Option Investor

Daily Newsletter, Tuesday, 4/23/2013

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Twitter Jitters

by Jim Brown

Click here to email Jim Brown

The Dow declined -150 points in two minutes after an AP tweet claimed explosions at the White House and president Obama was injured.

Market Statistics

Fortunately the tweet was bogus and there was no explosion and no injuries. The markets recovered just as quickly as they crashed, although trading over the next hour was very subdued. The front month treasury futures contract traded 180,000 contracts over the three minute period while the tweet was posted. AP claimed the Twitter account was hacked and the account was shutdown.

Dow Chart - Intraday

The market started off with a bang this morning but you will not believe the reason. The Markit PMI for France rebounded from 44.0 to 44.4 in March. I know you are probably shocked by the big gain considering anything under 50.0 is still contraction territory. The Markit Services PMI for France rose from 41.3 to 44.1. That was significantly better but still well into contraction territory. Germany's manufacturing PMI came in at 47.9 and services PMI at 49.2. The Eurozone Composite Output Index was unchanged at 46.5 for April, also well into contraction territory. Markit said "The survey is signaling a worrying weakness in the economy at the start of the second quarter, with signs that the downturn is more likely to intensify in the coming months rather than improve." So where is the good news that lifted the U.S. markets?

I am sure you know the answer to that question. The economic news was so bad that investors were sure the ECB would cut rates at the next meeting and possibly launch its own version of QE. European Commission president Jose Manuel Barroso was quoted as saying austerity "has reached its limits." Yes, the bad news was the good news in this crazy world where fundamentals don't matter. The world equity markets depend on central banks rather than fundamentals.

Even more surprising was that bad news in China failed to dent our markets. China's Shanghai Composite fell -2.6% after the April HSBC Manufacturing PMI fell from 51.6 to 50.5 and very close to contraction territory. Estimates had been for a minor decline to 51.4. The export index declined to 48.6 and exports are a major portion of China's economy. Exports are in contraction and that suggests manufacturing will follow.

The market was also excited that Spain sold 3.1 billion euros in 10-year debt. The yield dropped -22 basis points to 4.27% and the lowest level since November 2010. Italy's 10-year yield dropped -14 bp to 3.94% and the lowest level since November 2010.

OK, so the eurozone is slipping deeper into recession and China is right behind them. European investors are so worried about the economy they have resorted to buying debt from Spain and Italy even though they are in the worst shape of any major EU economy. The U.S. futures rally overnight on the news. What is wrong with this picture?

Positive economics in the U.S. only added to the bullish premarket hysteria. The FHFA Purchase Only Home Price Index rose +7.1% for the February period. That compares to the 6.5% in January and estimates for +5.0%. The weekly Chain Store sales snapshot rose from -1.1% in the prior week to +0.8% last week. This report is mostly noise since storms and local issues can cause volatility but the bulls were looking for any positive news.

The New Home Sales for March came in at 417,000 compared to 411,000 in February. Inventories rose slightly but there is still only 4.4 months of supply in the market and that is right at a historical low. Sales were up +19% from the same period in 2012.

Mass Layoffs declined in March to 1,337 events impacting 127,939 workers. This was down from 1,422 events in February and 135,468 workers. This put the layoffs back into the range before the November spike to 1,749 events and 172,879 workers. Manufacturing accounted for 23.3% of the mass layoff events and 28.7% of initial jobless claims.

Unfortunately not all the economic news was positive. The Richmond Fed Manufacturing Survey for April fell to -6.0 from +3.0 in March. The new orders component fell further into contraction declining from -4.0 to -8.0. Backorders plunged from -14.0 to -21.0. Employment declined from +9.0 to +3.0. Every material component declined.

Richmond Fed Chart

The economic calendar for Wednesday is void of any material reports. Thursday has the Kansas Fed Survey and Friday the all important GDP.

Economic Calendar

Apple reported earnings after the bell and they beat on both earnings and revenue. Earnings declined -18% to $10.09 compared to estimates of $9.98. Revenue was $43.6 billion compared to estimates of $42.3 billion. Gross margin at 37.5% missed estimates of 38.5%. Iphones sold 37.4 million compared to estimates of 36.5 million. Ipads sold 19.5 million compared to estimates for 18.3 million.

