Nuvasive Shares Jump 34%
Feb 26, 2010 Stock to watch, Stocks On The Move
Nuvasive’s (NUVA) stock was an impressive mover on Friday February 26, climbing $10.31 to $40, for an incredible 34.73% move. The stock got a boost this morning after the company announced that insurer Aetna (AET) had changed its policy and will now cover the company’s XLIF spinal surgery procedure.
The shares are further climbing in after hours trading, as the company also announced after the bell, that United Healthcare (UNH) had changed its lumbar spinal fusion policy and will now also cover the XLIF (eXtreme Lateral Interbody Fusion) spinal surgery procedure.
Buy Big Lots Options On Upcoming Earnings
Feb 26, 2010 Earnings, Options, Trading Idea
The following is the latest trade from our Options Capitalist service.
Closeout retailer Big Lots (BIG) reports its latest earnings news on Monday. There is a very good likelihood the company beats estimates, which should send the shares higher.
Buy the Big Lots March 2010 32.50 calls. They are now trading at $1.90 by $2.05. Enter to $2.40. There is a fifteen cents spread between bid and ask, which is larger than what we prefer, but with a beat, we should see a $2-$3 pop in the stock.
The Options Capitalist is a subscriptions-based options trading recommendation service. More information about the service can be found here.
Ugg Boots Maker Up 12%
Feb 26, 2010 Earnings, Stock to watch, Stocks
Deckers Outdoor (DECK) is seeing its shares rally very strongly today, on great fourth quarter numbers. The company, whose brands include Ugg shoes, reported late yesterday, that for the most recent fourth quarter period, it earned $67.7 million, which translates into $5.22 per share, against the $4.28 per share that analysts were forecasting. This compares to earnings of $40.5 million or $3.07 per share in the fourth quarter period a year ago.
The stock at 12:56 pm, is up $13.19, to $119.35, a gain of 12.42%.
Option Trade of The Day – 02/26/2010
Feb 26, 2010 Uncategorized
The following is the latest from our subscription-based Navivest Options Writer service. It is a very compelling trade that we are making freely available to readers of the Navivest blog.
Shares of InterMune (ITMN) are trading at $13.84, currently down $0.14 on the day. The stock in in a downtrend, after rallying from $13.46 on January 22nd, to a high of $17.81 on February 3rd.
The options on the stock are very richly priced and the March 20 calls are asking $2.00! Selling these, translates into a 14% potential in just three weeks on a covered basis. We will be selling uncovered calls, making it a 100% proposition if the stock does not get called away on us.
As a biotech company, there is the risk that the comany could announce some news that sends the shares soaring, but those risks, in the three week time frame we will be in the trade, are limited in our opinion.
THE TRADE:
Sell the InterMune (ITMN) March 20 calls.
TRADE FOLLOW-UP:
The First Solar calls are now bidding just $0.05, down about 95%, which is great for us, having sold those calls. Keep position open.
For information on Navivest Options Writer, click here.
Tags: calls, covered calls, first solar, intermune, ITMN, option writer, Options
Option Strategy of the Day – Covered Calls
Feb 24, 2010 Options
Covered calls are call options that are sold by an investor/trader who already owns the underlying stock, hence the writing or selling of the calls, are covered. Keeping in mind that for each option contract sold, the option writer is obligated to sell 100 shares of the underlying stock if the stock is called away, to write a covered call, you have to own a hundred shares of a stock, for every option contract that you write or sell.
In simpler terms, if for example XYZ stock is trading at $50 and you own 500 shares, you could sell 5 of the $55 March 2010 calls, which for the sake of conversation, we’ll say are trading at $1.50. So for selling five contracts, you collect ($1.50*100)*5 or $750.
The options expire on the third Friday of the month or March 19 in this case. If by March 19, XYZ is trading under $55, the stock won’t get called away and your profit is the entire $750 premium that you collected.
If by March 19, XYZ has traded above $55, say $60, then the option buyer will exercise the options, enabling her to purchase a $60 stock for $55 plus the $750 premium. Factoring the premium, her total price for the stock is $56.50. So she can purchase the stock and instantly turn around and sell the shares for a $3.50 per share profit.
Covered calls, is a low risk trade for the option writer. The worst that can happen is the stock makes a major move to the upside, and you lose out on the potential profit. For example, XYZ could run up to $95 and you lose out on all that profit because you have to give up the stock at $60 per share. However, while you’ve lost out on some potential profits, there is no actual loss to your portfolio.
Another benefit of the covered call is that it provides some downside protection to a stock holding. If XYZ drops to $45, ordinarily, you would have lost $5 * 500 shares, or $2,500. However, because you sold the calls and received the $750 premium, you limited your losses to $1,750.
Why Put On a Covered Call Trade:
You already own XYZ stock that you don’t want to sell now, but you don’t think the stock will be moving to the upside in the near-term.
You want to gain some extra profits from your stock holdings.
You want to hold on to the stock, but are worried the stock could move to the downside.
In summation, covered calls are a low risk options trade that you could use to generate regular monthly income. With 80% of all options expiring worthless, this is a trade that puts the odds in your favor.
Tags: covered calls, Options, options strategy
Stock Of The Day – Nordson
Feb 23, 2010 Stock Market, Stock to watch, Stocks
With the broader markets in a funk – the Dow is down 0.91%, while the NASDAQ and the S&P 500 are down 1.26 and 1.147% respectively at 2:38 PM – shares of Nordson (NDSN), a manufacturer of systems that apply adhesives during the manufacturing process, are up $5.32 or 8.95% to $64.75.
