Brent Archer
Virginia, US - http://www.investorsobserver.com
Brent Archer is an options analyst and writer at Investors Observer.
Abercrombie & Fitch (ANF) done in by weak July sales
Abercrombie & Fitch (NYSE: ANF - option chain) shares are tanking today after the company reported a 7 percent decline in same-store sales in July, much worse than the 1.4 percent decline expected by analysts. Apparently, suburban Moms and Dads decided that $100 jeans were not the correct place to spend their economic stimulus checks. Either that or they were finally turned off by the three-quarters naked models in the store windows. 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 ANF.This morning, ANF opened at $52.13. So far today the stock has hit a low of $49.55 and a high of $52.72. As of 12:50, ANF is trading at $49.55, down 6.18 (-11.1%). The chart for ANF looks bearish but S&P gives ANF a positive 5 STARS (out of 5) strong buy ranking.
For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $65 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 ANF is below $65 at September expiration. Abercrombie would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.
ANF hasn't been above $65 since late June and has shown resistance around $56 recently. This trade could be risky if the economy stages a rebound, but even if that happens, the position above could be protected by reluctant shoppers who still have lingering worries about their wallets.
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 ANF.
Ralph Lauren (RL) surviving economic slowdown
Polo Ralph Lauren (NYSE: RL - option chain) shares are trading higher today after the company posted first-quarter earnings of $95.2 million, or 93 cents per share, blowing analysts' estimates of 72 cents per share out of the water. RL also lifted its full-year earnings forecast to a range of $4.00 to $4.10 per share, from previous guidance of $3.95 to $4.05 per share, above analysts' expectations $3.98 per share. It is looking like the slowing economic situation is not hitting RL that hard, which could also be a good sign for other high-end retailers as well. 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 RL.RL opened this morning at $66.00. So far today the stock has hit a low of $63.90 and a high of $66.66. As of 12:45, RL is trading at $65.78, up $4.28 (6.9%). The chart for RL looks neutral and S&P gives RL a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $55 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 seven weeks months as long as RL is above $55 at September expiration. Ralph Lauren would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
Continue reading Ralph Lauren (RL) surviving economic slowdown
MGM Mirage (MGM) shoots higher on so-so earnings
MGM Mirage (NYSE: MGM / option chains) shares are soaring higher today even though the company announced its second-quarter profit fell 68.6% to $113.1 million as resorts lowered room rates and visitors spent less money. MGM posted earnings of 40 cents per share on sales of $1.9 billion, while analysts expected earnings of 42 cents per share on revenue of $1.89 billion. Even though the EPS missed estimates, investors seem to be focusing on revenues that beat estimates. The gaming sector has been beaten down so much over the first half of this year that it is possible anything other than a complete meltdown is a catalyst for the stock to rise. 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 MGM.
MGM opened this morning at $31.31. So far today the stock has hit a low of $31.04 and a high of $34.29. As of 2:35, MGM is trading at $33.85, up $2.85 (9.2%). The chart for MGM looks neutral and S&P gives MGM a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $22.50 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 4.2% return in just seven weeks as long as MGM is above $22.50 at September expiration. MGM would have to fall by more than 33% before we would start to lose money. Learn more about this type of trade here.
Continue reading MGM Mirage (MGM) shoots higher on so-so earnings
Intercontinental Exchange (ICE) falls on Q2 earnings
InterContinental Exchange (NYSE: ICE) shares are falling today after the company reported second-quarter earnings of $84.9 million, or $1.19 a share, matching analysts' estimates. However, shares of ICE are declining today, as investors may be weighing the company's earnings against chief competitor Nymex Holdings (NYSE: NMX), which beat analysts' earnings forecasts last week and claimed to have won more market share from ICE in the hotly-contested West Texas Intermediate crude market. 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 ICE.After hitting a one-year high of $194.92 in December, the stock hit a one-year low of $80.20 in July. This morning, ICE opened at $98.49. So far today the stock has hit a low of $88.33 and a high of $98.49. As of 12:20, ICE is trading at $88.33, down $7.87 (-8.2%). The chart for ICE looks bearish 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 September bear-call credit spread above the $120 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 seven weeks as long as ICE is below $120 at September expiration. InterContinental Exchange would have to rise by more than 35% before we would start to lose money. Learn more about this type of trade here.
ICE hasn't been above $120 since late June and has shown resistance around $103 recently. This trade could be risky if the overall market turns around quickly and stages a rebound, but even if that happens, the position above could be protected by resistance the stock might find at its 50-day moving average, which is currently around $113 and falling.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ICE nor NMX.
Sun Microsystems (JAVA) drops on forecast of losses
Sun Microsystems (NASDAQ: JAVA) shares are falling today after the company warned it will likely not turn a profit in the current quarter, despite having earnings come in at the high end of estimates this morning and announcing a stock buyback. JAVA executives said a weak financial sector has led to lower sales for the company. 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 JAVA(see more pf today's earnings news).After hitting a one-year high of $25.04 in October, the stock hit a one-year low of $8.63 in July. This morning, JAVA opened at $9.84. So far today the stock has hit a low of $9.10 and a high of $10.02. As of 12:10, JAVA is trading at $9.31, down 1.32 (-12.4%). The chart for JAVA looks bearish and improving slightly, while S&P gives the stock a bearish 2 STARS (out of 5) sell rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $11 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 eleven weeks as long as JAVA is below $11 at October expiration. Sun Micro would have to rise by more than 18.5% before we would start to lose money. Learn more about this type of trade here.
