Bullish Risk Reversal: Bank of America (BAC)

I know this goes against all the bearish activity we saw recently in regional banks, but I think BAC offers a great upside from here while it is trading under $15 this morning.  


To sum up the fundamentals, here is a note from Credit Suisse:


"Consumer real estate credit quality trends are demonstrating some signs of stabilization. Given recent trends, mgmt indicated that expects the peak in net charge-off’s to be approaching. Residential mortgage net charge-offs stabilized in 2H’09 ($1.2bn in 4Q09) and delinquencies have remained flat for the last several quarters. While the home equity portfolio losses improved in 4Q09, mgmt indicated that it expects losses to bounce around for the next several quarters before there is a sustained q/q improvement. 



The company remains positioned for the future. Bank of America Home Loans generated $5.2 billion in pre-tax pre-provision profits in 2009. However, the segment was pressured by elevated credit costs with provision expense of $11.2 billion in 2009. However, given BAC’s origination market share of nearly 23%, the company remains well
positioned for longer term success. While there will be ongoing higher expenses for fully documenting each borrower, the company will benefit as credit costs and expenses related to workouts wane, as well as benefits from scale efficiencies (with the integration of the CFC platform).


Maintain Outperform Rating. The risk/reward on the shares is attractive at current levels. BAC is the cheapest of our large cap banks on “normal” earnings trading at about 5.5 times (vs. large cap peers at 7x) and furthermore will build book value rapidly during 2010. Furthermore, we are encouraged by the slowing growth in non-accruals. Our price target of $21 equates to 1.5 times forward tangible book value and 7.9 times normalized earnings."


As for technicals, the stock has tremendous support at $14.  I believe a break below $14 would require significant market moving event, which I don't expect on the horizon.  Therefore, I like the following bullish risk reversal:

- Buy to open Aug $11 puts
- Sell to open Aug $14 puts, for a net credit of $0.82

- Use the proceeds from above to buy to open Aug $17 calls for $0.82 debit

Since the trade is done for net cost of $0 (except the margin requirement for selling the bull put spread), the trade doesn't incur any losses unless the stock is below $14 by Aug expiration.  As mentioned earlier, I expect $14 to hold which is tremendous support.  The profit potential on the upside is unlimited.  The daily chart and trade P&L is attached.  I like the odds.  


Good luck!

Housekeeping (Gold)

We have another monster trade working here and we timed it almost perfectly. 


Back on January 26, I suggested buying March GLD 108/112 call spread for $1.50 debit, and selling GOLD March 65/70 bull put spread for $1.85 credit.  


The original post can be found here: http://fahadstockworld.blogspot.com/2010/01/gold-gld-and-rangold-resources-gold.html


This morning, the GLD call spread has expanded from $1.50 to $1.95 (about 27% profit) and GOLD bull put vertical has shrunk from $1.85 to $1.35 (also 27% profit).  While I would love to hold both positions longer, but as I have said before, this market has no memory from day to day.  With gold trading up almost $30 today, I am taking profits on both of them.   

Bearish Bets Against Four Regional Banks (FITB, CMA, ZION, STI)

On Thursday, Feb 11, at least one trader put on large bear vertical put spreads on four regional banks.  Here is the tally:


Fifth Third Bank (FITB):
- Bought to open 5,850 contracts of May $11 puts for $0.95 debit (bid $0.91 x ask $0.93)
- Sold to open 5,850 contracts of May $9 puts for $0.34 credit (bid $0.33 x ask $0.35)


Comerica (CMA):
- Bought to open 4,954 contracts of April $32.50 puts for $1.53 debit (bid $1.40 x ask $1.55)
- Sold to open 4,954 contracts of April $27.50 puts for $0.43 credit (bid $0.40 x ask $0.55) 


Zions Bancorp (ZION):

- Bought to open 12,400 contracts of April $17 puts for $1.35 debit (bid $1.30 x ask $1.40)

- Sold to open 12,400 contracts of April $13 puts for $0.35 credit (bid $0.35 x ask $0.40)


SunTrust Banks (STI):

- Bought to open 4,000 contracts of April $22 puts for $1.58 debit (bid $1.55 x ask $1.58)

- Sold to open 4,000 contracts of April $18 puts for $0.48 credit (bid $0.47 x ask $0.50)


A few important points:
1. All trades were placed on Thursday, June 11 between 11:00am EST and 11:27am EST
2. The volume on all strikes was higher than open interest, clearly implying opening positions
3. All strikes were out-of-money at the time trades were executed


All four of these stocks are sitting somewhere between their 52-week highs and 50-day MA.  If these trades are not done for hedging long positions, but rather represent outright bearishness on the sector, then it appears the trader is looking for a retest of 200-day MA over next few months.  The MACD of all four stocks is declining and registering negative bias.   

