Something To Read With Your Coffee & Cheerios

Market Overview

SPY was down 1% on the week not bad considering we are down 6 out of 7 sessions there has been some fine action and certainly strength in a lot of names despite the market flopping around like a fish out of water.  Levels in SPY have really been working well as we saw on Friday we have been talking about 168.50 as the bounce spot and it did so just shows the selling is orderly and there is zero panic, yet.  So our level into next week is again 168.50 to the downside although the second test is not going to be as high probability as the first also the freak show in Washington is beginning. After that you got 167.50 area, which should hold and if that fails then you have 165.23-165.08, at which point I think is the spot to buy like its 1999.  To the upside you've got 169.50, 170-170.17, 170.53.  QQQ was basically flat on the week, up a tad 79.54 is the next spot to the upside & 78.75-78.59 to the down.  IWM squeaked out a .25% gain on the week, so there is strength within this weakness.

Economic Calendar

Technical Set-Ups

ALXN really looks good here as do many names in this sector as well as the IBB in general, I have my eyes on the 117 break looked like it was going to go Friday, but just could not get it done and then it got to lunch time and it did not have a chance.  Alert set for that 117 break.

 BA shares pulling in a bit, which is fine and should allows this to set up better in time, alert set for the 120 area break.

 BIDU strong performer and definitely a great trade for us this week, while I do not think this set-up is as good I am still very interested in the 155 break higher. Next weeks 160 calls found a 2 seperate100 block buyers on Friday prefer 155 calls myself on the breakout. 

 BP continues to be interesting here and I am waiting for a break out of this massive wedge on the weekly for a swing long.  I noted the bullish options activity last week Friday saw some more with 1,000+ Nov. 45 calls.  Stalking entries here as shares are acting well and could really go on a run here soon as this is a long consolidation.

 CBI pushed today but really lacked volume continue to monitor the volume here and looking for a break through Friday's highs.

 DLPH watching that 58.60 break for a move higher, break above should target 60-61.

 FXCM was on our list last week but fell on Thursday shares quickly recovered on Friday and continue to watch for the 20 break, which should target 21-21.50.

 GCI a lot of names in the group are hot and we got a big stick and two rest days 26.90 break should send this one for a nice day trade.

 GILD again names in this group are setting up well despite some weakness in the market so important to seek out strength in the weaker tapes.  Back through all moving averages RSI curling higher , as MACD looks to confirm the strength & ACCUM/DIST also curling higher. 64.75 break.

 HOG been a strong performer and pretty straight forward here watching for a 65.15 break.

 LTD on our list last week actually made a late day run at it despite the weak tape but fell back into range, eyes on those Fridays highs as this looks ready to run.

NFLX is on watch everyday for me but really like how its is setting up and believe it is again ready to run watching a break of that 314 area for a run back up through 320.

 ORLY I think the street was expecting a disaster from AZO and the report looked pretty solid so some relief in those shares and ORLY here so watching to see how it handles that 127.70 area.

 PXD sets up well here for the 190 area break.

 REGN again a bio love this set-up through 311 could put in a nice stick.

 ROST continue to wait for that 72.84-73 area break.

 SBUX upgraded on Friday but didn't react much but still watching the 77.85 break.  A lot of good happening here and my long term thesis has been and still is $100 by 2014.

 ST  a tad thin but really look good here through 39 RSI beginning to move higher bullish MACD cross and accum/dis at highs just waiting on a tad more volume to lead the way here should target 41 area.

 UPS 92.12 break continue to watch as it consolidates and works off over bought conditions here going to set up soon.

 WTW is interesting here as it continues to bottom RSI is grinding higher as are other momentum indicators 38.19 break should tag 50 day and one could evaluate commitment there.  Trades a bit thin so volume is going to be key.

Options Activity

MU seems to everyday break to new 52 week highs, and is just in one of those grooves where it is a name to watch everyday for a trade, it has become a great trading vehicle and bulls continue to be active in longer dated calls.

The Trades: Buyers: 8,500 Oct 18 calls .96, 3,500 Jan 18 calls 1.90, 2,500 Oct 20 calls .37, 3,000 Jan 21 calls .86.

Sellers: 4,000 Jan 18 calls, 7,000 Jan 16 calls.

My Take:  The action has been bullish for months open interest in calls is over 1.8MM now, Jeffries  slapped a $25 target on shares, but for me it is just a great trading stock and not something I am interested in for longer-term trades.