JAVA hasn't been above $11 since late June and has shown resistance around $10.15 recently. This trade could be risky if the overall market starts to rally, but even if that happens, this position could be protected by resistance JAVA might find at its 50 day moving average, which is currently around $11 and falling.
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 JAVA.
eBay drops on TV analyst's comments
eBay, Inc. (NASDAQ: EBAY) shares are falling today on no obvious news, but after CNBC analyst and BloggingStocks.com's own Jim Cramer said on his Mad Money TV show last night that he could not get behind the company, and that someone should buy them "and put them out of their misery." When Cramer talks, people have a habit of acting, so this could be the reason for the company's swoon. 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 eBay. After hitting a one-year high of $40.73 in October, the stock hit a one-year low of $23.52 last week. This morning, EBAY opened at $25.21. So far today the stock has hit a low of $24.75 and a high of $25.41. As of 1:45, EBAY is trading at $24.80, down 0.58 (-2.3%). The chart for EBAY looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $30 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 three months as long as EBAY is below $30 at October expiration. eBay would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.
Continue reading eBay drops on TV analyst's comments
New York Times (NYT) lifted by earnings, 20% price hike
Shares of The New York Times Co. (NYSE: NYT) are trading higher today after the company posted a second-quarter profit of $21.1 million, or 15 cents per share. NYT's adjusted profit came in at 26 cents per share, beating analysts' estimates of 22 cents per share. The company also annouced an increase int eh newsstand price from $1.25 to $1.50. 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 NYT.After hitting a one-year high of $23.85 last July, the stock hit a one-year low of $12.08 last week. NYT opened this morning at $13.05. So far today the stock has hit a low of $12.38 and a high of $13.42. As of 1:15, NYT is trading at $13.00, up $0.16 (1.1%). The chart for NYT looks bearish and steady, while S&P gives the stock a bearish 2 Stars (out of 5) Sell rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $12.50 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 19.0% return in just four weeks as long as NYT is above $12.50 at August expiration. NYT would have to fall by more than 4.3% in the next few weeks before we would start to lose money. Learn more about this type of trade here.
Continue reading New York Times (NYT) lifted by earnings, 20% price hike
Continental Airlines (CAL) lifted by easing oil worries
Continental Airlines (NYSE: CAL) shares are trading higher today as oil futures are falling now that Hurricane Dolly looks like it will not hit key oil installations in the U.S. Gulf of Mexico. The recent slide in oil prices has been good news for most airline stocks, which were battered as investors acted like there was no stopping the rise in oil. 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 CAL.After hitting a one-year high of $37.79 in October, the stock hit a one-year low of $5.91 in July. CAL opened this morning at $13.46. So far today the stock has hit a low of $12.90 and a high of $15.20. As of 12:50, CAL is trading at $13.84, up $0.48 (4.4%). The chart for CAL looks bearish but improving 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 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 19.0% return in just five months as long as CAL is above $5 at December expiration. Continental would have to fall by more than 64% before we would start to lose money. Learn more about this type of trade here.
Continue reading Continental Airlines (CAL) lifted by easing oil worries
Hershey (HSY) rises on strong Q2 earnings
The Hershey Co (NYSE: HSY) shares are trading higher today after the company reported a second-quarter profit of $41.5 million, or 18 cents a share, helped by a price increase and more efficient production lines. 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 HSY.
After hitting a one-year high of $48.77 in August, the stock hit a one-year low of $32.31 earlier this month. HSY opened this morning at $35.55. So far today the stock has hit a low of $35.32 and a high of $36.81. As of 1:00, HSY is trading at $36.40, up $1.45 (4.1%). The chart for HSY looks bearish and improving, while S&P gives the stock a bearish 1 Star (out of 5) Strong Sell rating.
For a bullish hedged play on this stock, I would consider a November 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 7.5% return in just four months as long as HSY is above $30 at November expiration. Hershey would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
Continue reading Hershey (HSY) rises on strong Q2 earnings
Trade idea for Salesforce.com downgrade
Salesforce.com (NYSE: CRM) shares are falling today after an analyst at Citigroup downgraded the stock to "Hold" from "Buy" based on the stock's valuation. Investors are shrugging off Thomas Weisel's "Buy" initiation in favor of the Citi downgrade. 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 CRM.After hitting a one-year low of $37.24 in August, the stock hit a one-year high of $75.21 in June. This morning, CRM opened at $67.15. So far today the stock has hit a low of $64.70 and a high of $67.23. As of 1:05, CRM is trading at $65.90, down $3.48 (-5.0%). The chart for CRM looks bearish but improving slightly, 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 an August bear-call credit spread above the $80 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 weeks as long as CRM is below $80 at August expiration. CRM would have to rise by more than 21% before we would start to lose money. Learn more about this type of trade here.
