Brent Archer
Virginia, US - http://www.investorsobserver.com
Brent Archer is an options analyst and writer at Investors Observer.
Johnson & Johnson (JNJ) posts strong Q3 earnings, raises forecast
Johnson & Johnson (NYSE: JNJ - option chain) shares are rising today after the company reported third-quarter earnings of $1.17 per share, which beat estimates of $1.11. Revenues were $15.9B as opposed to $15.7 billion expected and JNJ lifted its full year forecast by about a nickel as well. Defensive names like JNJ typically perform better than the rest of the market in weak economic times, and this morning's results show that to still be true for JNJ. 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 $66.50. So far today the stock has hit a low of $64.15 and a high of $67.48. As of 12:35, JNJ is trading at $64.65, up $1.97 (3.1%). The chart for JNJ looks bearish but S&P gives JNJ a 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 $50 range.
Continue reading Johnson & Johnson (JNJ) posts strong Q3 earnings, raises forecast
3M (MMM) buys French company
3M (NYSE: MMM - option chain) shares are rising today after the company announced it will buy license plate manufacturer Financiere Burgienne. Financial terms of the deal were not disclosed. I am encouraged by most companies who are willing to make a deal at this point in the market cycle, because they are most likely getting these new assets for much less than the asking price would have been for the same thing a year ago. 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 MMM.MMM opened this morning at $58.75. So far today the stock has hit a low of $56.01 and a high of $58.75. As of 12:20, MMM is trading at $57.43, up $3.17 (5.8%). The chart for MMM looks neutral and S&P gives MMM a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a January 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 an 11.1% return in just three months as long as MMM is above $45 at January expiration. 3M would have to fall by more than 22% before we would start to lose money. Learn more about this type of trade here.
MMM hasn't been below $50 at all in the past year and has shown support around $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 MMM.
Walgreens (WAG) backs out of Long's acquisition
Walgreen Co (NYSE: WAG - option chain) shares are rising today after the company withdrew its buyout bid for Long's Drug Stores (NYSE: LDG). This clears the way for CVS Caremark (NYSE: CVS) to complete its $2.7 billion buyout offer of LDG, which was a smaller offer than that of Walgreen.
It seems that investors approve of this action, since WAG is up a nice chunk today. 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 WAG.
WAG opened this morning at $26.89. So far today the stock has hit a low of $26.44and a high of $27.27. As of 12:30, WAG is trading at $26.80, up 62 cents (2.3%). The chart for WAG looks bearish and S&P gives WAG a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $25 range.
Continue reading Walgreens (WAG) backs out of Long's acquisition
Kohl's (KSS) September sales beat estimates
Kohl's (NYSE: KSS - option chain) shares are rising today after the company posted a 5.5% drop in same-store sales in September, beating analysts' estimates of a 6.1% drop. The markets were braced for bad news, so even though sales fell a significant amount and the KSS lowered its guidance, the stock is still getting a lift.
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 KSS.
KSS opened this morning at $36.95. So far today the stock has hit a low of $36.74 and a high of $40.08. As of 10:15, KSS is trading at $39.37, up $1.21 (3.2%). The chart for KSS looks neutral and S&P gives KSS a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $35 range.
Continue reading Kohl's (KSS) September sales beat estimates
Advance Auto Parts (AAP) gives bleak forecast
Advance Auto Parts (NYSE: AAP - option chain) shares are dropping today after the company forecast a third-quarter profit of 57 cents per share, coming in way below analysts' estimates of 66 cents per share. 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 AAP.This morning, AAP opened at $31.96. So far today the stock has hit a low of $27.73 and a high of $32.78. As of 12:05, AAP is trading at $29.71, down $4.66 (-13.6%). The chart for AAP looks neutral and S&P gives AAP a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $40 range.
Continue reading Advance Auto Parts (AAP) gives bleak forecast
What's in the green today - CME Group (CME)
CME Group (NASDAQ: CME - option chain) is one of the few stocks rising today after an article in the latest Barron's called CME one of its top picks to weather the current storm, because it can generate a lot of cash in a tight credit environment. Even if CME doesn't rise in the next few months, this kind of sentiment could help the stock at least maintain its current price. 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.CME opened this morning at $358.00 So far today the stock has hit a low of $353.63 and a high of $384.99. As of 12:35, CME is trading at $371.00, up $8.70 (2.4%). The chart for CME looks neutral and S&P gives CME a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider an October 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 6.5% return in just two weeks as long as CME is above $280 at October expiration. CME would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.