JCP selling 84MM shares caused a massive sell off and a view of the monthly chart shows shares down 27% in that time span and looks like the next stop could be low $7's.

The Trades: Trader rolls down 12,000 Feb 12 puts to buy 12,000 Feb 9 puts.  Oct 12 puts rolled down to Oct 10 puts 17,000. A bullish trader buys 16,500 Jan 2015 10/15 call spreads at 1.37.

My Take: Well I have highlighted the bearish action many times in the past weeks and had the alert set for the 12.12 breakdown, if one did not trade it then I really see no reason to be chasing it down here down 27% in the past 4 weeks.

KO shares continue to tread water with the market, and just cannot seem to stage any rallies but traders continue to place bullish bets on the name.

The Trades: Trader buys 1,900 Oct 25th 38.50 calls & another rolls out of 8,400 Oct 40 calls to 8,400 Nov 40 calls.

My Take: Shares need to reclaim the 39 level before I would even consider it at this stage earnings are on 10/15 so noting the action for a possible play there.  Also of note on 9/11 trader bought 13,000 Nov 40 calls.  I have an alert set for 39 & also have the action noted for any potential earnings plays.

INTC shares rolling over and holding above the 50 day, but for how long is now the question.  Bears smell blood and got extremely active today.

The Trades: 30,000+ Dec 22 puts

My Take:  Hard to disagree with a bearish stance here and with $2MM in put premium bought today and 2x avg put volume with Net Delta -836K it is significant positioning.  50 day break sets up for a short and earnings are 10/15, and these Dec 22 puts at .62 may not be a bad play.  Noted the action with a 50 day alert break down and for potential earnings plays.

COP shares in a nice orderly pull back here with a couple tests of the 10 day which has had a chance to catch up to price.

The Trades: 2,600 Jan 2014 65 puts bought for 1.14 & 300 Oct 70 puts bought at the end of the day for 1.24.  Also some smaller size buys in Oct 67.50 puts.

My Take:  I see no reason to be wanting to have short exposure to the name at the moment, earnings are 10/21, which is after Oct. expiration and not a name I am interested in an Earnings play so just information to me. 

MGM and the gaming names in general have just been on magnificent runs this year as shares make new 52 week highs this week as did many of the names, but came back in Friday but bounced off the 10 day and rallied to close near the highs.

The Trades: Over 3,000 Oct 4th 20.50 calls bought from .11-.24 (Nice trade already for the early dip buyers)

My Take:  As I said earlier seek out strength and I have been active in these names, and I have an alert set for the 20.40 break and will be piggy backing the same trade.

ESRX came under some heavy selling pressure of late but shares have stabilized and have held a key level right above the 200 day.

The Trades: Over 2,500 Oct 65 calls.

My Take: On 9/18 Trader bought 1,000 Nov. 72.50 calls at .11. These are low delta shots and just not my thing and I do not really see an edge here as shares need more time to stabilize.

MSFT shares have been volatile on a few news events earnings & CEO change. But are showing signs of life here late in the week and could set-up for a trade.

The Trades: Trader buys 10,000 Jan 34 calls, 2,700 Oct 34 calls, 3,000 Oct 33 calls rolled up to Oct 35 calls, also some smaller size buyers in Oct 34 calls.

My Take: I have seen worse set-ups for sure, and showed good strength on Friday in a weak tape so I have an alert set for 33.75-34 area and may look to either play weekly 34 calls or those Oct 34 calls.

EXXI we noted the bullish action earlier in the week and shares continue to grind higher.

The Trades: March 2014 29/36 call spread 1,000, Oct 31 calls 1,000 & seller of March 22 puts (1,000 in open interest already so could be closing action, confirm it on Monday).

My Take:  Shares certainly look decent here and trader bought 4,200 Dec. 30/34 call spreads earlier in the week, won't be on my A list but I will set an alert and keep an eye on it.

CSIQ shares up 12.5% on the week as solars caught bids, and this one was able to go out on highs.

The Trades: 1,500 Oct 16 calls, 1,000+ Oct 15 calls ran 5X daily call avg with mostly offer side action.

My Take: 10% short and the weekly below shows about another $1 through last weeks highs if your a momentum player it could be in play, chasing solars is a dangerous game but I may take a look for an intra day scalp.

TSLA well really no introduction needed.

The Trades: Oct 4th 225 calls 600, Oct 4th 210/225 call spread 200, Oct 19th 195/200 call spreads 300 & Oct 4th 195/205 call spreads 300.

