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Wall Street's Monday Lunch Options

By Chris Tyler, Optionetics.com | Mon March 19, 2012 9:34AM PT

An “iPayVer$2.65” is a hit with investors but bulls elsewhere are struggling to retain possession of the game. As of 11:15 ET the SP-500 (SPY) is up narrowly by 0.09% on the heels of the prior period’s confidently complacent, weekly slam dunk effort.

“Surprise!” The newest offering from Apple (AAPL) or update isn’t tied to the rollout of its third generation retina screen iPad. Instead, eye candy from the company has been unexpected news of a first ever $2.65 quarterly dividend, as well as a stock buyback program of $10.0B to commence later this year on September 30.

Apple’s archer in charge, CEO Tim Cook noted the company has used its hoard of cash to produce great research and development, acquisitions, brick and mortar store fronts and infrastructure for its products.

Pledging to continue with its brawny investments, Apple is nonetheless succumbing to the enviable but inevitable situation of simply having too much of a good thing, i.e. oodles of cash still laying around and has thus decided to initiate its latest and less organic growth offerings for investors.

Intraday, shares of Apple are being gobbled up by 1.25% after staging a near retest of last week’s all-time-highs of $600.01 with a high of $599.

In other news, an intraday release on housing prices from the NAHB has gone mostly unnoticed outside of minor repair work on the SPDR Homebuilders ETF (XHB). Much to analysts chagrin, the index matched the prior period’s downwardly-revised reading of 28.0 while missing forecasts of 31.0.

In those often intertwined markets of notice, the US Oil Fund (USO) is up for a second straight session and confirming a test of key weekly support with a gain of 0.45%. Support for Monday’s bid comes from reignited supply worries tied to Iran’s nuclear ambitions and despite an increase in exports from Libya and a loosened turn of the spigot by Saudi Arabia.

Fresh geopolitical hostilities have failed to muscle the US Dollar (UUP) as the currency proxy trades off 0.55%. Technically, Monday’s pressure is building support for a bearish break of the product’s nascent weekly uptrend with today’s price action confirming a lower weekly high.

The 20-Yr (TLT) is off fractionally by 0.35% but still managing to hold just below its 200SMA while attempting to establish a five-month long double bottom pattern. Metals (GLD, SLV) are a tiny bit more precious with gains of 0.25% to 1.30%, but the daily and weekly charts continue to flash decidedly mixed technicals as to future price direction.

And the VIX ($VIX) is up fractionally by 2.35% but still below 15%. The sentiment gauge is now in a more or less neutralized position relative to its 10SMA. However, given last week’s 20% complacency stretch relative to the short-term average as fresh five-year lows were tested in the mean-reverting index; we suspect some March Madness is still right around the corner.

Finally and in those sometimes accurate heat-seeking option markets, biotech upstart Vivus (VVUS) is seeing unusually heavy activity with volume of about 20,000 contracts compared to its daily intake of 4,000.

Shares of the obesity drug manufacturer are up 3.60% and attempting to confirm a less-than-simple three-week long pullback from a massive 77% price spike last month on bullish FDA news for its Qnexa product. Bulls in Vivus options appear to be trading in sympathy with shares as calls are favored by more than five-to-one on the session.

Most active on the board is a likely vertical in the June 28 and 35 calls put up 3,000 times for $1.05 per spread. With much larger open interest in both strikes, there is the possibility of a trader closing a position or rolling from one strike into a new and likely higher strike call. But, given the amount of time left until June expiration and today’s bullish technical signal; we’d guesstimate the scale tips in the favor of a heavyweight bull.


Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 




Recent articles by Chris Tyler, Optionetics.com

September 21, 2012  -  Wall Street's Friday Lunch Options
September 21, 2012  -  Hot Shots: All Aboard or Train Wreck?
September 20, 2012  -  Wall Street's Thursday Lunch Options
September 19, 2012  -  The Expected Move: Bed Bath & Beyond Earnings
September 19, 2012  -  Wall Street's Wednesday Lunch Options


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