While all those details sound bullish Apple warned for the current quarter. Apple said revenue would be $33.5-35.5 billion compared to estimates of $38.6 billion. Analyst earnings estimates for Q2 are $8.97 and Apple did not give an EPS estimate. Gross margins would fall further to an average of 36.5% compared to estimates of 38.6%.

Apple said it would return $100 billion to shareholders by the end of 2015. Spending $100 billion is a lot but the end of 2015 is 32 months away. That is a long time in stock years. In the next ten quarters anything can happen and there are many possibilities that could change that plan. Apple also said it would raise capital in the debt markets to fund the buybacks.

Apple authorized a $60 billion share buyback plan and raised its quarterly dividend to $3.06 per share. Apple currently has $145 billion in cash with $102 billion of that offshore. Cook implied there were no new products until this fall but there would be some really great stuff in 2014. That is a long time to wait when Samsung is slamming out new products every 90 days. Cook also acknowledged growth was slowing and margins were declining. Iphone inventories at quarter end rose more than one million units to 11.6 million. Is that evidence of slowing sales or stocking up before changing assembly lines for the new products?

Apple shares were halted for trading at $406 just before the earnings release. When trading reopened the shares spiked to $430 but immediately began to sink to hit $402.50 in late trading before closing the afterhours session at $405. This could have a negative impact on the broader markets on Wednesday.

Apple Chart

Panera Bread (PNRA) reported earnings of $1.59 and well below estimates at $1.65. Revenue rose +12.7% to $561.8 million, which also missed estimates of $566.1 million. Same store sales rose +3.3% and missed estimates for 4.2%. Panera shares declined -$11 after the earnings miss.

Panera Chart

Amgen (AMGN) reported earnings of $1.96 that beat estimates of $1.84. Revenue rose +5% to $4.24 billion and missed estimates of $4.37 billion. Drug sales rose +6% thanks to Enbrel and Prolia. Amgen saw sales decline in anemia drugs Aranesp and Epogen because of reluctance by insurers to pay due to safety concerns. The company guided for full year earnings of $7.05 to $7.35 and a penny less than analyst estimates at $7.21. Full year revenue was forecast at $17.8-$18.2 billion, which was in line with analyst estimates. Shares of AMGN declined -$7 after the report.

Amgen Chart

On the positive side of earnings Yum Brands (YUM) reported earnings of 70 cents compared to estimates of 60 cents. Revenue of $2.54 billion missed estimates of $2.56 billion. Same store sales in the U.S. rose +1% at KFC and Pizza Hut and spiked +6% at Taco Bell. Unfortunately a new problem has hit the stores in China. The new bird flu scare has severely depressed sales of chicken at the KFC stores. YUM gets 40% of its profits from China with 5,300 stores. Despite the problems they are opening another 700 stores this year. The bird flu in 2005 forced same store sales to drop -40%. Sales in China are down -30% so far in April. Despite the news shares of YUM rallied +$4 after the earnings.

Yum Chart

After the bell FedEx (FDX) announced it had agreed to a new seven-year contract with the Postal Service for $10.5 billion. The contract extends the current agreement to fly Express Mail and Priority Mail from city to city in bulk. FedEx transports those items in bulk around the U.S. for the post office. This means the Postal Service does not have to maintain a fleet of aircraft to haul high priority packages around the country. FedEx had to wade through a competitive process to renew the contract. Some were worried UPS would win the contract and FedEx would lose the monster deal. Since the FedEx planes fly every night the addition of a few postal packages is a money maker. FDX shares rallied about $1 in afterhours trading.

FedEx Chart

Delta Airlines (DAL) reported earnings of 10 cents that beat estimates. That equates to a whopping $7 million profit. Ex-items that profit rose to a more realistic $85 million. Revenue rose +1% to $8.5 billion. The first quarter is typically a losing quarter for airlines. Delta cut capacity by 3% in Q1 and will be flat in Q2. They are slowly raising prices where they can. Unfortunately Delta said it earns 3% of its revenue from big companies and spending by those companies has declined -20% over the past month since the sequester went into effect. The airline also said government travel declined in March and is continuing. Travel by vacationers has also declined. Delta said seat revenue would decline by 2% to 3% in April. I personally thought there were more negatives than positives in the report but Delta shares rallied instead of declined.