My Take:  Always on watch everyday basically opening range highs, through Friday's highs, and/or intra day range breaks.  $200 definitely achievable next week.

Other Options Activity

ELN- Traders active for over 14,000 Nov 16 calls from .20 chased all the way up to .35.  Personally I would not chase this VOL pop with your money.

CSCO- Buys- 5,000 Oct 24 calls, Oct 26/21 strangle 3,700, 8,000+ Dec 20 calls.  Some bullish positioning but really nothing to see here 22.90 alert set for a short into that May gap.

BBD- Trader buyers 1,000 Oct. 14 straddles for .80, alert set for 14.45 break out of this flag.

FB- Trader rolls 2,700 Oct 47 calls to Oct 50 calls, Trader buys 2,500 Nov 52.50/45 put spreads Nov 45 calls with over 3K & the most interesting and unrealistic the 1,000 March 2014 95 calls bought for .52 debit.  Like MU just been a really great trading vehicle and will continue to be earnings 10/21 could shift it.

DAL- Follow on action to the interesting spread from Thursday trader buys 5,000 Jan 2014 27/30 call spreads and another trader rolls 2,000 Jan 22 calls to 2,000 Jan 24 calls. (Still stalking the other bull calendar spreads).

CTCT- Trader sells 4,500 Nov 25 calls to open.  

GERN- Trader buys 3,000 Nov 3/5 call spreads.  Also smaller size buyers in Nov 3 calls running 20x daily avg call volume.

ACXM- Long-Term bull buys 2,400 May 2014 30 calls as shares make new 52 week highs.

KSS- Trader buys 1,600 Nov 50 puts.

NE- Traders active in Oct. 41 calls over 1,000 & Dec 42 calls about 300.

XOM- Shares continue to trade poorly but some bullish action with 1,500+ Jan 2014 95 calls & 500+ Nov. 92.50 calls.

DOW- Some ugly candles and traders flew out of Oct 36 calls and booked their profits.  Caution if long here.

JKS- Trader sells to open 1,200 March 2014 37 calls for .95 credit.

MTW- Jan 2015 25 & 30 calls finding buyers 5x daily avg volume, interesting longer term bulls.

XLU- 2,000+ Oct 25th 36 puts bought.

Trade Idea Of The Week

MRK been noting the bullish call flow as shares continue to attempt to reclaim 10 day supply and make a run back to 52 week highs.  Also in a prior note I mentioned the tendency for shares to run into earnings so I posted a chart below and the blue dots at the bottom represent earnings days and as you can see there is that tendency to run into the event.  With that said I also mentioned MRK as not being a great Earnings reactor so I will be out of this trade ahead of earnings.

The options action: 9/27 Oct 4th 48.50 calls 1,000+, Oct 4th 48.50 calls 1,000ish, 9/26 2,500 Nov 47/49 call spreads & 3,500 Nov 50 calls, 9/25 1,300 Nov 48 calls, 9/24 6,700 Oct 50 calls (low delta shot, little impact on me)

The Trade: Long Nov. 48 calls through 47.91 area and hold.

Catalyst- Earnings 10/21

Theta Thrasher

INTU shares are consolidating there latest move as they continue to bounce between 65-67 for all of September as they seek a catalyst on 11/11 earnings.  Traders see limited movement through November expiration.

The Trades: On 9/17 a trader sells 2,500 67.50/65 strangles for $1.60 credit & on 9/26 a trader sells 5,000 Nov. 67.50/65 strangles for $2.90 credit.  Both trades remain in open interest.

Trade to consider: Short INTU Nov. 70/62.50 strangle for $1.40 credit.  Largest earnings reaction past 4 quarters is $1.50 of 2.2%.  Profitability range- 61.11-71.39.

Volatility Seeker

GMCR shares down 11% last week in some volatile trade as a trade seeks the wide price movements to continue into next week.

The Trade: Trader buys 2,000 77.50/75 strangles for 3.25 (I always put calls first, except in bear risk reversals). Currently quoted at 3.30ish.

My Take: Shares of GMCR can put in vicious moves Alla 50% move down on earnings a year or so ago.  26% short despite this run up this year.  The trader is net bearish as he seeks higher delta buy on the put side while I am not interested in this play, I am interested in the action behind the play and the volatility of shares of GMCR and I will be watching any green to red scenarios and how shares handle a test of Friday's lows at 74.50.

Earnings

Will post day before event.

