Brent Archer
Virginia, US - http://www.investorsobserver.com
Brent Archer is an options analyst and writer at Investors Observer.
Trade idea for Merck (MRK) downgrade
Merck (NYSE: MRK) shares are falling today after an analyst at UBS downgraded the stock to "Neutral" from "Buy," saying that the earnings prospects for the stock don't offer much upside. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MRK.After hitting a one-year high of $61.62 in December, the stock hit a one-year low of $34.49 last month. This morning, MRK opened at $37.59. So far today the stock has hit a low of $36.38 and a high of $37.99. As of 1:40, MRK is trading at $36.37, down $2.07 (-5.4%). The chart for MRK looks bullish and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in three and a half months as long as MRK is below $45 at October expiration. MRK would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.
MRK hasn't been above $45 since February and has shown resistance around $38 recently. This trade could be risky if the company's earnings (due out in late-July) are a positive surprise, but even if that happens, this position could be protected by resistance MRK might find at its 50 day moving average, which is currently around $38 and falling.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MRK.
Intel lower on Nvidia guidance
Intel Corporation (NASDAQ: INTC) shares fell today with most other tech stocks after Nvidia Corporation (NASDAQ: NVDA) lowered its second-quarter revenue outlook to a range between $875 million and $950 million, well below analysts' expectations of $1.1 billion. NVDA cited end-market weakness for the lower forecast, which could be a bad sign for INTC. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on INTC.After hitting a one-year high of $27.99 in December, the stock hit a one-year low of $18.05 in January. This morning, INTC opened at $20.62. So far today the stock has hit a low of $20.26 and a high of $20.80. As of 12:10, INTC is trading at $20.65, down 0.28 (-1.3%). The chart for INTC looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $23 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.0% return in six weeks as long as INTC is below $23 at August expiration. Intel would have to rise by more than 11% before we would start to lose money.
Continue reading Intel lower on Nvidia guidance
Trade idea for recent Aetna downgrade
Aetna (NYSE: AET) shares are falling today after an analyst at Goldman Sachs downgraded the stock to "Sell" from "Neutral," saying the company will face lower profit margins over the next few years. Other companies in the health-care industry also got downgrades today. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AET.After hitting a one-year high of $60.00 in December, the stock has hit a new one-year low today. This morning, AET opened at $36.98. So far today the stock has hit a low of $36.01 and a high of $37.99. As of 11:55, AET is trading at $37.29, down 2.50 (-6.3%). The chart for AET looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in six weeks as long as AET is below $45 at August expiration. AET would have to rise by more than 20% before we would start to lose money.
Continue reading Trade idea for recent Aetna downgrade
Celgene (CELG) lifted by TV analyst coverage
Celgene Biopharma (NASDAQ: CELG) shares are trading higher today after an analyst on CNBC's Fast Money recommended the stock last night, adding that the company could be getting some good news related to the development of its Lymphoma treatment soon. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CELG.After hitting a one-year high of $75.44 in October, the stock hit a one-year low of $41.26 in December. CELG opened this morning at $65.90. So far today the stock has hit a low of $65.16 and a high of $66.93. As of 12:50, CELG is trading at $66.73, up $2.86 (4.4%). The chart for CELG looks bearish and improving slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just seven weeks as long as CELG is above $55 at August expiration. Celgene would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
Continue reading Celgene (CELG) lifted by TV analyst coverage
Sherwin-Williams (SHW) gets favorable court ruling
Sherwin-Williams (NYSE: SHW) shares are trading higher today after the Rhode Island Supreme Court overturned a $2.4 billion ruling against SHW and two other former lead-paint producers that would have ordered the companies to inspect and clean thousands of homes built before 1980 that were likely to contain lead paint. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SHW.
After hitting a one-year high of $73.96 last July, the stock hit a one-year low of $45.89 yesterday. SHW opened this morning at $48.29. So far today the stock has hit a low of $45.82 and a high of $48.86. As of 11:55, SHW is trading at $47.36, up $1.43 (3.1%). The chart for SHW looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just seven weeks as long as SHW is above $55 at August expiration. Sherwin-Williams would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
Continue reading Sherwin-Williams (SHW) gets favorable court ruling
Barrick Gold (ABX) driven higher by rising gold futures
Barrick Gold (NYSE: ABX) shares are trading higher today as gold futures have advanced by almost 2%. Gold is being propped up by yet another record high for crude, which investors expect to drive inflation. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ABX.After hitting a one-year low of $28.89 in August, the stock hit a one-year high of $54.74 in March. ABX opened this morning at $46.42. So far today the stock has hit a low of $46.00 and a high of $47.00. As of 12:05, ABX is trading at $46.55, up $1.05 (2.3%). The chart for ABX looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just seven weeks as long as ABX is above $37.50 at August expiration. Barrick would have to fall by more than 19% before we would start to lose money. Learn more about this type of trade here.
