MorningUpdate - Options Trading Email
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MORNING UPDATE: PriceWatch Alerts for RIMM, DOW, HES, and More...
June 18, 8:30 AM ET - Before the open... PriceWatch Alerts for
RIMM, DOW, LVLT, EGO, ZION, HES, PRU, AMP, BLK, BEN, Market
Overview, News Leaders and Laggards, Today's Economic Calendar, and
Index Support & Resistance Levels.
PriceWatch Alerts for RIMM, DOW, LVLT, EGO, ZION, HES, PRU, AMP,
BLK, BEN
Dow Chemical (NYSE: DOW) has been selected by InvestorsObserver
analysts as a stock that is an ideal candidate for a new covered
call today. Buying the stock for $32.89 while simultaneously
selling the September $32.00 call will result in a new position
with a target return of 5.2%. Based on recent prices, this position
will cost about $30.43, which is also the trade's breakeven point.
At that level, this covered call has 7.5% downside protection,
while still providing a 5.2% return in 96 days as long as DOW is
above $32.00 on 9/22/2012. For comparison purposes only, this Dow
Chemical covered call aims for an annualized return rate of 18.3%.
Eldorado Gold (NYSE: EGO) has been chosen by InvestorsObserver
analysts as a candidate for a new covered call today. Selling the
October $12.00 call while at the same time buying EGO stock for
$12.86 will produce a new covered call with a target return of
9.1%. Based on recent data, this trade will cost about $11.00,
which is also the covered call's breakeven point. At that price,
this covered call has 14.5% downside protection, while seeking an
assigned return of 9.1% return in 124 days. If EGO is higher than
$12.00 on 10/20/2012, we are assured that simple return. For
comparison purposes only, that equates to an annualized return rate
of 25.6%.
Level 3 Communications (NASDAQ: LVLT) has been selected by
InvestorsObserver analysts as a stock that is an ideal candidate
for a new covered call today. Buying the stock for $21.86 while
simultaneously selling the September $21.00 call will result in a
new position with a target return of 9.9%. Based on recent prices,
this position will cost about $19.11, which is also the trade's
breakeven point. At that level, this covered call has 12.6%
downside protection, while still providing a 9.9% return in 96 days
as long as LVLT is above $21.00 on 9/22/2012. For comparison
purposes only, this Level 3 Communications covered call aims for an
annualized return rate of 36.5%.
Research in Motion (NASDAQ: RIMM) has been identified by
InvestorsObserver analysts as being well-positioned for a new
covered call today. Buying the stock for $10.89 while selling the
August $11.00 call will produce a new covered call with a break-
even point around $9.81. At that price, this position has a target
return of 12.1%. This trade will have roughly 9.9% downside
protection, while still aiming for a 12.1% return in 61 days. It
will lock in that return as long as Research in Motion is above
$11.00 on 8/18/2012. For comparison purposes only, this RIMM
covered call aims for an annualized return rate of 69.4%.
Zions Bancorporation (NASDAQ: ZION) has been selected by
InvestorsObserver analysts as a stock that is a strong candidate
for a new covered call today. Selling the October $18.00 call while
simultaneously buying ZION stock for $18.70 will result in a new
position with a break-even point around $16.67. At that price, this
position has a target return of 8.0%. This trade has 10.9% downside
protection, while still providing a 8.0% return in 124 days as long
as ZION is above $18.00 on 10/20/2012. For comparison purposes
only, this Zions Bancorporation covered call targets an annualized
return rate of 21.9%.
Ameriprise Financial (NYSE: AMP) has been selected by
InvestorsObserver analysts as a stock that is an ideal candidate
for a new covered call today. Buying the stock for $49.75 while
simultaneously selling the September $49.00 call will result in a
new position with a target return of 5.7%. Based on recent prices,
this position will cost about $46.35, which is also the trade's
breakeven point. At that level, this covered call has 6.8% downside
protection, while still providing a 5.7% return in 96 days as long
as AMP is above $49.00 on 9/22/2012. For comparison purposes only,
this Ameriprise Financial covered call aims for an annualized
return rate of 18.3%.
Franklin Resources (NYSE: BEN) has been selected by
InvestorsObserver analysts as a stock that is a strong candidate
for a new covered call today. Selling the October $105.00 call
while simultaneously buying BEN stock for $109.18 will result in a
new position with a break-even point around $99.38. At that price,
this position has a target return of 5.7%. This trade has 9.0%
downside protection, while still providing a 5.7% return in 124
days as long as BEN is above $105.00 on 10/20/2012. For comparison
purposes only, this Franklin Resources covered call targets an
annualized return rate of 14.6%.