Net Delta

FB +964K

MSFT +963K

ELN +830K

BAC +622K

CSCO +528K

CSIQ +487K

ZNGA +448K

KO +331K

INTC -821K

MBI -545K

RAD -435K

IWM -400K

F -400K

DOW -400K

C -350K

Implied Volatility Gainers

TWGP +45

NDRO +31

ONE +18

BGCP +11

ROYT +11

RUE +9.5

HOS +9

EW +8.5

Implied Volatility Losers

NKTR -49

RDA -32

ZOLT -21

NVMI -16

FINL -16

BBRY -13

NKE -12

SLF -10

Be Well,

Keeblerelf3

This is for informational purposes only and should not be viewed in anyway as investment advice.

Monday NewsLetter

Anguilla AKA Paradise

Overview & SPY Trades

So today we had a pretty big gap up to begin the day with, your truly came in flat except for the FXI call spread, which was not a huge deal obviously I would have loved to have my entire account long but that did not happen.  As I have been stating in this letter the target was 170 and then a test of the highs so both completed in one big Summer swoop.  So is that it? No, I do not believe so I expect these highs to be in the rear view mirror this year, but at this point its a tad more uncertain and the market could use a healthy break let the 10 day catch up a bit build a nice flag and then go.  This way you have a solid base to trade from and you get a gap and go instead of a gap and fade.  I am not too in love with many set-ups long or short tomorrow and the good thing is I will be in NYC all day and will not participate in the market.  Lets get Down to business.

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Some SPY trades: 15,000 Sept 30th 158 puts, Oct 160/155 put spreads 7,500.  Net Delta -$5,9mm.  Of course a big hedging vehicle so I dont make too much of it.

Technical Set-Ups

ACN a name that held its gap very well today and closed near the highs set up fairly well here and has potential to fill the rest of the gap above.  So the break is 76.62 but right above that is the 100 day so does not give much room a possible play is buy half through 76.62 and then add the last half through the 100 day or just wait for the 100 day break around 77.

 AIZ not a huge mover but sets up well here if volume can come in and a nice break of 56.12-56.21 area.  Needs volume though.

 ARG had a pretty swingy day today but sets up pretty well here on that 106-106.14 break.

 Another gap and hold above 100 day so really have to take note of the committment here 50.40 break should move this.

 BRCM is really interesting here there has been a bunch of positive comments on it and saw some bullish options positioning weeks ago I think there is a swing opportunity in the name through 27.24 although to really get this moving it needs a break and close above 28 area to get that gap in play.

 DD straight forward needs that 60 break.

 FRX some activist invovlement and I really like set ups that have multiple resistance converging as they tend to really explode.  So here we have highs resistance plus previous broken trend support so worth a look on that 45 break.

 HRS 58.72 break worth a look needs some volume expansion though too.

 IR momentum play 64.90-65 break.

 MET building a nice little flag here above supply 10 day crossing all moving averages RSI a lot of room to run keep an eye on that 49.78-50 break. Should at least get the highs after the 50 break.

 OI 31 break targets about 34.

 OSK pretty tight here 47.58 break today's highs could set up for a trade.

 SWI also with a lot of gap to fill above gets interesting through 40 should at least test the 100 day at 41.14.

On to the good stuff...

Options Flow

RSH recapitilization plans pleased investors and got this running a bit today saw a trader roll up 9,500 Jan 4 calls to 9,500 Jan 5.50 calls.

My Take: Personally I see no value in RSH longer term and I also like to see on these roll ups traders take some or all of the profits and add more size to the trade but there could be some trades in it along the way.

IBM waking up a bit as of late and making a move into supply, and stalled totally fine.  Today a trader bought some more time rolling out 1500 September 195 calls to 1,500 Oct. 200 calls.  (This also could be a call calendar spread, but have to check OI and I would guess its a roll up)

My take:  196-197 break is going to be big here so I have an alert set noting the action and IBM certainly a swing name so the Oct. 200's can work well.  Pull up the weekly too and you'll see the 196 area.

APC noted some bullish spreads over the weekend today saw a trader early in the day roll out 5,700 Oct 92.50 calls to Oct 95 calls staying bullish but lowering Delta and taking 1.30 off the table.

My Take:  Same alerts set from over the weekend will continue to monitor the action.

C been treading water a bit and needs to get through that 51.50-52 area before anything.  Today saw traders buy 5,000 Jan 50 calls, 3,000 Oct 52.50 calls & a roll out of 4,000 Sept 50 calls to 4,000 Oct 50 calls.

