Liz Claiborne (LIZ) call trading picked up early this afternoon, particularly in the $5Jan issues (volume over 2,700 with open interest 3,300, at leat one block appeared to be traded at the ask up to 65 cents). LIZ shares are currently trading up 8 cents to $4.02 (+2%).
Update (Sept 7th): On Thursday afternoon, LIZ announced that it had hired a turnaround firm (link to Reuters story). Also, LIZ will be presenting at the GS retailing Conference on Sept 9th. LIZ closed at $4.12 on Friday.
Thursday, September 3, 2009
TRAD: Call Buyers Step In
TradeStation Group, Inc. (TRAD) is an online broker-dealer. On Wednesday, the company reported that customer trading volume declined again in August. However, bullish call buying was observed the same day, particularly in the December $7.50 issue where a block of 1,000 calls traded apparently at the ask. TRAD closed at $7.00 on Wednesday.
There are a couple of reasons to like TRAD here: First of all is the very recent trading activity, rumors, and news from other broker dealers such as ETFC and IBKR. Secondly, from the chart below, we see support and the 200 DMA both at around $6.85.
I was hoping to take a long position on a dip to support this morning, but that didn't happen.
Update (Sept 8th): I was able to pick up some TRAD at $6.95 afterhours today. The 200 day SMA is $6.93. TRAD has been testing $7 support for four days now. Stochastics are pointing up and TRAD had a positive MACD crossover today (not shown in chart). I'll have a stop just below the $6.85 support should that level fail.
TRAD Trading History:
September 8th, bought TRAD for $6.95
September 17th, sold TRAD for $7.53 (+$0.58, +8.3%)
Current position: None
There are a couple of reasons to like TRAD here: First of all is the very recent trading activity, rumors, and news from other broker dealers such as ETFC and IBKR. Secondly, from the chart below, we see support and the 200 DMA both at around $6.85.
I was hoping to take a long position on a dip to support this morning, but that didn't happen.
Update (Sept 8th): I was able to pick up some TRAD at $6.95 afterhours today. The 200 day SMA is $6.93. TRAD has been testing $7 support for four days now. Stochastics are pointing up and TRAD had a positive MACD crossover today (not shown in chart). I'll have a stop just below the $6.85 support should that level fail.
TRAD Trading History:
September 8th, bought TRAD for $6.95
September 17th, sold TRAD for $7.53 (+$0.58, +8.3%)
Current position: None
HGG: Bullish Call Activity (now bearish)
Electronics and appliance retailer hhgregg, inc (HGG) announced the opening of ten new stores in the Tampa area this morning. Shares have advanced 50 cents (3.5%) to $16.50.
Call traders are apparently anticipating more upside. In particular, January $17.50 calls show volume of 1,088 thus far versus open interest of 59. We've observed trades at the ask of $1.85 and later $1.95. Less than 100 puts have traded.
HGG recently tested its lower trendline, but there is a lack of other clear support points. The 200 DMA is close to $13.
Update (Sept 8 10:45am): HGG puts are active this morning. In particular, the $15October issues have traded over 6,000 thus far versus open interest of 46. We are observing trades going at the ask of 75 cents, with the stock at $16.80.
Update (Sept 8 11:22am): Put buyers have pushed volume on the $15Oct issue over 8,000 now with trades passing at the ask of 80 cents.
HGG trading History: None.
Current Poisition: None.
Call traders are apparently anticipating more upside. In particular, January $17.50 calls show volume of 1,088 thus far versus open interest of 59. We've observed trades at the ask of $1.85 and later $1.95. Less than 100 puts have traded.
HGG recently tested its lower trendline, but there is a lack of other clear support points. The 200 DMA is close to $13.
Update (Sept 8 10:45am): HGG puts are active this morning. In particular, the $15October issues have traded over 6,000 thus far versus open interest of 46. We are observing trades going at the ask of 75 cents, with the stock at $16.80.
Update (Sept 8 11:22am): Put buyers have pushed volume on the $15Oct issue over 8,000 now with trades passing at the ask of 80 cents.
HGG trading History: None.
Current Poisition: None.
CADX: Near Support Ahead of Decision
Cadence Pharmaceuticals Inc. (CADX) makes drugs for use in hospital settings. It is developing the painkiller Acetevance, which is an injectable form of acetaminphen. The FDA decision date for Acetevance is November 13th.
I took a trading position in CADX, buying the shares for $9.91. Shares are near support from September 2008, May and August 2009 and near the lower trendline. This is a trading position only. I'm not looking to hold this position into the decision in November. A stop just below support is in place.
Update (Sept 11): CADX seems to have reached an intermediate peak here and run out of momentum with mixed techincal indicators. I don't expect any upcoming events until the FDA action in November. I locked in profits by selling for $10.76 (+85 cents or +8.6%)
CADX Trading History:
September 1st. purchase CADX for $9.91
September 11th, sold CADX for $10.76 (+$0.85 or +8.6%)
Current Position: None
I took a trading position in CADX, buying the shares for $9.91. Shares are near support from September 2008, May and August 2009 and near the lower trendline. This is a trading position only. I'm not looking to hold this position into the decision in November. A stop just below support is in place.
Update (Sept 11): CADX seems to have reached an intermediate peak here and run out of momentum with mixed techincal indicators. I don't expect any upcoming events until the FDA action in November. I locked in profits by selling for $10.76 (+85 cents or +8.6%)
CADX Trading History:
September 1st. purchase CADX for $9.91
September 11th, sold CADX for $10.76 (+$0.85 or +8.6%)
Current Position: None
Wednesday, September 2, 2009
ARNA: I.V. Elevated Ahead of Stage III Results
Arena Pharmaceuticals, Inc. (ARNA) is a clinical stage biopharmaceutical company. Its lead drug candidate is lorcaserin, which is for the treatment of obesity. Clinical trial results (Stage III) are expected in September.