Delta Chart

A new factor has surfaced to cause airlines grief. The FAA has announced it is cutting 10% of its workforce of 47,000 to fit into the lowered budget after the sequester cuts. They are furloughing workers in an effort to cut $200 million from the budget. Overall they have to cut $637 million and apparently they are struggling. The furloughs are causing flight delays all across the country. More than 1,200 flights were delayed on Monday as a result of the FAA slowdown.

I have one question. Since the $85 billion sequester cuts ONLY cut the "growth" in spending that means the FAA actually has a larger budget in 2013 than they had in 2012. Since they had plenty of cash in 2012 to fund their operations why are they struggling when they have even more cash this year? Inquiring minds want to know.

Netflix (NFLX) released earnings Monday night and shares spiked +$42 on Tuesday. This was the primary reason the Nasdaq performed as well as it did today. The company said it added 2.0 million new U.S. subscribers in Q1. The spike propelled Netflix to be the fourth most expensive company in the S&P by PE. Vulcan Materials is first at a PE of 402, Prologis at 210 and Amazon at 182. Netflix clocks in at 165. Four billion hours were streamed in Q1. Betting against Netflix has been an expensive hobby. The bears were out in force claiming once the recently announced content deals begin and Netflix has to start paying for the monster content deals the house of cards will collapse.

Netflix Chart

The earnings cycle has been better than expected on top line earnings but there are significant problems. Before the tonight's earnings we have seen 132 S&P companies report. More than 67% of those have beaten estimates on earnings thanks to cost cutting. However only 42% have beaten on revenue. That is far lower on revenue than the average of 62% according to Thomson Reuters. That is the lowest in years and suggests trouble ahead.

A more troubling statistic is the guidance. The negative to positive guidance ratio is 14:1 compared to a historical average of 2:1. That is a MAJOR red flag for the rest of 2013. Europe is getting the blame but the sequester excuse is also showing up. As we move deeper into the earnings cycle the size of the companies declines as does the quality of earnings. The big blue chips have economies of scale and a lot of overhead that can be cut to improve earnings. Smaller companies have a tighter workforce and far less expense "fat" that can be cut. They tend to be single focused unlike a company like GE, UTX, etc. If they have slowing sales in one or two divisions they make up for it in the others. In the smaller companies they only have one or two divisions and slow sales impact them harder.

Earnings growth is coming in at about +2% at this point in the cycle. That is well above the breakeven to -2% that many had predicted BUT the cycle is not over until the small companies report. Stay tuned.

Earnings Calendar

The market continues to amaze with days of strong gains on no particular news. Spiking because Europe's economics are so bad the ECB may have to resort to QE is contradictory thinking for me. Why celebrate bond buying in Italy and Spain simply because investors don't want to buy stocks when the Eurozone is in recession? It makes no sense but liquidity driven bull markets never do. Don't fight QE from the Fed, BOJ, BOE and potentially the ECB. They can print money faster than traders can invest it.

The S&P extended its rebound by another +16 points to close at 1579. That is only 14 points below the historic high close at 1593. Fundamentally it makes no sense but we have to play the cards we are dealt.

With April coming to a close I speculated in the weekend commentary we would probably see some window dressing into month end. Remember, April is historically the best month of the year for the Dow. That is a tough trend to fight in a Fed driven environment. However, May is the second worst month of the year for the markets so it will be interesting to see if the Fed can keep the pedal to the metal through May.

Bull markets normally see as much as 5% of their gains in the last several days of a major move as shorts capitulate and buyers chase stocks higher at a frantic rate. Today was a short covering day with the Dow spiking +130 points in the first 15 minutes of trading. Will shorts reenter those positions on Tuesday?

Support is well below at 1540 and resistance is now back at the highs at roughly 1595. A return to the 1595 level with a subsequent failure could be seen as a double top and a perfect setup for a sell in May event.

S&P Chart

The Dow closed at 14,719 and only a few points below the historic high close at 14,865. That becomes the target for this move. Many of the Dow components have already reported and that will remove a lot of stimulus from future Dow moves. Typically once a company announces and reacts the days following that reaction are lackluster and tend to trade lower as investors take profits. This makes it harder for the Dow to maintain its velocity. Boeing and Procter & Gamble are the only Dow components to report on Wednesday. The remaining Dow components to report are as follows.

XOM 4/25
CVX 4/26
PFE 4/30
MRK 5/01
DIS 5/7
CSCO 5/15
HD 5/21
HPQ 5/21

A lot of the Dow gains today came from IBM with a +$4 rebound after plunging -$24 over the last week. That accounted for +35 of the Dow points.