My Take: Signifigant bullish positioning being seen in October, and the play gets EPS on the 15th.  Have some interest in the 52.50's setting an alert for 51.53 break with the action noted and will continue to monitor.

KO popped today but faded fast big Buffet name and today saw traders buy over 2,000 Oct 40 calls and 1,500 Sept 39 calls.  Also saw a trader book profits on 2,000 sept 45 puts and roll out to 2,000 Nov 41 puts.  So a mixed bag.

My Take: Not really interested in this action but 50 day break could get this going. But could be worth a look this week if it starts to show some strength as those Sept 39 calls are fairly cheap shots.

 OIS interesting here has come some ways to reach this point and could use some consolidation before its next leg up.  Today saw a traders buy a 2 1,000 blocks of Mar 2014 130 calls also some small buyers of Sept 105 calls taking a shot.

My Take:  A name I am going to keep an eye on and setting an alert for 103.50 & 104 spreads are wide here so its a name if using options would probably have to swing so I would probably trade shares here personally to keep liquidity.

IWM faded pretty hard today and almost went red at one point.  Trades today: Sept 30th 99/92 bull put spread for .14 credit or a roll down neither play makes any sense to me so 0 interest. Oct 103/97 put spread 8,300 a more reasonable play but more of a portfolio hedge and I am not seeking major short exposure.  Oct 106/105 strangle buyer 15,000 times definitely interesting one expeticng some big moves in the market spread traded for 3.85... I have certainly seen worse plays.

YHOO really battling this 30 level I have an alert set up there and am slightly bullish on the name long some in IRA some trades today.  Sellers of 11,500 Jan 25 puts (most likely closing action) Sept 30 calls 2,000- Oct 30 calls 2,000 Nov 28 calls 800-Oct 30 calls 1,000- Oct 27 puts 1,000.

My Take:  Some bullish action have my eyes on the 30 level, but want to see some committment some sideways action here to build a launching pad would be great, but worth keeping an eye on it for momentum with that Sept 30 call buyer in the area.

IGT nice pop today as traders look to ride the momentum but then expect negative EPS in November as they buy 10,000 Oct. 20 calls & sell 10,000 Jan 2014 23 calls for .55 debit.

My Take:  Interesting play there noting the action for earnings plays in November and watching for some consolidation and then next leg higher.

Other Action:

XLI- Strong pop today and held a lot of its gains late a lot of profit taking in Sept 47 calls today, but also a buyer of 1500 Sept 47 calls & a buyer of 5,000 Oct 47 calls.  For me I will focus more on individual names within the group, but setting an alert on XLI for 47 break noting the action.

COG- Buyers active in Oct 40 calls for about 1,500 there continues to see bullish action here but also seeing shares fall currently barely hanging on to 50 day.

CFN- 2.700 Oct 40 calls starting to look a lot better here setting an alert for 39.38 noting the action.

OMX- 1,000 block of Jan 12 calls.  Not something I am interested in but could break out above 11.80 area.

CRTX- BIOS not my thing but 1K Nov 10 calls 500 Oct 10 calls & 500 Feb 10 calls.

LTD- Small buyers in Oct 62.50 calls today about 500 or so, good value name alert set for 61 noting the action.

MT trader rolls out 4,000 Sept 13 calls to 4,000 Sept 14 calls worth eyeing has a couple interesting levels 14.32 & 15.

MAS- Noted earlier action today saw 3,800 Oct 22 calls

OPEN- trader roll up 5750 Oct 67.50 calls for nice profits and stays bullish buying oct 75 calls.

BAC- massive Nov 16/13 strangle 20,000 for .27.. Actually a very interesting play, I might nibble on a few.

Earnings Follow Up

DRI Sept 49 puts 1,760 & 500 Sept 50 calls.. Has no affect on trade as was positioning both sides.  Price may require adjustment though.. Still a few days away.

TIBX- Another another 1,500 Nov 20 puts at .30 & also an Oct. call spread have to check OI tomorrow to confirm action though.  Still like the low risk Nov 20 puts.

ORCL- 2,000 Oct. 33/35 call spreads & about 4,000 Sept 32 puts.  Still like same play.

FDX- Oct 100 puts closed out.. Have to confirm OI tomorrow... Still like same play adjusted for price movement.

ADBE- Nothing worth noting.

This is an example of a newsletter sent out daily if you'd like to be added to the mailing list email: keeblerelf0602@gmail.com.

This is for informational purposes only and should not be viewed in anyway as investment advice.