2014-06-19 Smart Money Report (HOT) (PWE)

Posted on June 19th, by Mitchell Warren in Free Articles, Options Risk Management, Smart Money Report. Comments Off on 2014-06-19 Smart Money Report (HOT) (PWE)

Smart Money Report

  1. AGNC- A rollout from 6,500 June 21 $23 calls (debit) into 6,500 Sep. $24 calls (credit). Volume was above the open interest in Sep. $24 calls. A likely covered call rollout by three additional months. The steady uptrend from December remains intact. The REIT currently has a yield of 10.98%.
  2. CBS- 5,000 July 3 weekly $61 calls were purchased for $1.90 each, against open interest of 8 contracts. This was tied to 225,000 shares of stock. We remain long shares of CBS and the July 19 $60/$65 call spreads. http://www.traderplanet.com/commentaries/view/166505-cbs-10-upside-into-the-summer/
  3. HOT- 3,600 Aug. $78.70 puts were sold for $1.63 each, against open interest of 220 contracts. Starwood Hotels & Resorts Worldwide trades at a P/E ratio of 25.00x (2015 estimates), PEG ratio of 1.79x (2015 estimates), 5.9% revenue growth, 1.73% dividend yield, and has an average analyst price target of $85.
  4. NFX- The Jan. 2015 $45/$55 call spread was put on 5k times for a $2.50 debit. Volume was above the open interest in both options. The call to put ratio is 479:1. Call activity is 7x the average daily volume. Net call premium is +$2.3M vs. net put premium of -$2K. The stock is up 13 days in a row. A pullback to the middle Bollinger Band (20-day SMA) would be a buying opportunity. It trades at a P/E ratio of 16.32x (2015 estimates), PEG ratio of 0.48x (2015 estimates), and has an average analyst price target of $41. (not expensive despite the run up).
  5. PWE- A rollout from 6,000 June $7 calls (credit) into 6,000 Sep. $8 calls (debit). Volume was above the open interest in the Sep. $8 calls. The uptrend that started early this year remains intact. Look for a better entry on a pullback to the 10-week EMA. Penn West Petroleum grow EPS from $0.02 this year to $0.22 in 2015. Declines in revenue will slow to -5% in 2015 vs. -16.8% this year. It trades at a P/B ratio of 0.70x and has a 5.10% dividend yield. The average analyst price target is $10.38.

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