Posts Tagged ‘Amazon’

Amazon Surges to the top of the OptionsHouse Hot List

Friday, October 23rd, 2009

Amazon seems to be turning out to be the biggest beast of this earnings season!  The online retail giant crushed the estimates, income surged 62%, and the company predicted 20-35% growth in revenue for the current quarter. The shares are responding dramatically, higher by 24%!  (AMZN $116.28 +22.85)

This report is obviously warming investors today to the shares but the next quarter’s earnings report, which will include holiday sales becomes absolutely critical. Those earnings have typically been delivered after January expiration, so unfortunately the January 2010 options most likely won’t give exposure to the earnings release. We will have a macro sense of consumer spending but not what percentage of that retail traffic Amazon has captured!  Option traders who would like to capture that future event will have to trade out in April expiration.

The OptionsHouse hotlist is seeing huge volume in the options, over 370,000 contracts trading today already!  Looking at the OptionsHouse option chain we can see 4000 of the April 135 calls trading, predominately on the bid side, actually indicating selling interest. This may be the action of covered call sellers.  Traders who are long the stock and overwrite an upside call take in a premium while limiting the upside to price appreciation above strike.

To learn more about the covered call strategy join the OptionsHouse weekly webinar series “2 Traders 1 Strategy” Tuesday, October 27, at 4:30 EST.  Jared Levy, Senior Derivatives Specialist for OptionsHouse parent company PEAK6 Investments, L.P., and I will discuss all the ins and outs of this popular strategy. Click here to register.

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August Roundup: A Look at Some Specific Stocks Compared with Major Market Averages

Saturday, August 29th, 2009

With August almost in the books I believe it is worthwhile to look at some specific sectors and stocks relative to the major market averages.

For a reference point the SPX index started the year at a level of 903.25.  So with today’s close at 1028.93 the overall market is up almost 14%.  It is more impressive to remember that on March 9th the index closed at 676.53, after hitting a intra-day low of 666.79 (up 54% from intra-day low)

On the sector front the best performing sector has been Info Tech up almost 40% YTD.

Within the highest weighted Tech companies Apple (AAPL) stands out,  up almost 100% .  Google (GOOG) a more pedestrian 51%.  Microsoft and Intel 27% and 38% respectively.

Also a leading sector the Materials sector has enjoyed just over a 30% YTD return

Freeport McMoran (FCX) a copper and gold company stands 167% higher than the start of the year!

Heavy weight Monsanto (MON) is only better by 18%

Consumer Discretionary names as a sector are up by 23.6% from the start of the year.  This sector as it is driven by consumers has definite winners and losers.  McDonald’s Corporation (MCD) which was a relative bastion of safety in the last quarter of 2008 is actually down9.8% on the year.  This is likely because investors have rotated out of safety into higher beta higher risk names.

Ford (F) is back from the dead, taking the pole position of the top 15 members in this sector up 237%.  Remember this company did not take government money as Chrysler and General Motors (MTLQQ.PK) did.  Amazon (AMZN), up 61%, Target  (TGT) up 37% and Kohls (KSS) up 45%, are three retailers that compare favorably.

The consumer staples sector is higher by only 3% as investors have rotated out of traditional safety stocks.  Proctor Gamble (PG) is down 13% Wal Mart (WMT) is down almost 9% and Coca-Cola (KO) is up only 8%.

Lastly Financials are up 17% for the year.  This sector has had the biggest thrill ride at the lows it was down over 50%, from the lows it is up 143%!

Goldman Sachs (GS) is up 94% to lead the charge

American Experess (AXP) is higher by 84% as the consumer is still using the little green cards.

In the Banking subsector Wells Fargo (WFC) is still down on the year losing 7.3%

Citigroup (C) still has issues down 22%

Bank of America (BAC)  has recovered 27%

And J.P. Morgan Chase (JPM) is up a respectable 36% which is great by most measures, unfortunately they measure vs. Goldman Sachs typically.  So Jamie Dimon is probably disappointed.

The next move in the overall market is anyone’s guess.  The 10 day historical vol is calculated today at 10.79%.  The VIX is stubbornly staying near the 25% level, possibly indicating we are entering a more volatile trading environment into the last 4 months of the year.  The more dispersion between sectors, and between stocks in performance the more “normal” trading will be.

Remember the stock market is the ultimate forward looking indicator of future cash flows and expected growth for the economy and individual companies.

There is no better indicator out there.

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What a Market!

Friday, July 24th, 2009

If you told me that Microsoft (MSFT), American Express (AXP), and Amazon.com (AMZN) would each disappoint on their earnings and each trade lower by 8 or 9%, I would tell you that the market was probably down 2% or more and looking very ugly!

But the market is holding in there like a champ, down only a fraction of a percent. True, the safety sectors of Health Care, Utilities, and Staples are propping it up. But after the move we have had the last two weeks, I expected a lot more carnage! Perhaps the low levels of premium – as evidenced by the CBOE Market Volatility Index (VIX) down in the 23% handle – are calming to traders. Now is the VIX so low that it is giving the impression the market can’t go down? Don’t bank on it.

–Steve Claussen

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Wal-Mart’s a Winner, Everyone Else is a Loser (Except Amazon)

Thursday, December 4th, 2008

This morning, Wal-Mart Stores, Inc. (WMT) reported a same-store sales increase of 3.4% for November (excluding fuel). These results show that WMT is a beneficiary of the trade-down retail phenomenon, which has been pointed to as a possible reason WMT shares have been solid as other retailers struggle.

According to the Goldman Sachs-International Council of Shopping Centers sales index (tracking sales at 37 stores), overall sales dropped 2.7 percent for November, making it the worst month since at least 1969 when the index began.

Excluding Wal-Mart, the index dropped a dramatic 7.7 percent. Target Corp. (TGT) posted a 10.4% decline. That’s worse than the 8.9% decline estimated by Wall Street analysts. Macy’s Inc. (M), a department-store retailer, reported a 13.3% drop in same-store sales for November, steeper than the 12.1% decline expected. And specialty teen retailer Abercrombie & Fitch (ANF), which has resisted deep discounting, saw a 28% same-store sales drop, worse than the 25.6% analysts expected.

The “good” news? Much of the negative news seems priced into the shares. Even with disastrous numbers being reported, most retail shares are gaining today.

In the online space, Amazon (AMZN) is up another 10% today as Barclays upgraded the stock today with positive comments about the improved competitive position of the company despite these declining economic conditions.

–Steve Claussen

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