Something to keep an eye on over next few days/weeks to see if put buying continues to build for further confirmation.  

Human Genome Sciences (HGSI) Going to $35/share by July?

Human Genome Sciences (HGSI) is a biotech with three products in late-stage clinical development: 
1. Albuferon for chronic hepatitis C, 
2. LymphoStat-B for systemic lupus erythematosus, and 
3. ABthraxtm for inhalation anthrax. 


Albuferon and LymphoStat-B are progressing toward commercialization. In December 2008, the Company reported that Albuferon met its primary endpoint in the first of two Phase III clinical trials in chronic hepatitis C. 


Previously, HGSI has had many instances of unusual option activity.  This time it caught my attention in the month of July.  On Friday, Feb 12 at 1:31pm EST, a trader bought the following butterfly spread:


- Bought to open 1900 contracts of July $28 calls for $4.65 debit (bid $4.45 x ask $4.65)
- Sold to open 3800 contracts of July $35 calls for $1.85 credit (bid $1.78 x ask $1.90)
- Bought to open 1900 contracts of July $40 calls for $0.85 debit (bid $0.74 x ask $0.90)

I have provided the bids and asks at the time the trade was executed to show that the butterfly spread was bought for a net debit of $1.80 per contract.  The volume on all strikes was higher than previously established open interest, clearly implying opening positions.  Total cost of the trade is $342,000, which will provide peak profit of nearly $1 million if the stock closes at exactly $35 on July expiration.  


This is a bullish bet on HGSI with an expectation that the implied volatility will come down.  Currently, July IV is at 55.  


It is important to note that the company already made an announcement on Jan 11 that its lupus drug most likely will not be approved until 4Q 2010.  Additionally, HGSI is constantly a target of take-out rumors and I believe if there is going to be one, it would have to be north of $40 given the potential of its pipeline.  


As such, I don't believe the trade above is necessarily a bet on FDA approval or merger/acquisition.  This one has a touch of trader simply betting on slow rise in stock price with declining IV.  The P&L and daily charts are attached.  I like the trade.


Good luck!

Leap Wireless (LEAP) News

Just a quick note: Get ready for potential fireworks on Leap Wireless (LEAP).  News are just hitting the wires that MetroPCS has hired JP Morgan and Credit Suisse to advise on potential acquisition of Leap Wireless.  I am already in this trade and posted on Feb 2nd.  


Here is the link: http://fahadstockworld.blogspot.com/2010/02/risk-reversal-leap-wireless-leap.html

Moody's (MCO) To Stay Range-Bound?

Moody’s Corporation (MCO) is a provider of credit ratings and related research, data and analytical tools, quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and securities pricing software and valuation models.


On Wednesday, Feb 10, I reported under Unusual Activity a trader sold 5000 contracts of March 25/28 strangle for net credit of $1.57.  Then again yesterday, another batch of 5000 contracts of March strangle was sold.  This time 26/27 strike for a net credit of $2.17.  Both of these trades were well above the open interest clearly implying the opening positions.  


With earnings already behind us and the next report not coming out until 4/29/10, the big money obviously expects MCO to stay between $25 and $28 from now until March expiration.  


One way to play this is through the following iron condor:


- Buy to open March $30 calls
- Sell to open March $29 calls
- Buy to open March $24 puts
- Sell to open March $25 puts


The trade pays 66.6% profit by March expiration as long as the stock remains between $25 and $29, which is about 7% away on both directions from current price of $27.12.  


Another way to play this would be to buy the following butterfly spread:


- Buy to open 1x March $24 calls
- Sell to open 2x March $27 calls
- Buy to open 1x March $30 calls


Currently, the butterfly spread is going for net debit of $1.10.  The spread pays peak profit of approx 180% if the stock closes at $27 on March expiration.  The break even points are $25.1 and $28.9.  


I like both trades.  The daily chart and both P&L profiles are attached.  


Good luck!

Unusual Option Activity - Feb 11, 2010

A bit late, but here is the list for today.  Note there was limited action as the volume was light.  The activity below only scans items where the volume was 1) greater than open interest, and 2) greater than daily average volume.  

