After hitting a one-year high of $37.99 in September, the stock hit a one-year low of $24.38 in January. This morning, WFC opened at $29.64. So far today the stock has hit a low of $28.61 and a high of $29.65. As of 12:05, WFC is trading at $28.71, down 89 cents(-3.0%). The chart for WFC looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $32.50 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 11.1% return in nine weeks as long as WFC is below $32.50 at July expiration. Wells Fargo would have to rise by more than 12% before we would start to lose money. Learn more about this type of trade here.
WFC hasn't been above $32.50 since February and has shown resistance around $30 recently. This trade could be risky if the flagging US economy turns around quickly, but even if that happens, this position could be protected by resistance WFC might find at its 200 day moving average, which is currently around $32 and falling.
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 WFC or BRK.A.
Lowe's (NYSE:LOW) is expected to report Q1 EPS before the open on May 19. LOW June option implied volatility of 35 is below its 26-week average of 39 according to Track Data, suggesting decreasing price movement.
Home Depot (NYSE:HD) is expected to report Q1 before the market open on May 20. HD June option implied volatility of 32 is below its 26-week average of 36 according to Track Data, suggesting decreasing price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Genentech (NYSE: DNA) shares are trading higher today after the company announced that a trial of Avastin in colon cancer patients who have undergone surgery will be completed earlier than expected. Though the news has no effect on the likelihood of the drug's success, investors seem excited that the drug might be approved for use in colon cancer patients up to a year ahead of schedule. 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 DNA.
After hitting a one-year low of $65.35 in December, the stock hit a one-year high of $82.2 in March. DNA opened this morning at $70.37. So far today the stock has hit a low of $69.52 and a high of $70.60. As of 11:55, DNA is trading at $69.98, up $1.15 (1.7%). The chart for DNA looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a June 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 12.4% return in just five weeks as long as DNA is above $65 at June expiration. Genentech would have to fall by more than 7% 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 $67 recently. This trade could be risky if one of the company's treatments gets into regulatory trouble, but even if that happens, this position could be protected by the support the stock might find around $66, where it has bottomed out twice in the past six months.
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.
After hitting a one-year high of $33.19 in June, the stock hit a one-year low of $19.94 in January. This morning, LOW opened at $25.22. So far today the stock has hit a low of $24.51 and a high of $25.24. As of 11:45, LOW is trading at $24.83, down 31 cents(-1.2%). The chart for LOW looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $27.50 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 five weeks as long as LOW is below $27.50 at June expiration. Lowe's would have to rise by more than 10% before we would start to lose money. Learn more about this type of trade here.
LOW hasn't been above $27.50 since October and has shown resistance around $26 recently. This trade could be risky if the company's earnings (due out on 5/19) are a positive surprise, but even if that happens, this position could be protected by resistance LOW might find at its 200 day moving average, which is currently around $26 and falling. Brent Archer is an options analyst and writer at Investor's 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 LOW.
After hitting a one-year high of $57.34 in October, the stock hit a one-year low of $32.84 in January. TIF opened this morning at $45.91. So far today the stock has hit a low of $45.29 and a high of $48.95. As of 12:00, TIF is trading at $48.00, up 2.15 (4.7%). The chart for TIF looks bullish and steady, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $35 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 three months as long as TIF is above $35 at August expiration. Tiffany would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.
TIF hasn't been below $35 except for a couple days in the past year and has shown support around $41 recently. This trade could be risky if the US economy tanks some more in the coming months, but even if that happens, that position could be protected by support the stock might find just around $36, where it bottomed out in March.
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 TIF.
After hitting a one-year high of $59.17 in January, the stock hit a one-year low of $46.19 in April. NVS opened this morning at $50.96. So far today the stock has hit a low of $50.74 and a high of $51.10. As of 12:10, NVS is trading at $50.95, up 0.82 (1.6%). The chart for NVS looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $45 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 two months as long as NVS is above $45 at July expiration. Novartis would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.
NVS hasn't been below $46 at all in the past year and has shown support around $50 recently. This trade could be risky if one of the company's drugs gets into trouble with the FDA, but even if that happens, this position could be protected by the support the stock might find around $46, where it bottomed out about a month ago.
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 NVS.
Barclay's (NYSE: BCS) stock is falling today after the company announced a 1.1B GBP loss for Q1, including a 1.7B GBP charge, mostly related to write-downs of credit market losses. The company also did not announce rights issue to raise capital, which has surprised analysts. 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 BCS.
After hitting a one-year high of $61.55 in July, the stock hit a one-year low of $31.31 in March. This morning, BCS opened at $32.44. So far today the stock has hit a low of $32.35 and a high of $33.17. As of 12:25, BCS is trading at $32.97, down 0.34 (-1.0%). The chart for BCS looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $40 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 a 7.5% return in four months as long as BCS is below $40 at September expiration. Barclays would have to rise by more than 21% before we would start to lose money. Learn more about this type of trade here.
BCS hasn't been above $40 by more than a little bit since January and has shown resistance around $37 recently. This trade could be risky if the financial markets execute a turnaround, but even if that happens, this position could be protected by resistance BCS might find at $40, where the stock has topped out twice int he past two months.
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 BCS.