The company after the bell yesterday, reported what it termed “Excellent Fiscal Year 2010 First Quarter Results.”
For the period, which ended January 31, Nordson reported an 18% rise in revenue to $221 million. Operating profit was $36 million, compared to the $13 million realized in the first quarter period a year ago and earnings came in at $26.7 million or $0.78 per share, compared to $11.2 million and $0.33 per share in the year ago period.
Analysts had been looking for the company to earn $0.58 per share, on $212 million in revenue.
The company also announced that for the fiscal 2010 second quarter period, “sales are expected to increase in the range of 26 to 30 percent compared to the second quarter a year ago. Diluted earnings per share are expected to be in the range of $0.81 to $0.89, inclusive of a $0.01 charge related to restructuring activities.”
Nordson shares are trading roughly 571,000 shares, compared to average daily volume of 187,000 over the past three months.
Tags: hot stock, nordson, Stock to watch
Selling First Solar Calls – Easy Money In The Bank
Feb 23, 2010 Options, Trading Idea, Uncategorized
Trade Update II
On Thursday February 11, we sent out a recommendation to subscribers of our Navivest Options Writer service, that they sell the First Solar (FSRL) March 150 calls.
Our recommendation was premised on the fact that the stock would have to climb about 35 points before the March 19 expiration and beyond that, our analysis of First Solar, revealed that there was too much negative overhang on the company, making it unlikely that the company would rally that much in so short a time period.
While the stock did rally a few points after we got in, its been sold off drastically since last Friday, February 18 and the March 150 calls, which we got $0.92 for, are now bidding just $0.06!
March 19 is still a ways off, and the stock could see some upside move, but there is now a better than 95% chance that even if we hold on through expiration, the stock stays below $150. Alternatively, we can actually close out the position now and we realize a profit of 93.47%.
Buying calls and puts provide a great opportunity for traders to realize incredible profits in a very short period of time. However, this should be done only with the utmost care and after conducting a very thorough analysis of the underlying stock to see if it has a good likelihood of moving in the direction you expect it to, as well as analyzing the options, including looking at the options’ greeks, to make sure its not priced in a manner that stacks the odds against you to begin with, as we do when selecting options trading candidates for our Options Capitalist service.
Alternatively, instead of just buying and calls and puts, traders should look to sell options as well, to put the odds when trading options, in their favor. Selling options also helps offset risks inherent in the portfolio, from just buying calls.
Eighty percent of all options expire worthless, which means that when you buy a call or put, there is a good chance that it will be a losing proposition.
Using our above trade as an example, while our subscribers where selling the FSLR March 150 calls, others out there were taking the other side of that trade, buying the calls in the hopes that First Solar either climbs to over $150, so that they can exercise the option and buy the stock at a lower price, or sell the calls at a profit if there is some rise in the stock. But as aforementioned, we sold those calls at $0.92 and they are now bidding $0.06, meaning anyone buying those calls on February 11 and holding on through today, has lost $.86 cents on each call they bought, or 93%.
For more information on Navivest’s subscription based trading advisory service, visit out website at http://www.navivest.com
Tags: calls, calls options, first solar, options writer, sell options
Hot Stock – Green Plains Renewable Energy
Feb 22, 2010 Earnings, Stock to watch, Stocks
Shares of ethanol producer, Green Plains Renewable Energy (GPRE) was among the biggest percentage gainer among NASDAQ stocks today. The stock rallied $2.85 to $16.99, a whopping 20.16% gain, with the movement in the stock coming on the back of the company’s latest earnings results.
The company this morning, announced that for it’s most recent fourth quarter period, it recorded a profit of $23.1 million, which translates into $0.91 per share, on revenue of $436.7 million. This compares to revenue of $183.2 million and a loss of $1.8 million or ($0.08) per share in the fourth quarter of 2008.
The company credited higher ethanol demand for the stellar earnings. The higher demand for the company’s products, also helped to improve margins.
For the full year, the company earned $19.8 million, or $0.79 cents per share, on revenue of $1.3 billion.
Green Plains Renewable Energy started 2009 at $2 after a steep decline through 2008, but has been one of the strongest performers among the entire universe of US stocks in the last 12-14 months, climbing over 750% in just over a year.
Tags: biofuel stocks, ethanol stocks, green plains renewable energy, hot stock, Stock to watch
The Options Capitalist – SII March 37 Calls Exit Alert
Feb 22, 2010 Options, Trading Idea
The Smith International calls we entered into on Friday, are up about 125%. They are now bidding $4.10, but with the wide spread between bid and ask, we are up 95%. Exit trade.
Navivest
Tags: call options, navivest, options capitalist, smith international
47% One Day Gain On Smith International Options
Feb 22, 2010 Mergers & Acquisition, Trading Idea
On Friday, we issued a recommendation to subscribers of our Options Capitalist trading advisory service, that they buy the Smith International (SII) March 2010 37 calls, as there was a possibility a bid could be made for the company this week, by Schlumberger (SLB). We also actually posted that trade on the Navivest blog for our readers.
On Sunday, Schlumberger did announce a $45.84 per share bid for the company and the March 37 calls, which we purchased at $2.10, are now bidding $3.10, a nice 47% gain in just one trading day!
We offer compelling options trading ideas such as these twice a week via The Options Capitalist. For more info on the service, visit our site at http://www.navivest.com
Tags: acquisition, merger, schlumberger, smith international