VNDA - Monster buy-write.  A bullish trader bought shares at $10.80 and sold 10,000 contracts of Sept $12.50 covered calls at $1.13.  The trade will yield a profit of 29.25% if the stock closes above $12.50 by Sept expiration.

S - Massive strangle sold in May implying the trader believes Sprint will remain range bound through May expiration.  The trader sold 45,000 contracts of May $2.50 puts and $4 calls for net credit of $0.27.  

MCO - On Tuesday, we noticed a trader sold 25/28 strangle.  The trade continued today with another strangle of 5000 contracts sold in March of $26 puts and $27 calls for a net credit of $2.14.  I like this trade after two days of convincing volume.  But I would rather play it with 24/27/30 butterfly spread in May for a net debit of $1.10 or less.  


HP - Outright bearish bet as one trader bought March $40 puts for $1.40.  This could have been tied to HP shares, however there was no obvious connection.  $40 has tremendous support.  Something to keep an eye out.  


BBY - Bullish action continues.  This time traders bought Feb $36 calls with biggest blocks coming on the offer price of $0.40.  These calls expire in one week.  Again, something to watch closely.  


DAL - A trader did a massive calendar backspread with a bearish profile.  The trader sold 10,000 contracts of March $12 puts for $1.05 and bought 20,000 contracts of June $10 puts for $1.  The trade will generate a moderate return if the stock essentially holds at current levels.  It will also profit greatly if shares fall sharply.  The losses on  the upside are limited.  I like this trade.  


AVB - At least one trader is convinced that the stock will not go below $65 by April expiration.  The trader sold over 4,200 contracts of April $65 puts for a net credit of $1.50.  


Good luck!

Housekeeping

Just a quick note: DNDN just took out 52-week high.  We already have a butterfly spread on DNDN back from early Feb.  See the link: http://fahadstockworld.blogspot.com/2010/02/dendreon-dndn.html


The spread has expanded to $2.60.  Entry was $2.35.  Not taking any actions and still holding the full postion.  


Separately, we just had another bad 10-year auction.  This is exactly what we expected and the TBT 47/50 call spread in March we did is now going for $1.75.  We got in for $0.88 last week.  That's a double people!!  I got out yesterday and I would recommend taking profits here.  Here is the original trade: http://fahadstockworld.blogspot.com/2010/02/taking-another-shot-at-shorting-us.html


Lots of good trades working here!!  

Chipotle Mexican Grill (CMG) Earnings Play 2/11/10

CMG will report earnings today after the market close. I love the growth story and their food. As of the end of 2009, CMG operated 900 restaurants with more than 90% of them in the US. A few highlights from the last quarter:

- 3Q09 revenue rose 14% y/y to $387.6 million and same-store sales grew 2.7% driven mostly by 6% increase in menu prices. This contrasts with declines at other casual dining chains. Earnings grew 83% to $1.08 in 3Q09 from $0.59 in 3Q08.

- Management reiterated its goal to ultimately open 3000 restaurants in the US and worldwide with expansions in London, Toronto, Germany and France already under way. The company also expects to introduce lower-priced kids menu, soups and salads to boost revenue going forward.

CMG has consistently performed at 25% growth easily surpassing the industry average of 13%. Currently, CMG shares trade at 21.5x FY2010 earnings estimate vs. industry average of 22. Given its growth rate and PE relative to industry, I believe CMG is trading at a very reasonable valuation.

- On Jan 8, Morgan Stanley upgraded the stock to Overweight. 

- On Jan 11, Deutsche Bank upgraded the stock to Buy.

- On Jan 14, Wells Fargo upgraded the stock to Market Perform.

After long consolidation, the stock finally broke out above $96 on high volume and has held it nicely.  Currently, Feb implied volatility is sharply elevated at 60 vs. March at 41.  At-the-money straddle at $100 strike is going for $7.30.  So the market expects the stock to make about 7.3% move by Feb expiration.  

I am slightly neutral-to-bullish going into earnings.  Given the volatility skew and expected 7.3% move, I like the following double diagonal calendar spread: 

- Buy to open March $110 calls

- Buy to open March $100 puts

- Sell to open Feb $110 calls

- Sell to open Feb $100 puts

I just filled the order for net debit of $2.65.  This spread creates a very large range.  As long as shares stay between $95 and $116, the spread will make money.  The downside break even point of $95 is below current support of $96 and that's why I am willing to take the risk of less cushion on the downside vs. the upside.  I like the odds.  