There is a speed bump at 14,756 in the road on the way to 14,865. That is the highs on the 16/17th. If the Dow can continue its gains the 14,865 level would be the inflection point sellers would likely target.

CNBC reported the Dow has been positive on 15 consecutive Tuesdays. That is the longest streak since 1927. More than 70% of the gains in this rally have come on Tuesdays. Obviously somebody has too much time on their hands if they are researching these facts?

Dow Chart

The Nasdaq chart is ugly from a traders perspective. The increasing volatility over the last month has caused significant gaps and broadened the trading range. The Nasdaq can't decide if it is coming or going. The stall today at 3290 was just noise but it suggests there was a lack of real confidence in the move. With Apple reporting after the close I am surprised there were any gains at all. Apple typically influences the direction of the Nasdaq after earnings. The give back of its gains in the afterhours market could suggest Apple will be weak on Wednesday. With AMGN and PNRA getting hit hard after the close the Nasdaq futures are negative and trending lower.

Nasdaq Chart

The Russell short squeeze powered it over the resistance at 918 but it stalled at the 50-day average at 929. If the rebound fails at this level it will be another lower high and setup the retest of 895 as a lower low. The Russell is well below the historic high set back in early March.

Russell Chart

The closer we get to May the more likely investors will become more cautious. However, when trends are as easily visible as the May declines the last three years they tend to do the opposite of what is expected. If everyone is standing on the same side of the boat it capsizes. If everyone is short on May 1st there is a huge potential for a short squeeze. Eventually fundamentals will matter and the market will correct. The Fed and friends can't hold it up forever without a pause for investors to reload.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email

New Option Plays

Agricultural Chemicals

by James Brown

Click here to email James Brown


Agrium Inc. - AGU - close: 90.69 change: -0.58

Stop Loss: 92.05
Target(s): 85.25
Current Option Gain/Loss: Unopened
Time Frame: Exit prior to earnings on May 9th
New Positions: Yes, see below

Company Description

Why We Like It:
AGU is in the agricultural chemicals industry. It competes with companies like CF, POT, and MOS. Shares of AGU have not been participating in the stock market's rally. Quite the opposite with a steady trend of lower highs and lower lows. You could label this a bearish momentum trade. Currently AGU is hovering above round-number support at $90.00. A breakdown could see an acceleration in the down trend.

I am suggesting a trigger to buy puts at $89.75. If triggered our target is $85.25. More aggressive traders could certainly aim lower. The Point & Figure chart for AGU is bearish with an $82 target.

NOTE: AGU could see some volatility when investors react to earnings from its rivals. POT is due to report earnings on April 25th. CF reports in early May.

Trigger @ 89.75

- Suggested Positions -

buy the May $90 PUT (AGU1318Q90) current ask $2.30

Annotated Chart:

Entry on April -- at $---.--
Average Daily Volume = 1.5 million
Listed on April 23 2013

In Play Updates and Reviews

The Bounce Continues

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. market continues to rebound off last week's lows. A strong day in European markets helped keep the rally going.

SINA was stopped out.

We have adjusted our strategy on the SPY put play.

Current Portfolio:

CALL Play Updates

American Tower Corp. - AMT - close: 81.90 change: +0.88

Stop Loss: 78.75
Target(s): 84.75
Current Option Gain/Loss: +29.2%
Time Frame: Exit prior to earnings on May 1st
New Positions: see below

04/23/13: The market's strength helped AMT rally to another high. Given the current trend we could see AMT hit our target by the end of the month. Let's not forget that the plan is to exit prior to earnings on May 1st. Readers may want to start raising their stop loss.

Our target is $84.75. More aggressive traders could aim higher. FYI: The Point & Figure chart for AMT is bullish with a $94 target.

- Suggested Positions -

Long May$80 call (AMT1318E80) entry $2.05

Entry on April 11 at $80.25
Average Daily Volume = 2.2 million
Listed on April 09 2013

Clorox Co. - CLX - close: 89.48 change: +0.23

Stop Loss: 87.95
Target(s): 94.00
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on May 1st
New Positions: Yes, see below

04/23/13: Traders continue to buy the dips in shares of CLX but the stock has not yet broken out past resistance at $90.00. We are waiting for a bullish breakout.

