade.

dynamic materialsboom options

VISA (V) reported great earnings last night, and the stock was up in after hours trading. However, Mastercard (MA) came out with earnings this morning that are disppointing Wall Street and the tumble in those shares are dragging VISA (V) down as well. As a result, the stock is currently trading down three points.

We did set up the trade so that we make money regardless of the direction the stock moves in, however, we would like to see a drop of 4 points or more, so hold on to the positions.

mastercardVISAVISA earningsmastercard earnings

Today’s economic calendar certainly is having an impact on stocks. The Dow is opening over a hundred points to the downside, as a result of GDP and Initial Jobless Claims reports issued at 8:30 this morning.

Initial jobless claims that were filed for the week ending July 26th, rose by 44,000 to 448,000. This was a much higher number than the 395,000 expected by economists and the highest number of filers in five years. If that isn’t a telling sign for the economy, we don’t know what is.

GDP numbers showed that the economy grew by 1.9% in the second quarter. While this was much better than the .9% growth in the first quarter, it was less than the 2.9% that was expected. Exports were one bright spot, with a whopping 9.2% growth in the quarter.

While that number is being applauded by Wall Street, in our estimation, it is actually a roundabout sign of a worsening economy. The drop in dollar is making U.S. goods more inexpensive for overseas buyers and with American companies seeing declines in their sales here in the U.S. they are aggressively courting overseas buyers to make up for the shortfall.

But for exports, companies such as IBM and Caterpillar which reported good earnings numbers this month, would have seen a very negative hit to their business, with a very dim forecast for the near term future.

While stocks are initially dropping on the news, oil prices are also dropping, so we might very well see that have a positive impact on stocks later on in the day and we could end the day to the upside.

 economygdpjobless claims

Savvis Inc ((SVVS) has gapped up the last two trading days, and has moved from around $13 to Wednesday’s closing price of $16.43 on analyst upgrades. The stock should be watched by traders as twice in April, the stock hit 19 and then 20, then pulled back substantially. This time around, it might not even get that high in the absence of good news, as the $17 area is also resistance. Traders would probably want to avoid options on this one and just short the stock.

Buffalo Wild Wings (BWLD) was up $2.23 points, closing at $33.36 yesterday, on very good earnings. The stock traded 2,862,291 shares compared to the average 609,000 shares it usually trades. Depending on the markets overall, the stock might still have a couple points left in it today and tomorrow. So if it looks like we will have an upmarket, this would probably be a buy today. On an upmove, the August 30 calls should be a safe bet.

SAIA (SAIA) is a trucking company that has moved from just over $10, to $17 in a month. The stock was up $1.27 yesterday and at the $17 area, the stock is right up against resistance. If oil prices start to show strength, we will see weakness in these shares.

Solar Stocks. Solar stocks have been battered of late, but First Solar (FSLR) just released earnings that BLEW past estimates last night, reporting $0.85 cents for its second quarter while analysts where expecting $0.58 cents! As a result, FSLR is up about 19 points to $304 in after hours trading. While it is now too late to jump in on that band wagon in the near term, traders might want to consider Canadian Solar (CSIQ) which is trading at $29.78 though up over a dollar in after hours trading and Solar Fun (SOLF) which is now at $13.47. If FSLR continues upward over the next few days, it will take these stocks along for the ride.

savvisfirst solarfslrcanadian solarcsiqbwld

While oil might stay on the front burner and chart the directions for stocks today, the economic calendar could also have a strong impact. Among the releases expected today, are initial jobless claims and GDP, both of which will be released at 8:30am.

Economists have been revising GDP upwards in the last two weeks but we may still see an upside suprise. The GDP report could possibly send stocks higher again, with Wall Street treating a decent number as signs the economy is not as bad as feared.

GDPjobless claimsus economyeconomic calendar

VISA released earnings for the third quarter on Wed 07/30/08 evening, that beat estimates. Consensus earnings per share estimates for the quarter were $0.48, on expected revenues of $1.55 billion. Actual net revenues for the quarter came in at $1.6 billion and EPS came in at $422 million, or $0.51 per share.