Good luck!

Buffalo Wild Wings (BWLD) Earnings Play 2/11/10

Buffalo Wild Wings will report earnings tonight after hours.  Back in Jan (see the archives), I traded in and out of BWLD.  This is one sector that hasn't been getting much press despite holding very well in 2010 YTD.    

Until two years ago, this used to be a great momentum stock due to its consistent performance in top and bottom line.  But as valuation got overextended, the stock has been digesting gains for past two years.  The stock currently trades at slightly less than 22 times 2010 earnings, which are expected to grow 22% YOY.  This compares to 23 times earnings for its peer group, which is expected to grow 14% YOY.  So, on a valuation basis, the stock is relatively cheap.  

From a technical standpoint, $45 used to be stiff resistance going as far back as early 2008.  After long consolidation from July to Dec 09, the stock finally broke out above $45 and has held that level very nicely.   

Recent actions and opinions:
- Jan 22, 2010 Stephens initiated the stock with an Overweight and $60 price target
- Jan 14, 2010 MKM Partners upgraded the stock to Buy
- Jan 11, 2010 the company reiterated expectations for 20% EPS growth in 2010
- Jan 11, 2010 Morgan Keegan upgraded the stock to Outperform

The volatility skew is very attractive with Feb IV sharply elevated at 64 and March at 42.  I am neutral going into earnings and want to play it safe with the following double diagonal calendar spread: 

- Buy to open March $50 calls

- Buy to open March $45 puts

- Sell to open Feb $50 calls

- Sell to open Feb $45 puts


I just filled the order for net debit of $1.45.  If you look at the P&L chart, it creates a very wide range from $42.3 to $53.5.  As long as the stock remains between those points, the trade remains profitable.  The stock will have to make greater than 11% move in either direction before the trade turns into a loss.  I like the odds here.  


Good luck!    

Unusual Option Activity - Feb 10, 2010

Here is some unusual option activity for today:


FXE - Single trader bought massive 135/136/137 butterfly spread in Feb, paying 15 cents debit.  Specifically, trader bought 10,000 contracts of wings (135 and 137 puts) and sold 20,000 contracts of the body (136 puts).  The trade will produce fat profit of over 600% if FXE closes at 136 on Feb expiration.  Stock closed today at 137.06 today.  This is a continuation bet that Euro still has more room to fall.  


AKS - Trader sold Jan 2011 $22.50 straddle (calls and puts) for a net credit of $9.00.  The bet pays off as long as the stock remains between $31.50 and $13.50 by Jan 2011 expiration.  Indeed a very wide range with assumption that IV will continue to fall.  I like the trade if you have conviction and patience.  


AUY - Trader rolled down 7000 contracts from April $13 calls to April $10 calls.  Still a bullish bet, but looking for higher delta.


ARM - Trader sold 1,250 contracts of May $10 straddle (calls and puts) for $2.50 credit.  Trade remains profitable as long as the stock remains between $7.50 and $12.50 window in the next 3 months.  Open interest was less than half the size of trade, clearly implying opening position.  Obviously, the trader believes the IV is too high and the stock is not going anywhere anytime soon.  


NVTL - 3500 contracts bought of March $7.50 calls on the offer paying $0.40 with IV rising 10%.  Stock hit 52-week low today, but speculators are abound for a turnaround.  Earnings are on Feb 25.  Shares are cheap on a cash basis at 1.7x and 7x cash flow.  There is also a 23.5% short float.  NVTL is a player in the 3G and 4G equipment.


GGB - Trader sold 5,000 June $15 calls against a block of 195,000 shares in a large buy-write.  Calls were sold for $0.80, effectively reducing the purchase price of shares to $12.80, with potential for around 20% upside.  Volume was double the open interest on both strikes.  Shares look to be finding support at its 200 day EMA here.  The Brazilian steelmaker trades 7.8X earnings and 8.5X cash flow.  Gerdau should see solid demand with infrastructure building for the Summer Olympics in Brazil.


GGB (separately) - Trader sold 3000 contracts of June $12.50 straddle (calls and puts) for a net credit of $3.00, effectively betting that the IV will decline and the stock will stay range bound between $9.50 and $15.50.  Volume was nearly 6x the open interest on both strikes.  


MDVN - The company is waiting for Phase III data in early March for cure of Alzheimer's disease.  A trader rolled 2,250 contracts from March $40 calls to June $55 calls.  Very bullish. 


