PSS opened this morning at $7.76. So far today the stock has hit a low of $7.68 and a high of $9.70. As of 12:00, PSS is trading at $9.11, up $1.85 (25.5%). The chart for neutral and S&P gives PSS a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $5 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 19.0% return in just three and a half months as long as PSS is above $5 at March expiration. Collective would have to fall by more than 45% before we would start to lose money. Learn more about this type of trade here.
PSS hasn't been below $5 at all except for one day in the past year and has shown support around $6.50 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in PSS or FDO.
If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CEG.
CEG opened this morning at $30.00. So far today the stock has hit a low of $27.37 and a high of $30.17. As of 12:35, CEG is trading at $28.04, up $2.89 (11.5%). The chart for CEG looks neutral and S&P gives CEG a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $22.50 range.
Sears Holdings (NASDAQ: SHLD - option chain) shares have jumped higher today even after the company announced a Q3 loss that included slowing sales and falling margins. Earnings and revenues fell, but an extension of the company' s buyback plan is boosting the shares today, along with a positive outlook for the company's holiday layaway promotion. It might just be that investors expected even worse results from the beleaguered retailer. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SHLD.
SHLD opened this morning at $33.98. So far today the stock has hit a low of $31.55 and a high of $38.47. As of 12:20, SHLD is trading at $36.67, up $4.83 (15.2%). The chart for SHLD looks bearish and S&P gives SHLD a negative 2 STARS (out of 5) sell ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $22.50 range.
Johnson & Johnson (NYSE: JNJ - option chain) shares are lower today after the medical giant announced it would acquire breast implant companyMentor (NYSE: MNT). JNJ put the price for MNT at $31 per share, more than 90% above Friday's price of $16. This kind of buyout activity could signal a couple things. First JNJ is in pretty good financial shape and second that many stocks are undervalued and that resilient companies like JNJ might be looking into making moves in the coming months. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JNJ.
JNJ opened this morning at $57.66. So far today the stock has hit a low of $56.45 and a high of $57.82. As of 12:40, JNJ is trading at $56.49, down $2.09 (3.6%). The chart for JNJ looks bullish and S&P gives JNJ its highest 5 STARS (out of 5) strong buy ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just three weeks as long as JNJ is above $50 at December expiration. Johnson & Johnson would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.
JNJ hasn't been below $52 at all in the past year and has shown support around $56 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MNT. He does control a bullish hedged position in JNJ.
This morning, TGT opened at $18.66. So far today the stock has hit a low of $18.61 and a high of $21.50. As of 12:35, TIF is trading at $20.45, down $0.38 (-1.8%). The chart for TIF looks neutral and S&P gives TIF a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a February bear-call credit spread above the $30 range.
InterDigital (NASDAQ: IDCC - option chain) shares opened higher today after the company announced it has resolved its patent dispute with Samsung Electronics Co. Under the agreement, IDCC has granted Samsung a license that covers 3G wireless handsets through 2012. The license allows IDCC to collect royalties from Samsung. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on IDCC.
IDCC opened this morning at $28.10. So far today the stock has hit a low of $25.35 and a high of $28.98. As of 12:35, IDCC is trading at $28.98, up 0.29 (1.1%). The chart for IDCC looks neutral.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $15 range.
DNA opened this morning at $76.40. So far today the stock has hit a low of $74.86 and a high of $79.16. As of 12:40, DNA is trading at $77.09, up $4.35 (6.0%). The chart for DNA looks bullish and S&P gives DNA a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $65 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just four weeks as long as DNA is above $65 at December expiration. Genentech would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
DNA hasn't been below $65 at all in the past year and has shown support around $69 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DNA.
This morning, BMY opened at $18.92. So far today the stock has hit a low of $18.12 and a high of $19.30. As of 12:15, BMY is trading at $18.60, down $0.68 (3.5%). The chart for BMY looks bullish and S&P gives BMY a positive 4 STARS (out of 5) buy ranking.
For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $22.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in four weeks as long as BMY is below $22.50 at December expiration. Bristol-Myers would have to rise by more than 21% before we would start to lose money. Learn more about this type of trade here.
TGT hasn't been above $45 since early September and shown resistance around $21.50 recently. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BMY.
Northrop Grumman (NYSE: NOC - option chain) shares have moved higher today after with other large defense contractors after President Bush and Defense Secretary Gates recommended that President-elect Obama increase overall defense spending for at least the next five years. This comes just one day after NOC CEO Ron Sugar said that he expects steady spending for at least the next two years. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NOC.
NOC opened this morning at $36.80. So far today the stock has hit a low of $35.24 and a high of $38.05. As of 12:35, NOC is trading at $37.70, up 90 cents (2.4%). The chart for NOC looks bullish and S&P gives NOC a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $30 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just one month as long as NOC is above $30 at December expiration. NOC would have to fall by more than 20% before we would start to lose money.
NOC hasn't been below $35 at all in the past year and has shown support around $35.25 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NOC.
