Best Buy (BBY) is scheduled to unveil its fourth-quarter results Thursday morning, with analysts anticipating a profit of $1.85 per share -- little changed from the big box retailer's year-ago earnings of $1.82 per share. Best Buy has been hot-and-cold on the earnings front; during the past four quarters, the company has topped consensus bottom-line estimates twice, and fallen short on two other occasions.

Ahead of the quarterly report, one options player built a bullishly biased spread on BBY. Right after the opening bell Wednesday morning, the trader purchased 358 April 32 calls, and simultaneously sold 716 April 35 calls. In other words, two April 35 calls were sold for every one purchased April 32 call. This strategy is known as a ratio call spread, and it's typically used by traders who are bullish on the underlying equity -- but with a very specific upside target in mind.

Continue reading Best Buy Singled Out for a Ratio Call Spread Ahead of Earnings

Best Buy Singled Out for a Ratio Call Spread Ahead of Earnings originally appeared on BloggingStocks on Wed, 23 Mar 2011 19:20:00 EST. Please see our terms for use of feeds.

Friday morning, the good folks at JPMorgan Chase (JPM) kicked off a wave of quarterly reports from the banking sector. Next week, we'll hear the latest earnings results from the likes of Citigroup (C), Goldman Sachs (GS), and Wells Fargo (WFC), just to name a few.

Of course, the biggest bank in the nation -- Bank of America (BAC) -- also has a quarterly report on deck. Ahead of next Friday's fourth-quarter release, one speculator opted to construct a high-volatility options strategy on BAC.

Continue reading Bank of America Singled Out for a Long Strangle Ahead of Earnings

Bank of America Singled Out for a Long Strangle Ahead of Earnings originally appeared on BloggingStocks on Fri, 14 Jan 2011 12:30:00 EST. Please see our terms for use of feeds.

Options players rushed to place their bets on The Gap (GPS) Tuesday, with volume rising to five times the norm within the first hour of trading. Taking a closer look at the major block trades, it looks as though one speculator is anticipating a major price swing from GPS during the next year.

Specifically, the trader opened a long strangle on GPS by purchasing 2,619 January 2012 20-strike calls, and simultaneously buying 2,619 January 2012 17.50 puts. This two-legged option strategy allows the trader to benefit from a drastic move in the underlying equity, regardless of whether the shares move higher or lower.

Continue reading The Gap Singled Out for a Long-Term Strangle

The Gap Singled Out for a Long-Term Strangle originally appeared on BloggingStocks on Tue, 28 Dec 2010 12:30:00 EST. Please see our terms for use of feeds.

Bank of America (BAC) has grabbed some headlines lately, for better or worse. Earlier this week, WikiLeaks founder Julian Assange claimed he would release documents next year pointing to an "ecosystem of corruption" at a major U.S. bank, and many journalists connected a trail of dots leading back to Bank of America. As a result, the stock slipped 3% on Tuesday.

However, Bank of America bounced back with the rest of the market on Wednesday, after one executive at the Charlotte-based bank downplayed the growing speculation. During the course of the session, call volume on BAC rose to two times the usual level, with about 593,000 contracts crossing the tape.

Continue reading Dissecting a Massive Call Spread on Bank of America

Dissecting a Massive Call Spread on Bank of America originally appeared on BloggingStocks on Thu, 02 Dec 2010 12:00:00 EST. Please see our terms for use of feeds.

Puts were unusually popular on Bank of America (BAC) Monday, with volume rising to 1.50 times the expected level. Roughly 144,000 puts changed hands on the Dow component during the course of the session, easily outpacing the banking baron's predicted daily volume of 96,000 contracts.

Taking a closer look at the day's major block trades, it looks as though one speculator is expecting a modest pullback from BAC during the near term. In afternoon action, a block of 20,000 November 13 puts traded at the ask price, suggesting they were purchased. Simultaneously, a block of 40,000 November 11 puts crossed the tape at the bid price, indicating they were most likely sold. Open interest rose substantially at both strikes overnight, confirming that these were all freshly opened positions.

Continue reading Put Spread Player Bets on Bank of America Pullback

Put Spread Player Bets on Bank of America Pullback originally appeared on BloggingStocks on Tue, 12 Oct 2010 12:00:00 EST. Please see our terms for use of feeds.

Continue reading Weyerhaeuser Strangled Ahead of Earnings

Weyerhaeuser Strangled Ahead of Earnings originally appeared on BloggingStocks on Thu, 22 Jul 2010 12:40:00 EST. Please see our terms for use of feeds.

Continue reading Dissecting a Bearish Spread on Veeco Instruments

Dissecting a Bearish Spread on Veeco Instruments originally appeared on BloggingStocks on Tue, 20 Jul 2010 14:00:00 EST. Please see our terms for use of feeds.

Continue reading Long-Term Speculator Synthetically Shorts Fannie Mae

Long-Term Speculator Synthetically Shorts Fannie Mae originally appeared on BloggingStocks on Mon, 12 Apr 2010 14:00:00 EST. Please see our terms for use of feeds.

Continue reading J.M. Smucker reels-in profits, quietly

J.M. Smucker reels-in profits, quietly originally appeared on BloggingStocks on Wed, 23 Sep 2009 17:40:00 EST. Please see our terms for use of feeds.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX up .03 to 10.27.

Huntsman Corp. (NYSE:HUN) option implied volatility suggests larger Risks on Chairman remarks

Huntsman is a large chemical company controlled by private equity investor David Matlin and Jon Huntsman. Bloomberg is reporting that Chairman Jon Huntsman said the company may sell itself after transition. On 1/31/06 the Wall Street Journal reported HUN was in discussion to be sold for more than $4.3 billion. HUN has a market cap of $4.5 billion. HUN option implied volatility of 31 is above its 26-week average of 27 according to Track Data, suggesting larger price fluctuations.

Occidental Petroleum Corp. (NYSE:OXY) option volume Heavy as volatility up on renewed takeout Chatter

Occidental Petroleum operates in two segments: oil and gas and chemical. OXY is recently up $.69 to $47.86 on renewed and unconfirmed takeover chatter. OXY has a market cap of $39.5 billion. OXY reported September 2006 quarterly revenue of $4.6 billion. OXY has long term debt of $2.2 billion. OXY call option volume of 15,367 contracts compares to put volume of 2,047 contracts. OXY March option implied volatility of 33 is above its 26-week average of 31 according to Track Data, suggesting decreasing price fluctuations.

Continue reading Daily option update - February 21, 2007

Daily option update - February 21, 2007 originally appeared on BloggingStocks on Wed, 21 Feb 2007 14:30:00 EST. Please see our terms for use of feeds.