Continue reading Barrick Gold (ABX) driven higher by rising gold futures
Time Warner (TWX) lifted by global ad revenue growth forecast
Time Warner (NYSE: TWX) shares are trading higher today after ZenithOptimedia forecast a 6.6% growth rate for global ad spending in 2008, pushed by international growth. An analyst at Citi also added TWX to the broker's "Top Picks Live" list, saying that there is potential value to be found int he sale of different parts of the overall Time Warner business such as the cable unit, AOL's advertising business, and the AOL dial-up ISP service. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on TWX.After hitting a one-year high of $21.51 in July, the stock hit a one-year low of $13.65 in March. TWX opened this morning at $14.59. So far today the stock has hit a low of $14.46 and a high of $14.79. As of 12:30, TWX is trading at $14.69, up 27 cents(1.9%). The chart for TWX looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $13 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 12.5 % return in just four months as long as TWX is above $13 at October expiration. Time Warner would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.
TWX hasn't been below $13.65 at all in the past year and has shown support around $14 recently. This trade could be risky if the company's earnings (due out on 8/6) disappoint, but even if that happens, this position could be protected by the support the stock might find around $14, where it bottomed out in March.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in TWX.
Priceline.com (PCLN) pulled lower by analyst commentary
Priceline.com (NASDAQ: PCLN) shares are falling today after an analyst at Citi Investment Research reiterated his hold rating on PCLN and dropped his price target to $142, citing weakness in European travel. Citi also removed competitor Expedia (NASDAQ: EXPE) from its Top Picks Live list, cut the price target on EXPE as well. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on PCLN.After hitting a one-year low of $59.50 in August, the stock hit a one-year high of $144.34 in May. This morning, PCLN opened at $119.78. So far today the stock has hit a low of $114.38 and a high of $121.95. As of 12:10, PCLN is trading at $117.95, down $7.18 (-5.7%). The chart for PCLN looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $155 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in seven weeks as long as PCLN is below $155 at August expiration. PCLN would have to rise by more than 32% before we would start to lose money. Learn more about this type of trade here.
PCLN hasn't been above $145 at all in the past year and has shown resistance around $132 recently. This trade could be risky if the company's earnings (due out in early August) are a positive surprise, but even if that happens, this position could be protected by resistance PCLN might find around $140, where it topped out in May.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in PCLN or EXPE.
Starbucks (SBUX) closes Puerto Rico locations
Starbucks (NASDAQ: SBUX) shares are falling today after the company announced over the weekend that it will close three of its stores in San Juan, Puerto Rico, admitting that economic times are tough and that perhaps the stores were too close to other Starbucks locations (Gee, you think so?). This might not be the worst thing in the world for the brand if it closes down some locations if it over-expanded, but at the same time, if customers don't come back, we could be seeing the beginnings of another Krispy Kreme (NYSE: KKD) situation. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on SBUX.After hitting a one-year high of $28.60 in August, the stock hit a one-year low of $15.39 in April. This morning, SBUX opened at $16.19. So far today the stock has hit a low of $15.89 and a high of $16.33. As of 12:30, SBUX is trading at $16.24, down 11 cents(-0.7%). The chart for SBUX looks bullish but deteriorating, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $20 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in three and a half months as long as SBUX is below $20 at October expiration. SBUX would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.
SBUX hasn't been above $20 since January and has shown resistance around $17 recently. This trade could be risky if the company's earnings are a positive surprise, but even if that happens, this position could be protected by resistance SBUX might find at its 200 day moving average, which is currently around $20 and falling.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in SBUX.
Bristol-Myers Squibb (BMY) could be a buyout target
Bristol-Myers Squibb (NYSE: BMY) shares are trading higher today after a Bernstein analyst wrote that BMY might be a takeover candidate, one day after the company announced it has completed its $234.6 million acquisition of Kosan Biosciences. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BMY.After hitting a one-year high of $32.35 in July, the stock hit a one-year low of $19.43 last week. BMY opened this morning at $20.06. So far today the stock has hit a low of $20.00 and a high of $20.60. As of 12:50, BMY is trading at $20.45, up 78 cents (4.0%). The chart for BMY looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $17.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just three months as long as BMY is above $17.50 at September expiration. BMY would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.
BMY hasn't been below $19.40 at all in the past year and has shown support around $19.50 recently. This trade could be risky if the company's earnings (due out on 7/24) disappoint, but even if that happens, this position could be protected by the support the stock might find from bargain hunters looking for defensive stocks.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BMY.