CME hasn't been below $282 at all in the past year and has shown support around $350 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 CME.
Family Dollar (FDO) earnings strong despite slowing economy
Family Dollar (NYSE: FDO - option chain) shares are rising today after the company posted a fourth-quarter profit of $53.2 million, or 38 cents per share, beating analysts' estimates of 34 cents per share. Discount stores have been one of two industries that have posted gains in the past year, alongside the typically defensive household goods industry. Today's earnings reinforce the idea that these companies are strong bets in weak economic times. 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 FDO.FDO opened this morning at $25.35. So far today the stock has hit a low of $25.23 and a high of $26.05. As of 12:25, FDO is trading at $25.18, up $1.19 (4.9%). The chart for FDO looks neutral and S&P gives FDO a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $17.50 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 an 8.7% return in just three and a half months as long as FDO is above $17.50 at January expiration. Family Dollar would have to fall by more than 30% before we would start to lose money. Learn more about this type of trade here.
FDO hasn't been below $17.50 since January and has shown support around $23.50 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 FDO.
Hewlett-Packard (HPQ) buys data storage company
Hewlett-Packard (NYSE: HPQ - option chain) shares are falling today after the computer giant announced it has agreed to purchase LeftHand Networks, a small Colorado firm specializing in data storage. Companies are generally depressed when they make acquisitions, but often times an economic downturn offers a great opportunity to expand. If you think that the stock won't fall by too much, then now could be a good time to look at a bullish hedged trade on HPQ.HPQ opened this morning at $44.27. So far today the stock has hit a low of $41.95 and a high of $44.30. As of 12:10, HPQ is trading at $43.00, down $1.95 (4.4%). The chart for HPQ looks neutral and S&P gives HPQ a very positive 5 STARS (out of 5) strong buy ranking.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $37.50 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 5.3% return in just two weeks as long as HPQ is above $37.50 at October expiration. Hewlett-Packard would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
HPQ hasn't been below $39.99 at all in the past year and has shown support around $41 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 controls a bullish hedged position in HPQ.
Oracle (ORCL) president sells 500k shares
Oracle (NASDAQ: ORCL - option chain) shares are dropping along with much of the overall market. Today the company announced it would acquire Advanced Visual Technology, but what I am looking at is the recent insider activity on ORCL, which indicates that one of the company's president's, Safra Catz, exercised 500K of stock options and almost immediately sold the stock for about $10 million about two weeks ago at a price near $20 per share. Oracle has tumbled over the past month or so, and if those in the know are still selling at $3 less than recent August prices, then that is ringing some alarm bells for me. Granted, insider activity is not a perfect indicator, since he might have had needed cash for some reason, but if Ms. Catz thought the stock would be rising in the next few weeks, then she probably would have waited to sell, right? 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 ORCL.
This morning, ORCL opened at $20.19. So far today the stock has hit a low of $19.55 and a high of $20.19. As of 12:15, ORCL is trading at $19.78, down $0.53 (-2.6%). The chart for ORCL looks bearish and S&P gives ORCL a very positive 5 STARS (out of 5) strong buy ranking.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $21 range.
Continue reading Oracle (ORCL) president sells 500k shares
Goldman Sachs (GS) acquiring $50 billion in bank assets, shares rise
Goldman Sachs (NYSE: GS - option chain) shares are rising today as the markets bounce back from yesterday's bloodbath and the company announces that is is looking to buy up to $50 billion in assets as a way to become a major player in the banking industry now that it is a bank holding company. 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 GS.GS opened this morning at $126.89. So far today the stock has hit a low of $124.50 and a high of $129.00. As of 12:45, GS is trading at $127.38, up $6.68 (5.5%). The chart for GS looks bearish and S&P gives GS a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a November 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 6.4% return in just eight weeks as long as GS is above $50 at November expiration. Goldman would have to fall by more than 60% before we would start to lose money. Learn more about this type of trade here.