BlackRock (NYSE: BLK) has been chosen by InvestorsObserver analysts
as a candidate for a new covered call today. Selling the October
$175.00 call while at the same time buying BLK stock for $176.73
will produce a new covered call with a target return of 6.6%. Based
on recent data, this trade will cost about $164.13, which is also
the covered call's breakeven point. At that price, this covered
call has 7.1% downside protection, while seeking an assigned return
of 6.6% return in 124 days. If BLK is higher than $175.00 on
10/20/2012, we are assured that simple return. For comparison
purposes only, that equates to an annualized return rate of 18.3%.
Hess (NYSE: HES) has been identified by InvestorsObserver analysts
as being well-positioned for a new covered call today. Buying the
stock for $44.80 while selling the August $42.50 call will produce
a new covered call with a break-even point around $40.60. At that
price, this position has a target return of 4.7%. This trade will
have roughly 9.4% downside protection, while still aiming for a
4.7% return in 61 days. It will lock in that return as long as Hess
is above $42.50 on 8/18/2012. For comparison purposes only, this
HES covered call aims for an annualized return rate of 25.6%.
Prudential Financial (NYSE: PRU) has been selected by
InvestorsObserver analysts as a stock that is an ideal candidate
for a new covered call today. Buying the stock for $48.59 while
simultaneously selling the September $48.00 call will result in a
new position with a target return of 7.0%. Based on recent prices,
this position will cost about $44.84, which is also the trade's
breakeven point. At that level, this covered call has 7.7% downside
protection, while still providing a 7.0% return in 96 days as long
as PRU is above $48.00 on 9/22/2012. For comparison purposes only,
this Prudential Financial covered call aims for an annualized
return rate of 25.6%.
*Annualized returns are shown for comparison purposes only
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NOTE: All stocks and options shown are examples only. These are not
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NEWS LEADERS AND LAGGARDS
Stocks pointed higher this morning include Nabors Industries (NBR),
St. Jude Medical (STJ) and Symantec Corp. (SYMC). Pointed lower
this morning are Merck & Co. (MRK), SAIC (SAI) and Baker Hughes
(BHI). Analyst upgrades this morning include UIL Holdings (UIL),
Groupon (GRPN), and Amerigroup (AGP). Downgrades this morning
include HollyFrontier (HFC), Tractor Supply (TSCO) and Huntsman
(HUN).
MARKET OVERVIEW
Stocks in Asia kicked off the week on a high note, as early results
from the weekend elections in Greece pointed to a narrow win for
the pro-bailout New Democracy party. Along with financial and
export-related stocks, property developers paced the advance in
Hong Kong, thanks to stronger-than-expected data on housing prices.
By the close, Japan's Nikkei and South Korea's Kospi both soared
1.8%, while Hong Kong's Hang Seng added 1%. On the other hand,
Indian stocks took the red road less traveled, after the Reserve
Bank of India kept its key lending rate at 8%. In Europe,
meanwhile, optimism about the Greek election is waning, thanks to
lingering concerns about the fiscal health of the euro zone. Most
notably, it appears the skeptics have turned their attention to
Spain, with the country's 10-year government bonds up 21 basis
points at 7.08%. Against this backdrop, London's FTSE 100 has
trimmed its lead to 0.3%, while France's CAC 40 is 0.2% higher. The
German DAX is faring the best of its peers, up 0.6% with help from
a rally among auto makers.
The U.S. dollar index is headed higher this morning, with the
greenback up 0.2% at $81.76. Conversely, crude oil is pointed
lower, with July-dated crude down 0.5% at $83.90 per barrel. Gold
futures are on pace to pare some of last week's gains, with the
malleable metal aimed 0.4% lower at $1,621.10 an ounce
PUT/CALL RATIO
Equity option activity on the Chicago Board Options Exchange (CBOE)
saw 1,346,751 call contracts traded on Friday, compared to 924,671
put contracts. The resultant single-session put/call ratio arrived
at 0.69, while the 21-day moving average was 0.73.
SUPPORT & RESISTANCE LEVELS
The S&P Depository Receipts (SPY) show support in the neighborhood
of $131.15 with resistance near $136.85. The Nasdaq 100 (QQQ) has
shown support around $61.65 and resistance around $63.35.
TODAY'S ECONOMIC CALENDAR
10:00 a.m. June NAHB Housing Market Index
EARNINGS EXPECTED TODAY
IHS
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