This is going to be a short-term trade. We may not have time for CLX to make it to $100. The company is due to report earnings on May 1st and we do not want to hold over the announcement. There is too much risk that investors could sell the news after CLX's impressive rally.

Last Friday's high was $90.10. I am suggesting a trigger to buy calls at $90.25. If triggered our short-term target is $94.00.

Trigger @ 90.25

- Suggested Positions -

buy the May $90 call (CLX1318E90) current ask $1.45

Entry on April -- at $---.--
Average Daily Volume = 738 thousand
Listed on April 20 2013

Gilead Sciences - GILD - close: 53.33 change: -0.72

Stop Loss: 49.75
Target(s): 56.50
Current Option Gain/Loss: +24.7%
Time Frame: Exit PRIOR to earnings on May 2nd
New Positions: see below

04/23/13: GILD underperformed its peers and the broader market with a -1.3% decline on Tuesday. Both GILD and rival Bristol-Myers (BMY) released data this morning on their hepatitis C treatments under development. The market might be worried about potential competition from BMY, which could explain today's weakness. Technically shares of GILD have created a bearish engulfing candlestick reversal pattern. We'll have to see if there is any follow through lower. I am not suggesting new positions. Readers may want to raise their stop loss.

Earlier Comments:
I do consider this a more aggressive entry point. More conservative traders may want to wait for a pullback near the $50.50-50.00 zone as an alternative entry point. Our target is $56.50 but we'll plan on exiting prior to the May 2nd earnings report.

- Suggested Positions -

Long May $52.50 call (GILD1318e52.5) entry $1.94

Entry on April 15 at $52.25
Average Daily Volume = 11.7 million
Listed on April 13 2013

PUT Play Updates

Atlas Air Worldwide - AAWW - close: 38.59 change: +0.27

Stop Loss: 40.05
Target(s): 33.50
Current Option Gain/Loss: -35.2%
Time Frame: exit PRIOR to earnings in early May
New Positions: see below

04/23/13: AAWW is not really cooperating with us but then the stock market refuses to roll over. A bullish market environment is putting the brakes on AAWW's down trend. Right now our stop loss is at $40.05 but more conservative traders may want to lower their stop closer to $39.00 instead. I am not suggesting new positions at this time.

- Suggested Positions -

Long May $37.50 PUT (AAWW1318Q37.5) entry $1.70

Entry on April 17 at $38.00
Average Daily Volume = 262 thousand
Listed on April 16 2013

Cubic Corp - CUB - close: 41.69 change: +0.79

Stop Loss: 41.60
Target(s): 37.15
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in early May
New Positions: Yes, see below

04/23/13: There was no follow through on yesterday's breakdown to new lows in CUB. Shares managed to outperform the market with a +1.9% bounce. The bigger trend is still bearish with a pattern of lower highs. We will wait and see if this rebound continues. Currently the plan is to buy puts if CUB trades at $39.90 or lower.

We want to keep our position size small to limit our risk. Shares of CUB do not trade with a lot of daily volume and that could make the stock prone to more volatility. If triggered at $39.90 our target is $37.15 near its 2011 lows.

Trigger @ 39.90 *Small Positions*

- Suggested Positions -

buy the Jul $40 PUT (CUB1320S40)

Entry on April -- at $---.--
Average Daily Volume = 112 thousand
Listed on April 22 2013

FedEx Corp. - FDX - close: 93.17 change: +0.67

Stop Loss: 95.25
Target(s): 86.50
Current Option Gain/Loss: -25.9%
Time Frame: 3 to 4 weeks
New Positions: see below

04/23/13: Our FDX put play is in trouble. News out after the closing bell is pushing the stock higher. FDX has been working with the U.S. postal service for 12 years. Today they announced a seven-year extension with FDX transporting USPS express mail and priority mail between major American airports. It is estimated the deal is worth $10.5 billion. The old contract expires in September this year and the new one picks up in October. Shares of FDX spiked higher afterhours on the news and we will likely see FDX gap open higher tomorrow. Odds are very good FDX will hit our stop loss at $95.25.