CMCSA - Bullish risk reversal as shares dip to the 200 day MA and nearly fill the December gap.  The trader sold 5,600 July $12 puts and bought 5,600 July $18 calls, for a net debit of 1 penny.  Volume was more than double the open interest on both strikes.  At 11.3x earnings and cash flow, and a 2.5% dividend yield, CMCSA is ridiculously cheap.  Interestingly, the trade occurred on the day when Google made an announcement to make a push into broadband. 


PNC - Bullish risk reversal as traders sold 3,000 contracts of March $50 puts and bought 3,000 of March $52.50 calls for a net debit of 8 cents.  PNC is currently trading at 21% discount to book value and RBC has $65 price target.  Volume was higher than open interest on both strikes. 


PFCB - A single trader bought 2500 contracts of Feb $45 calls on the offer against open interest of only 787.  We have earnings from PNRA, BWLD and CMG all out on Thursday after the market close.  However PFCB earnings are expected next week some time (date not set yet).  This trader might be looking for further upside on the back of good earnings from other casual dining restaurants.  


SKF - Trader sold 15,400 contracts in a single lot of SKF $28 calls for $0.16 credit.  Open interest was only 1,076. That is bullish for financials.  Makes me believe option expiration next week will be calm and mostly non-volatile.  


That's it for today.  If I miss something, feel free to drop them in the comment box.   

Equinix (EQIX) Earnings Play 2/10/10

Equinix, Inc. provides network-neutral colocation, interconnection and managed information technology (IT) infrastructure services to enterprises, content providers and financial companies. Through its International Business Exchange (IBX) data centers, across 18 markets in North America, Europe and Asia-Pacific, customers directly interconnect with a network ecosystem of partners and customers. Its services comprises colocation, interconnection and managed IT infrastructure services.


EQIX shares are down almost 20% from 52-week high and are currently trading at $93, same point where they traded last time when the company reported a blow out quarter and beat EPS estimate by a large ($0.47 actual vs. only $0.30 consensus).  The company has beat EPS on average by 33% each of last 5 quarters.  


15 analysts have "Strong Buy" or "Buy" rating on the stock.  Morgan Joseph has $125 price target.  I am leaning slightly bullish-to-neutral going into earnings which come out after hours today.  


I like the following calendar spread;


- Buy to open March $95 calls
- Sell to open Feb $95 calls


Just filled the order for a net debit of $1.50.  The implied volatility is elevated to $40 in Feb vs. 32 in March.  The break even on this spread is $90 on the downside and $100 on the upside.  


Good luck!

Allstate (ALL)

Just a quick note:  Someone just sold on the bid 23,000 contracts of March $31 calls at $0.30.  Earnings are out after the market close.  Not taking any actions, just reporting.  

Live Nation (LYV) Bullish Call Buying

Just a quick note.  At 11:45am EST, a trader bought 5000 contracts in a single block of April $10 strike calls on the offer price of $2.20. This is against the open interest of only 489.  


On Jan 22, Liberty Media (LSTZA) said that it intends to purchase up to 34.5M shares of Live Nation (LYV) through a partial tender offer for $12 per share in cash, increasing its stake in the live music company to 35% from 14.6%.  


That was a great endorsement by Liberty Media on future confidence on LYV.  After jumping 13% on Jan 22, LYV has held very well in overall bad tape.  I don't see any news today, but it looks like traders are looking for more upside or potentially a full acquisition.     

Harley Davidson (HOG) Weakness Continues

And the weaker continues to get weaker.  Here is a summary of 4Q earnings report on Jan 22:



"HOG reported a larger-than-expected loss for 4Q 2009 on Friday and warned that 2010 would continue to present challenges. Weak consumer spending and tight credit markets created huge headwinds last year. In response, Harley has undertaken a huge and costly restructuring, consolidating production, laying off thousands of workers, discontinuing its Buell bike lines and putting its MV Agusta unit up for sale. 

As a result, Harley-Davidson said it now plans to ship between 201,000 and 212,000 motorcycles in 2010 -- down as much as 10% from 2009 and down more than 40%om the peak in 2006, when the company shipped 349,196 units. For the 4Q, HOG posted a net loss of $218.7 million, or 94 cents a share, compared with a year-earlier profit of $77.8 million, or 34 cents. Analysts expected a loss of just 32 cents. The costly revamp is "critical to restoring greater profitability and long-term growth," Wandell said, and warned that the company would have to spend another $175 million to $195 million in 2010 on the process. HOG total outlays on the restructuring could reach $460 million into 2012, he added. Revenue from sales of Harley motorcycles fell 45.6% to $552.0 million in the 4Q, and shipments fell 53.1%."