Continue reading Goldman Sachs (GS) acquiring $50 billion in bank assets, shares rise
DirectTV (DTV) should gain on AT&T (T) deal
DirecTV (NYSE: DTV - option chain) shares are basically flat today, but with today's market that is great performance. The company announced a deal Friday after the close that DTV and AT&T Inc. (NYSE: T) will launch a co-branded satellite television service that will be available to AT&T customers beginning after T's current deal with Dish Network (NASDAQ: DISH) expires early next year. Terms of the deal were not disclosed, but this is a big move for the smaller company and DISH is down more than 13% currently. 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 DTV.DTV opened this morning at $26.05. So far today the stock has hit a low of $26.05 and a high of $27.30. As of 12:25, DTV is trading at $26.54, down one cent (-0.04%). The chart for DTV looks neutral and S&P gives DTV a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider an November 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 an 11.1% return in just eight weeks as long as DTV is above $22.50 at November expiration. Direct TV would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.
DTV hasn't been below $22.50 since February and has shown support around $24.50 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 DTV nor DISH, but he does control a bullish hedged position on T.
McDonald's (MCD) bumps up dividend again
McDonald's (NYSE: MCD - option chain) announced yesterday evening that it was increasing its dividend payout from 0.375 per share to 0.50 per share. If you think that the company 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 MCD, and a covered call should also allow you rake in the dividend in late November or early December.MCD opened this morning at $62.05. So far today the stock has hit a low of $62.05 and a high of $62.99. As of 12:55, MCD is trading at $62.54, up 27 cents (0.4%). The chart for MCD looks neutral and S&P gives MCD a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a January covered call at the $65 level. A covered call is an options position that combines the purchase of stock with the 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 8.6% return in just 4 months if MCD is above $65 at January expiration. If it isn't above $65, then we just get a free 2.60 per share. (I it a bonus dividend) McDonald's would have to fall by more than 4% before we would start to lose money. Learn more about this type of trade here.
MCD has not been below $60 (the break-even point) since early August and has shown support around $61 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 owns and controls a long hedged position in MCD.
McCormick (MKC) flat after beating earnings
McCormick (NYSE: MKC - option chain) shares are pretty much flat today after the company reported Q3 earnings that came in at 0.50, 2 cents higher than analyst estimates. Sales beat estimates as well, but the stock is not really moving since some of the EPS benefits were from the sale of one of their brands. Last night, CNBC analyst and BloggingStocks contributor Jim Cramer also mentioned this stock as a potential buy on his TV show if it gets depressed by losses in the broader market. 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 MKC.MKC opened this morning at $39.63. So far today the stock has hit a low of $38.16 and a high of $39.64. As of 12:10, MKC is trading at $38.71, up 21 cents(0.5%). The chart for MKC looks neutral and S&P gives MKC a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December covered call at the $40 level. A covered call is an options position that combines the purchase of stock with the 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 6.0% return in just 3 months if MCK is above $40 at December expiration. If it is below $40, then we picked up a free $1.10 per share by selling the call. Plus, MKC pays a small dividend that we will receive if we hold the stock on 10/01. McCormick would have to fall by more than 3% before we would start to lose money. Learn more about this type of trade here.
MKC hasn't been below $37.75 (our break-even point) since July and has shown support around $38 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 MKC.
First Solar (FSLR) soars on U.S. tax bill implications
First Solar (NASDAQ: FSLR - option chain) shares are rising today with other solar stocks after the US Senate approved a tax bill yesterday afternoon that extended $18 billion worth of tax credits to producers of alternative energy, including wind and solar power. 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 FSLR.FSLR opened this morning at $220.80. So far today the stock has hit a low of $218.02 and a high of $229.39. As of 12:45, FSLR is trading at $225.32, up $14.43 (6.8%). The chart for FSLR looks bullish and S&P gives FSLR a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $170 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 FSLR is above $170 at October expiration. First Solar would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.
Continue reading First Solar (FSLR) soars on U.S. tax bill implications
Lennar (LEN) drops on Q3 earnings miss
Lennar (NYSE: LEN - option chain) shares are falling today after the company reported had significantly smaller losses in this year's third quarter this year than last. EPS missed estimates by four cents but revenues beat estimates as cost-cutting measures helped the bottom line. Even as revenues were less than half of last year's figure, the EPS went from a 3.25 loss to just 0.56 per share. 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 LEN or one of the other home-builders that has yet to report.This morning, LEN opened at $13.60. So far today the stock has hit a low of $12.95 and a high of $14.30. As of 1:00, LEN is trading at $12.95, down $0.79 (-5.8%). The chart for LEN looks bullish and S&P gives LEN a neutral 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $17.50 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 nine weeks as long as LEN is below $17.50 at November expiration. Lennar would have to rise by more than 34% before we would start to lose money. Learn more about this type of trade here.
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