After hitting a one-year high of $56.60 in July, the stock hit a one-year low of $35.03 in March. AZN opened this morning at $41.50. So far today the stock has hit a low of $41.29 and a high of $41.76. As of 11:55, AZN is trading at $41.42, up $0.75 (1.8%). The chart for AZN looks bullish and deteriorating slightly, while S&P gives the stock a neutral 3 Stars (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $35 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 14.9% return in just five months as long as AZN is above $35 at October expiration. AZN would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
Whole Foods Market (NASDAQ: WFMI) shares are falling after the company posted a second-quarter profit of $40 million, or 29 cents a share, below analysts' estimates of 30 cents per share. Growth has slowed for WFMI, which company executives are blaming on the slowing economy. 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 WFMI.
After hitting a one-year high of $53.65 in October, the stock has hit a new one-year low today. This morning, WFMI opened at $30.17. So far today the stock has hit a low of $28.96 and a high of $30.21. As of 12:10, WFMI is trading at $29.37, down $4.27 (-12.7%). The chart for WFMI looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $37 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 a 7.1% return in three months as long as WFMI is below $37 at August expiration. Whole Foods would have to rise by more than 26% before we would start to lose money. Learn more about this type of trade here.
Autodesk Inc. (NASDAQ: ADSK), a leader of 2D and 3D design software, is at $40.48. ADSK is scheduled to report Q1 EPS on May 15. Goldman Sachs says, "we think it is less likely that shares will rise on earnings."
ADKS May 40 straddle is priced at $2.15, June 40 is at $4.05. ADSK June option implied volatility of 40 is near its 26-week average of 38 according to Track Data, suggesting non-directional price movement after EPS.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
BAC call option volume of 42,197 contracts compares to put volume of 19,995 contracts. BAC June option implied volatility of 30 is below its 26-week average of 34 according to Track Data, suggesting decreasing price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
After hitting a one-year low of $24.81 in August, the stock hit a one-year high of $46.25 in December. This morning, FOSL opened at $34.46. So far today the stock has hit a low of $33.33 and a high of $35.65. As of 1:15, FOSL is trading at $33.98, down $3.27 (-8.8%). The chart for FOSL looks bullish and deteriorating slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $45 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 a 6.4% return in four and a half months as long as FOSL is below $45 at September expiration. Fossil would have to rise by more than 33% before we would start to lose money. Learn more about this type of trade here.
Altria (NYSE: MO) shares are trading higher today, getting a boost from news that menthol is getting special protection in a new bill as Congress attempts to regulate the tobacco industry. Menthol brands, which make up about one-fourth of the US tobacco output, is getting an exemption from a ban on cigarette flavoring like cinnamon and clove. 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 MO.
After hitting a one-year high of $79.59 in January, the stock spun-off Phillip Morris International (NYSE: PM) in March and hit a one-year low of $19.95 early this month. MO opened this morning at $21.57. So far today the stock has hit a low of $21.50 and a high of $21.94. As of 1:00, MO is trading at $21.85, up $0.27 (1.2%). The chart for MO looks bearish and steady, while S&P gives the stock its highest 4 Stars (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $20 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 four and a half months as long as MO is above $20 at September expiration. Altria would have to fall by more than 20% before we would start to lose money. Learn more about this type of trade here.
Toll Brothers (NYSE: TOL) shares are falling today after the company announced Q2 preliminary earnings this morning down 30% from a year ago and that it expects more "challenging times" ahead. However, the stock might be getting some support from another part of the statement that indicated TOL is looking to use some of its available capital to make acquisitions at cheap prices. 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 TOL.
After hitting a one-year high of $31.15 almost a year ago, the stock fell much of 2007 to hit a one-year low of $15.49 in January. This morning, TOL opened at $23.25. So far today the stock has hit a low of $22.66 and a high of $23.67. As of 12:45, TOL is trading at $23.00, down $0.37 (-1.6%). The chart for TOL looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $27.50 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 a 4.2% return in six weeks as long as TOL is below $27.50 at June expiration. Toll would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.
Valero Energy (NYSE: VLO) shares are trading higher along with most other refiners, as crude oil futures have dropped off from last week's record highs, which could start to help out refiner's margins. Also moving VLO is news that a large California refinery is coming back on line with no significant loss of production after a power outage yesterday morning. 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 VLO.
After hitting a one-year high of $78.68 in July, the stock hit a one-year low of $44.55 last week. VLO opened this morning at $45.06. So far today the stock has hit a low of $45.01 and a high of $46.93. As of 12:45, VLO is trading at $46.86, up $2.30 (5.2%). The chart for VLO looks neutral and improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $40 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 six weeks as long as VLO is above $40 at June expiration. Valero would have to fall by more than 14% before we would start to lose money.
VLO hasn't been below $40 at all in the past year and has shown support around $45 recently. This trade could be risky if the price of gasoline falls off if demand starts to lower, but even though there is a slowdown in the US, other global economies are still clamoring for energy, which could keep prices high.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in VLO.
Wells Fargo (NYSE: WFC) shares are trading lower today after conflicting reports have surfaced as to Berkshire-Hathaway's (NYSE: BRK.A) recent actions regarding the company. The AP reports that Warren Buffett's brand disclosed a smaller stake in WFC, while Bloomberg is saying that Berkshire is increasing its Wells Fargo position. Personally, I'm not sure who to believe on this one, but the market is taking WFC lower so far 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 WFC.
Lowe's
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