Implied volatility is highly elevated and I believe there has been a bullish skew to the options trading (high call/put ratios have been the norm, while some large blocks of puts have been associated with shares).
I entered a long ARNA position for $4.41/sh position on weakness during trading Tuesday (9/1), and simultaneously wrote $6Oct covered calls for a credit of $0.93. Thus it was a net charge of $3.48/sh with an upside to $6.00.
Update (Sept 18th): ARNA announced trial results for lorcaserin this morning, which were a disappointment. I closed my position, buying back the calls for 15 cents (an 84% gain), and selling the underlying stock for $4.55 (a 3.2% gain).
Implied volatility is highly elevated and I believe there has been a bullish skew to the options trading (high call/put ratios have been the norm, while some large blocks of puts have been associated with shares).
I entered a long ARNA position for $4.41/sh position on weakness during trading Tuesday (9/1), and simultaneously wrote $6Oct covered calls for a credit of $0.93. Thus it was a net charge of $3.48/sh with an upside to $6.00.
Update (Sept 18th): ARNA announced trial results for lorcaserin this morning, which were a disappointment. I closed my position, buying back the calls for 15 cents (an 84% gain), and selling the underlying stock for $4.55 (a 3.2% gain).
ALTH: Selling Volatility Ahead of FDA Review
Allos Therapeutics (ALTH) is halted today as the company is presenting its lymphoma drug pralatrexate in front of the FDA's cancer drug advisory panel this afternoon. A panel vote is expected late this afternoon, with a conference call by Allos afterwards. A final decision on the drug is expected from the FDA on or by September 24th.
I was a little late to this one, and options activity has shown no clear bias (both calls and puts have been very active since July, with rising IV, chart below).
Given the uncertain direction and elevated volatility, I wrote $2.50 September Puts (credit of $0.15) for a fairly low risk trade. Shares closed at $7.86 on Tuesday.
Update (9/3/2009): ALTH's drug was recommended for approval by the FDA panel yesterday by a 10-4 vote. Shares are only up around 3.5% now in premarket trading. This is quite a lukewarm reaction from traders. Nevertheless, my put position should be safe and I expect them to expire worthless next next week.
ALTH Trading History:
09.01.2009 Wrote $2.40Sept puts (.QATUZ) for a credit of $0.15.
09.20.2009 .QATUZ expiration at $0.00 (+100%).
Current Position: None
I was a little late to this one, and options activity has shown no clear bias (both calls and puts have been very active since July, with rising IV, chart below).
Given the uncertain direction and elevated volatility, I wrote $2.50 September Puts (credit of $0.15) for a fairly low risk trade. Shares closed at $7.86 on Tuesday.
Update (9/3/2009): ALTH's drug was recommended for approval by the FDA panel yesterday by a 10-4 vote. Shares are only up around 3.5% now in premarket trading. This is quite a lukewarm reaction from traders. Nevertheless, my put position should be safe and I expect them to expire worthless next next week.
ALTH Trading History:
09.01.2009 Wrote $2.40Sept puts (.QATUZ) for a credit of $0.15.
09.20.2009 .QATUZ expiration at $0.00 (+100%).
Current Position: None
CYPB Trading at Support
Cypress Biosciences (CYPB) is a biotech and services firm. Among its products is Savella, a fibromyalgia treatment that received FDA approval in January. Shares have been in decline recently, possibly over concerns regarding Savella revs. Yahoo Finance shows CYPB has nearly $4 cash/sh, a short ratio of nearly 19.
I noted a large $5/10 December call spread going through on Monday August 31st for $1.90 with shares trading at $6.90. The trade would achieve maximum profit if shares reach $10 at expiration. The previous week, more bearish trading in puts was observed.
CYPB has tested support at $7 in January, March, April, May, and now August. Resistance was shown at around $9.75, with a double top in July. RSI and Stochastics show that shares are currently oversold, however, these indicators are not yet heading north.
I entered a long position at $7.00 on September 2nd. Stop placed near the May 4th low of $6.70 in the event that support does not hold.
Update (September 8th): Cypress Biosciences will be presenting at the Baird's conference tomorrow (9/9/09). The stock gained 7% today to close at $7.92, which is above the 200-day SMA with a positive MACD crossover. The RSI and Stochastics are also both very favorable (both are rising and both crossed 50 today, chart below has not been updated to show this).
Update (September 9th): It looks like CYPB may have run into a little resistance at $8.00 today. I sold half my position for $7.92 (a gain of 92 cents or 13.1%).
I noted a large $5/10 December call spread going through on Monday August 31st for $1.90 with shares trading at $6.90. The trade would achieve maximum profit if shares reach $10 at expiration. The previous week, more bearish trading in puts was observed.
CYPB has tested support at $7 in January, March, April, May, and now August. Resistance was shown at around $9.75, with a double top in July. RSI and Stochastics show that shares are currently oversold, however, these indicators are not yet heading north.
I entered a long position at $7.00 on September 2nd. Stop placed near the May 4th low of $6.70 in the event that support does not hold.
Update (September 8th): Cypress Biosciences will be presenting at the Baird's conference tomorrow (9/9/09). The stock gained 7% today to close at $7.92, which is above the 200-day SMA with a positive MACD crossover. The RSI and Stochastics are also both very favorable (both are rising and both crossed 50 today, chart below has not been updated to show this).
Update (September 9th): It looks like CYPB may have run into a little resistance at $8.00 today. I sold half my position for $7.92 (a gain of 92 cents or 13.1%).
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