AK Steel (AKS) added to the S&P 500
AK Steel (NYSE: AKS) shares are trading higher today after Standard & Poor's announced they have added the stock to the S&P 500 index. These announcements drive stock prices higher since any mutual fund that is tracking the S&P 500 will need to add AKS to its holdings soon. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on AKS.After hitting a one-year low of $27.90 in August, the stock hit a one-year high of $73.07 in May. AKS opened this morning at $65.74. So far today the stock has hit a low of $65.42 and a high of $68.10. As of 12:30, AKS is trading at $67.18, up $4.00 (6.3%). The chart for AKS looks neutral and deteriorating, while S&P gives the stock a bearish 2 Stars (out of 5) Sell rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just three weeks as long as AKS is above $55 at July expiration. AKS would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.
AKS has not been below $55 since April and has shown support around $63 recently. This trade could be risky if the global economy tanks in the next few weeks, but even if that happens, this position could be protected by the support the stock might find around $63, where it has bounced twice in the past month.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AKS.
Palm (PALM) Q4 earnings (losses) disappoint
Palm, Inc (NASDAQ: PALM) shares are falling today after after the company reported a fourth-quarter loss $43.4 million, or 40 cents per share. PALM's adjusted loss of 22 cents per share was worse than analysts' predictions of an 18 cent loss. That this news comes one day after Canadian competitor Research in Motion (NASDAQ: RIMM) also tumbled on their earnings release does not bode well for the economy or gadget-makers in general. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on PALM.After hitting a one-year high of $19.23 in October, the stock hit a one-year low of $4.21 in March. This morning, PALM opened at $6.15. So far today the stock has hit a low of $5.79 and a high of $6.37. As of 12:40, PALM is trading at $5.85, down 69 cents (-10.6%). The chart for PALM looks bullish but deteriorating slightly, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.
For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $7.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in five months as long as PALM is below $7.50 at November expiration. Palm would have to rise by more than 27% before we would start to lose money. Learn more about this type of trade here.
PALM hasn't been above $7.50 by more than a few cents since November and has shown resistance around $6.80 recently. This trade could be risky if the economy finds its footing, but even if that happens, this position could be protected by resistance PALM might find at its 200 day moving average, which is currently around $8 and falling.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in PALM or RIMM.
Eaton (ETN) names new Automotive CEO
Eaton (NYSE: ETN) shares are falling today after the company announced this morning that it has named Joseph P. Palchak its new Automotive Group Chief Executive Officer. ETN shares are trading lower today with most other auto component companies as a weak first-quarter GDP reading has investors worried about the fragile state of the economy. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ETN.After hitting a one-year high of $104.12 in July, the stock hit a one-year low of $66.27 in January. This morning, ETN opened at $87.94. So far today the stock has hit a low of $84.78 and a high of $87.94. As of 11:40, ETN is trading at $84.88, down $3.67 (-4.2%). The chart for ETN looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $100 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in seven weeks as long as ETN is below $100 at August expiration. Eaton would have to rise by more than 17% before we would start to lose money. Learn more about this type of trade here.
Continue reading Eaton (ETN) names new Automotive CEO
Ford (F) drops as price target is cut
Ford (NYSE: F) shares are falling today after Goldman Sachs cut his price target on the stock to $5 from $8. The broker maintained a "neutral" rating on Ford, but moved General Motors (NYSE: GM) to a sell. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on Ford.After hitting a one-year high of $9.70 last June, the stock hit a one-year low of $4.95 in March. This morning, F opened at $5.07. So far today the stock has hit a low of $4.94 and a high of $5.16. As of 12:30, F is trading at $5.03, down $0.22 (-4.2%). The chart for F looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $6 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in three months as long as F is below $6 at September expiration. Ford would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.
Continue reading Ford (F) drops as price target is cut
Bed, Bath & Beyond (BBBY) rises as Q1 earnings beat estimates
Bed, Bath, & Beyond (NASDAQ: BBBY) shares are trading higher today after the company posted a first-quarter profit of $76.8 million, or 30 cents per share, beating analysts' estimates of 27 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BBBY.After hitting a one-year high of $37.61 last June, the stock hit a one-year low of $24.49 in January. BBBY opened this morning at $29.98. So far today the stock has hit a low of $29.72 and a high of $30.54. As of 12:05, BBBY is trading at $30.28, up $1.70 (6.0%). The chart for BBBY looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $25 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just seven weeks as long as BBBY is above $25 at August expiration. Bed, Bath & Beyond would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
Continue reading Bed, Bath & Beyond (BBBY) rises as Q1 earnings beat estimates
Anheuser-Busch (BUD) sues InBev, what's next?
Wal-Mart might help your portfolio during the recession
IndyMac (IMB) turns to stone