- Suggested Positions -

Long May $92.50 PUT (FDX1318Q92.5) entry $2.12

04/23/13 FDX trading higher after hours on news, the stock will likely hit our stop loss tomorrow morning.
04/20/13 new stop loss @ 95.25
04/18/13 trade opened on gap down at $93.18, trigger was $93.50

Entry on April 18 at $93.18
Average Daily Volume = 3.3 million
Listed on April 15 2013

Dow Jones Transportation ETF - IYT - close: 108.03 chg: +0.46

Stop Loss: 107.05
Target(s): 100.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

04/23/13: Airline stocks were strong performers today and the group helped lift the transportation sector. The IYT failed to keep pace with the broader market but it is trying to chew threw a cloud of moving averages directly overhead. I don't see any changes from my prior comments.

Trigger @ 104.75

- Suggested Positions -

buy the May $105 PUT (IYT1318Q105)

Entry on April -- at $---.--
Average Daily Volume = 904 thousand
Listed on April 17 2013

S&P500 ETF - SPY - close: 157.78 change: +1.61

Stop Loss: 160.50
Target(s): 150.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

04/23/13: We are adjusting our entry point strategy on the SPY. Instead of waiting for a breakdown below support near $154.00 we are looking for a failure near resistance. The recent highs near $160 should be new resistance for the SPY.

Tonight we are adjusting the trigger to buy puts from $153.40 to $157.00. We'll move the stop loss to $160.50. The target has been adjusted to $150.25. I am moving the option strike to the May $155s.

This is a much more aggressive entry point since the S&P 500's trend is still higher. Traders will want to strongly consider limiting your position size to reduce your exposure.

Trigger @ 157.00

- Suggested Positions -

buy the May $155 PUT (SPY1318Q155) current ask $1.04

04/23/13 adjust strategy: new trigger @ $157.00,
new stop loss @ 160.50, new target @ 150.25
adjust option strike to 2013 May $155 put

Entry on April -- at $---.--
Average Daily Volume = 130 million
Listed on April 18 2013

Vulcan Materials - VMC - close: 46.98 change: +0.31

Stop Loss: 47.55
Target(s): 40.25
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in early May
New Positions: Yes, see below

04/23/13: VMC failed to keep pace with the rally in the broader market but shares are still trying to rebound. The stock added +0.66%. Nimble traders could look for a failed rally near $48.00 or its simple 200-dma as an alternative entry point to buy puts. Officially the newsletter is waiting for a breakdown to new lows.

Earlier Comments:
Shares of VMC are in a bearish trend of lower highs and lower lows and recently broke down below its simple 200-dma. The stock is currently testing potential support at its simple 300-dma. Monday's low was $45.42. I am suggesting a trigger to buy puts at $44.90. If triggered our target is $40.25. However, keep in mind that VMC is scheduled to report earnings in early May (not date yet) and we will plan to exit prior to the announcement.

Trigger @ 44.90

- Suggested Positions -

buy the May $45 PUT (VMC1318Q45)

Entry on April -- at $---.--
Average Daily Volume = 581 thousand
Listed on April 18 2013

Longer-Term Play Updates

Longer-Term Portfolio:

Chicago Bridge & Iron Co. - CBI - close: 52.37 change: +0.10

Stop Loss: 49.25
Target(s): 62.50
Current Option Gain/Loss: July's: -2.2% or Jan's: -5.1%
Time Frame: 3 to 4 months
New Positions: see below

Please review our original play description on this page

- Suggested Positions -

Long 2013 Jul $55 call (CBI1320G55) Entry $2.20*

- or -

Long 2014 Jan $60 call (CBI1418A60) Entry $2.90*

*option entry price is an estimate since the option did not trade at the time our play opened.

Entry on April 22 at $51.53
Average Daily Volume = 2.5 million
Listed on April 20 2013


SINA Corp. - SINA - close: 47.92 change: +1.62

Stop Loss: 48.25
Target(s): 42.00
Current Option Gain/Loss: -37.2%
Time Frame: exit PRIOR to earnings in mid-May
New Positions: see below

04/23/13: Our SINA trade has been stopped out at $48.25. Even though both the Chinese Shanghai index and the Hong Kong Hang Seng index were down today somehow shares of SINA decided to rally. I couldn't find any news to explain the sudden show of relative strength (+3.5% today). Our stop was hit on the spike to $48.44.

- Suggested Positions -

May $45 PUT (SINA1318Q45) entry $2.20 exit $1.38 (-37.2%)

04/23/13 stopped out at $48.25


Entry on April 22 at $46.26
Average Daily Volume = 1.7 million
Listed on April 20 2013