TEVA opened this morning at $43.00. So far today the stock has hit a low of $42.55 and a high of $43.78. As of 12:25, TEVA is trading at $42.84, up $0.65 (1.5%). The chart for TEVA looks bullish and S&P gives TEVA a positive 5 STARS (out of 5) strong buy ranking.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $35 range.
China-based Suntech Power Holdings (NYSE: STP) is slated to report its third-quarter earnings results ahead of the opening bell tomorrow, and the solar stock looks particularly vulnerable to a post-report drubbing. Sector peer JA Solar (NASDAQ: JASO) fell to an all-time low last week after offering a weak outlook, while Trina Solar (NYSE: TSL) today lowered its revenue forecast for 2008.
Currently, First Call reports that analysts are expecting STP to report a quarterly profit of 42 cents per American depositary receipt. Suntech has a respectable history in the earnings spotlight, having exceeded the Street's forecast in three out of its past four reports.
On the plus side, it seems as though many brokerage firms have already downwardly revised their expectations for STP. There have been 10 cuts to the firm's average 2008 earnings-per-share estimates, compared to just two increases.
Plus, several analysts have issued bearish notes on Suntech in the past few weeks: Jefferies & Co. cut its price target on November 17; JPMorgan Chase cut the stock from "neutral" to "underweight" and lowered its price target on November 16; Raymond James downgraded STP from "strong buy" to "outperform" on November 13, the same day that AmTech Research slashed its price target; and Deutsche Bank cut the stock from "hold" to "sell" on November 10.
Medtronic (NYSE: MDT - option chain) shares are way lower today after the company posted a second-quarter profit of $571 million, or 51 cents per share. The company's adjusted profit of 67 cents per share missed analysts' estimates of 71 cents per share. MDT also lowered their fiscal-2009 EPS forecast by about 3% on both the high and low ends. None of this is helping the stock today. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MDT.
This morning, MDT opened at $34.49. So far today the stock has hit a low of $31.25 and a high of $35.48. As of 12:30, MDT is trading at $32.24, down $4.18 (11.5%). The chart for MDT looks neutral and S&P gives MDT a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $42.50 range.
Eaton (NYSE: ETN - option chain) shares have soared higher today after Berkshire Hathaway (NYSE: BRK.A) disclosed in an SEC filing Friday afternoon that it has bought 2.91 million shares of ETN over the past six months. Usuall,y when announcements like this are made, investors follow the Oracle of Omaha and send the stock higher. If you think the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ETN.
ETN opened this morning at $42.30. So far today the stock has hit a low of $41.48 and a high of $43.35. As of 12:25, ETN is trading at $43.49, up $2.34 (5.7%). The chart for ETN looks neutral and S&P gives ETN a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $30 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just five weeks as long as ETN is above $30 at December expiration. Eaton would have to fall by more than 30% before we would start to lose money.
ETN hasn't been below $37 at all in the past year and has shown support around $39 recently.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ETN or Berkshire.
The shares of chipmaker Cypress Semiconductor Corporation (NYSE: CY) are getting hammered today after the company warned that it will swing to a fourth-quarter loss. In a statement, Cypress cited "declining order patterns and turns from all sales channels, all end markets, all geographies, and all of our product lines. In addition, backlog continues to be weak, and we are seeing cancellations and requests for push-outs that are somewhat higher than normal."
The firm now expects to record a quarterly loss of 3 cents to 12 cents per share on sales of $165 million to $180 million. As recently as mid-October, Cypress expected to book a profit of 4 cents to 7 cents per share in the fourth quarter, with sales totaling $194 million to $204 million.
This afternoon, CY is down roughly 20%, and it's trading less than a point above its current annual low of $2.93. The chip company's warning sparked a rush in the options pits; so far, Cypress has seen more than 6 times its average daily put volume cross the tape. The bulk of these bearish bets have changed hands on the November 4 strike, which has seen volume of 2,113 contracts on open interest of 6,509.
C opened this morning at $9.76. So far today the stock has hit a low of $8.79 and a high of $10.11. As of 1:55, C is trading at $9.19, down 0.26 (-2.8%). The chart for C looks bearish and S&P gives C a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $5 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 10.1% return in just five weeks as long as C is above $5 at December expiration. Citi would have to fall by more than 45% before we would start to lose money. Learn more about this type of trade here.
C hasn't been below $8 at all in the past year and has shown support around $8.25 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in C.
Collective Brands (NYSE: PSS - option chain) shares have moved higher today after the company, which includes Payless Shoe Source and Stride Rite reported a third-quarter profit of $47.5 million, or 75 cents per share, on revenue of $862.7 million. PSS's adjusted profit of 42 cents per share met analysts' estimates of 42 cents per share on revenue of $840.7 million. In this environment, merely meeting estimates warrants a 20+% jump in stock price. It seems that PSS is keeping up its profits the same way discounters like Family Dollar (NYSE: FDO) have by taking advantage of cost-conscious consumers. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on PSS.
China-based 
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