IBM - At least four analysts issued positive commentary and raised price targets this morning, including Goldman, JP Morgan, Deutsche Bank and Bank of America. Last night CNBC pounded IBM on lower gross margins which came in at 43.6% and 44.1% consensus. Goldman's note this morning illustrates that margin pressure is due to unfriendly consistent trend in currency translation. Aside of this one slight negative, IBM had overall a very positive report with beat on earnings, revenue and raised guidance.
We currently have July 120/125 bull put spread done for $1.20 credit, and July/May $140 call calendar done for $0.90 debit. I am disappointed of stock weakness this morning. Given the weakness this morning, lets close May $140 calls by buying them back for $0.12. After closing, the adjusted cost for long July $140 call is $1.02. It is currently going for $0.85. I am holding.
GS - They killed it again, posting Q1 EPS of $5.59 versus $4.00 estimate. Revenue of $12.8 billion versus $11 billion. Trading & principal investment revenue came in at an astonishing $10.25 billion, up 60% quarter over quarter. Net investment banking revenue was $1.18B, up 44% y/y. Compensation and benefits expenses at $5.49 billion versus -$519M q/q.
However, the stock gets no love, trading down $1.20 to $162 as of this writing. GS is now trading at 7.2x fiscal year 2010 earnings. If it wasn't for Washington rhetoric, the stock would have already passed $200 mark.
We're long July $190 calls with adjusted cost of $3.13 (after closing short May $190 calls yesterday). It is currently going for $2.00, so it is nearing 50% loss mark. I am holding.
Disappointed? Yes. Discouraged? No.
About Me
- Fahad Khalid
- Chicago, IL, United States
- I have Masters in Business (Accounting and Finance 2003) from Michigan State University. I have been trading the market since 1998. Prior to picking up trading as a full-time career in 2008, I was a management consultant at Alvarez & Marsal and Conway MacKenzie for four years. I provided turnaround, crisis management and restructuring services to financially distressed firms. Prior to working in turnaround, I worked in Audit & Assurance at Deloitte & Touche for two years. Trading in the market has always remained my side business ever since I started college. 90% of the time, I trade through options. I love volatility skews and positive Theta plays. While I make a lot of directional bets, in general my favorites are to take advantage of high implied volatilities through calendar or butterfly spreads and vertical credit spreads. I never buy straight calls or puts and I do a lot of exotic multi-leg option trades.
Visitor Locations