Bottom line is there is no way to print a bright future until restructuring steps can produce results.  Right now, shares are breaking down below 200-day MA and put buyers are stepping in.  At 11:30am EST, I see a trader stepped in and bought one block of 9500 contracts of March $22 puts for $1.08 and sold equal number of March $19 puts for $0.25.  The net debit was $0.83 for $3 spread.  The open interest is only 2825 and 651 on those strikes.   


I want to follow the fast money and do the exact same put spread for $0.80 or less.  


Good luck!

Cerner (CERN)

Just a quick note.  Despite CERN trading up this morning around $81.20 after decent earnings last night, at least a few traders are challenging the valuation at 28x earnings.  I see two large blocks of 4388 and 1000 of March $80 puts bought on the offer at $3.00 and $3.30 at 10:10am and 11:02am, respectively.  This is against the open interest of 829.  


They might be hedging, but something to keep an eye on.  

Unusual Option Activity - Feb 9, 2010

During the normal trading hours, it is difficult to gauge every unusual option activity and have enough time to convey on my blog.  Therefore, starting from today each night after the market close I will run the scans and present a list of as many unusual option activity as I can find.  If I miss something, readers are welcome to drop them in the comment section.  So, here they are:


BAC - Bullish risk reversal: Traders sold 6000 Aug $12 puts for $0.86 to partially finance the purchase of Aug $16 calls for $1.12.  Net cost was $0.26 per contract.  Shares need to rally 12% to $16.26 by Aug expiration.  BAC shares traded above $16.50 as recently as Jan 20, 2010.


PBR - Traders sold 15,000 contracts of Feb $39 puts for an average price of $0.83 after the company announced natural gas output will increase to 93 million cm in 2011 from 85 million cm in the current year.  


MAC - Traders went out in Sept and bought 4700 contracts of $25 puts for an average price of $2.55.  Previously established open interest was only 99, so this is a clear bearish bet.  Earnings out on 2/11/10 before market opens. 


FSLR - Large butterfly call spread out in Sept where 1,000 contracts of the $135/$155 wings were bought and 2,000 contracts of $145 calls were sold, looking for a decline in IV and shares to be around 30% higher in 7 months.  


CYBS - Bullish risk reversal as one trader sold April $15 puts and bought April $20 calls for a net credit of $0.10.  Shares are touching the 200 day EMA here, and the trader is willing to get long shares around $15, but is looking to capitalize on a leveraged bet for a move higher.  There is a 12.9% short float, 13.8 days to cover, that could cause a squeeze higher.  


CCI - Trader bought 5,000 July $30 puts at $1.10 against previously established open interest of only 65.  Straight bearish bet.  Despite all the rhetoric from Cramer, bearish bets against cell tower stocks (SBAC, AMT) continue.


NDAQ - Bullish risk reversal as traders sold 5,000 contracts of June $17 puts for $0.95, and bought 5,000 times of June 19/21 call spread for $0.80 cents.  NDAQ has a lot of support around $18 and the stock is a great long term value play.  


MR - Traders sold 2000 contracts of March $35 puts on the bid against open interest of only 144.  Someone obviously wants to get long if the stock falls below $35.  


CQB - A single buyer bought 4000 contracts of Aug $15 calls on the offer price between $2.15 and $2.25.  Previously established open interest is only 82.  Very bullish.


MCO - Someone is betting that MCO is not going anywhere anytime soon by selling out-of-money strangle.  The trader sold 5000 contracts of March $25 puts and sold 5000 contracts of March $28 calls for a net credit of $1.57.  Earnings are out on 4/29/10, so selling the strangle in March makes sense.  


SCHW - Someone betting the online broker is about to fall off a cliff.  A trader bought 5000 contracts of March $16 puts at 3:53 pm EST on the offer price of $0.35.  Earnings announced already on Jan 19.    


That's it for today.  It is important to keep an eye on these unusual activities on a daily basis because if they're related to earnings or other major announcement, many times the most unusual trades happen several days or weeks before the event.  By keeping a tally of sentiment, it provides us better clues when the time comes to pull the trigger.  


Feel free to drop in the comment section if I miss anything.  


Good luck!