Besides beating on top and bottom lines, the company is also raising its long term outlook for adjusted operating margins.

According to the company, they expect annual net revenue growth through 2010, of 11-15%, EPS growth of 20% or better and annual free cash flow of at least a billion.

Here are the highlights from the company’s reports:

•GAAP net income of $422 million in the third quarter.

•Adjusted net inc. of $457 million.
 

•GAAP diluted class A common EPS of $0.51.

•Adjusted diluted class A EPS of $0.59.

•Payment volumes grew 19% from Q3 of last year, to $652 billion
 

visa earningsvisavisa stock

Visa (V) will be posting earnings today after the stock market closes. Here is an options trade to try and capitalize on any big moves the stock might have from the earnings news. We are looking for great earnings from the company, but if they disappoint, the trade is formulated to just about break even if the stock moves downward. Even better, if there is a more than four points move downward, (which will most likely happen if the news is bad) we make money. So its basically a can’t lose trade that you can bet big on.

If you are entering the trade, we recommend a minimum $2,500 investment. The higher the better. We are buying both calls and puts and we have a ratio of calls to puts. The ratio MUST be strictly adhered to, to make it a can’t lose trade.

If the stock is up 4 points, we are up about 23%, up 5 points, we gross about 31%. If the stock is down 5 points, we make 7% and for 6 points downwards, we make 14%. This is all before commissions, so that will affect your gains.

Remember one side of the trade will lose money, for instance, if VISA (V) soars tomorrow, the puts will lose money and vice versa, but again, net net, you make money.

Here is the trade.
The August 80 calls are currently going for $2.50 and the August 70 puts are going for $2.00. You will have to pay a few cents more on the ask side, but the spreads are not too wide. As a matter of fact, the calls now have a price quote of 2.44 and the ask price is 2.40. The puts though are going for $2.10 with a $2.00 price quote.

BUY 6 AUGUST 80 CALLS and BUY 5 AUGUST 70 PUTS. This will run about $2,460. Keep the ratio constant. It’s basically a can’t lose trade as stated above, so you can double, triple or whatever your capital base allows. Do maintain ratio. You can buy 12 calls, 10 puts, 24 calls, 20 puts etc.

If the price has changed by the time you enter this, you can still enter (today) unless VISA (V) has moved up by more than say 5 points, which might change the volatility of the stock and the greeks on the options in which case, we need to reconfigure our ratio. If VISA is trading between 73-78 when you get this, you can enter the trade as is.

If you are entering the trade and would like a follow-up, email us at navivest@navivest.com with either a short message, or just Visa Trade on the subject line.

visa earningsvisa options

With stocks, as represented by the Dow Jones Industrial Averages, up 150 points in early trading and so far up 416 points in less than two days, financial stocks are setting up for easy profitable short/put buying trades.

AIG (AIG) is up over 12% since Tuesday’s close, Merrill Lynch (MER) up 11% and so it goes across the board. The runup, whether warranted or not, has been fast and furious and these stocks will need to take a breather.

Word of caution. Visa and Mastercard will be releasing earnings today and tomorrow respectively and we suggest waiting until after those earnings news to initiate a financials short trade. (V) and (MA) might come out with great earnings that could serve as further impetus for financials to continue moving upwards.

 mastercard earningsvisa earningsfinancial stocksMERAIG

VISA (V), which went public in March of this year, will be reporting third quarter earnings today after the close of the stock market. We expect the company to exceed earnings expectations, as more and more consumers are using their credit and debit cards more for purchases.

Unlike banks and American Express (AXP) which on July 21st, reported a 36% drop in earnings when compared to the same period last year, for the second quarter of 2008, VISA (V) does not take on potential (or actual) credit losses. When a Visa card is used, Visa (V) is paid for processing the transaction, and is paid regardless of whether the credit card holder ends up defaulting or not. All credit losses remain with the issuing bank.  

Consensus EPS estimates for the quarter are $0.48 on $1.55 billion in revenues.

Depending on how Visa moves in early trading, we may be issuing an options trade to capitalize on the earnings report. Check often, or send us an email at navivest@navivest.com and we will email you the trade.

vvisa earnings