Continue reading Trade idea for Salesforce.com downgrade
Chicago Merc (CME) soars on Q2 earnings
Chicago Mercatile Exchange (NYSE: CME) shares are soaring higher today after the company reported a second-quarter profit of $201 million, or $3.67 per share. Excluding one-time costs, CME earned $3.93 per share, beating analysts' estimates of $3.85 per share. 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 CME.After hitting a one-year high of $714.48 in December, the stock hit a one-year low of $282.00 last week. CME opened this morning at $328.99. So far today the stock has hit a low of $326.67 and a high of $349.80. As of 12:50, CME is trading at $344.28, up $18.75 (5.8%). The chart for CME 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 an August bull-put credit spread below the $280 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 CME is above $280 at August expiration. CME would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.
Continue reading Chicago Merc (CME) soars on Q2 earnings
Nokia (NOK) drops on Vodafone (VOD) warning
Nokia (NYSE: NOK) shares are falling today after international wireless carrier Vodafone (NYSE: VOD) warned that FY2008 sales will likely fall below the company's forecast between 39.8 billion pounds ($79.7 billion) and 40.7 billion pounds. VOD blamed widespread economic weakness for the lagging sales, and if the wireless provider isn't doing well, then it could be a bad sign for NOK too. 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 NOK.After hitting a one-year high of $42.22 in November, the stock hit a one-year low of $23.58 earlier this month. This morning, NOK opened at $26.36. So far today the stock has hit a low of $26.26 and a high of $26.72. As of 1:10, NOK is trading at $26.41, down $0.91 (-3.3%). The chart for NOK looks neutral and improving, while S&P gives the stock a 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $31 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 14.3% return in three months as long as NOK is below $31 at October expiration. Nokia would have to rise by more than 17% before we would start to lose money. Learn more about this type of trade here.
Continue reading Nokia (NOK) drops on Vodafone (VOD) warning
Wachovia (WB) lifted by Bank of America earnings
Wachovia (NYSE: WB) shares are trading higher with most other banks after rival Bank of America (NYSE: BAC) posted a second-quarter profit that beat analysts' expectations. WB reports earnings tomorrow morning before the open and is pretty much in the same boat as BAC, so this, along with other positive earnings from financial stocks last week could imply that Wachovia will see a good reaction to their release. 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 WB.After hitting a one-year high of $53.10 in September, the stock hit a one-year low of $7.80 last week. WB opened this morning at $13.52. So far today the stock has hit a low of $12.98 and a high of $14.66. As of 12:55, WB is trading at $13.61, up 64 cents (4.9%). The chart for WB looks bearish and steady, while S&P gives the stock its lowest 1 STARS (out of 5) strong sell rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $7.50 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 4.2% return in just four weeks as long as WB is above $7.50 at October expiration. Wachovia would have to fall by more than 44% before we would start to lose money.
WB hasn't been below $7.50 at all in the past year and has shown support just below $10 recently. This trade could be risky if the company's earnings (due out tomorrow morning) disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low at $7.80.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in WB or BAC.
Trade idea for Whole Foods (WFMI) upgrade
Whole Foods Market (NASDAQ: WFMI) shares are trading higher today after an analyst at Morgan Stanley upgraded the stock to Equal-weight from Underweight, as noted by Eric Buscemi. If you agree with Morgan Stanley and 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 WFMI.After hitting a one-year high of $53.65 in October, the stock hit a one-year low of $20.18 last week. WFMI opened this morning at $23.27. So far today the stock has hit a low of $22.37 and a high of $24.06. As of 12:45, WFMI is trading at $22.50, up $1.12 (5.2%). The chart for WFMI looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $19 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 15.6% return in just four weeks as long as WFMI is above $19 at August expiration. Whole Foods would have to fall by more than 15% before we would start to lose money.
WFMI hasn't been below $20 at all in the past year and has shown support around $21 recently. This trade could be risky if the company's earnings (due out on 8/5) disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low between $20 and $21.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in WFMI.
XM Satellite (XMSR) subscriber numbers growing
XM Satellite Radio (NASDAQ: XMSR) shares are trading higher today after the company announced it gained 322,000 new net subscribers during the second quarter, 17% higher than the same quarter last year. 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 XMSR.After hitting a one-year high of $16.44 in November, the stock hit a one-year low of $6.78 earlier this month. XMSR opened this morning at $8.75. So far today the stock has hit a low of $8.69 and a high of $9.02. As of 12:15, XMSR is trading at $9.04, up 48 cents (5.8%). The chart for XMSR 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 September bull-put credit spread below the $6 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 9.9% return in just two months as long as XMSR is above $6 at September expiration. XM would have to fall by more than 33% before we would start to lose money.
XMSR hasn't been below $6.75 at all in the past year and has shown support around $7.25 recently. This trade could be risky if the company's earnings (due out late this month) disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low at $6.80, which is has bounced up from recently.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in XMSR.
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