2014-08-04 Smart Money Report (AZN) (CVS)
Smart Money Report
- AZN- The Jan 2015 $65/$80/$90 bull call spread risk reversal was put on 10,000 times for a $0.35 debit. Volume was below the open interest in all three options. Net call premium is +$2.2M vs net put premium of -$1.9M.
- CVS- More than 5,000 Sep 20 $75 puts were sold for $1.12-$1.19 each, against open interest of 312 contracts. Earnings are due out on 8/5. The stock has moved higher after earnings on 4 out of the last 5 reports. CVS Caremark shares were down 4 out of 5 last week, which brought the stock to test the 50-day EMA. CVS trades at a P/E ratio of 15.25x (2015 estimates) with 12.8% EPS growth (11.5% this year), 4.6% revenue growth (5.7% this year), 1.43% dividend yield, and has an average analyst price target of $82. On 6/6, Susquehanna raised their price target to $90 from $85.
- GSK- 9,249 Jan 2015 $50 calls were bought for $1.10 each, against open interest of 1,208 contracts. The call to put ratio is 6:1. Call activity is 10x the average daily volume. GlaxoSmithKline trades at a P/E ratio of 13.42x (2015 estimates) with 8.1% EPS growth (-4.8% this year), 5.6% revenue growth (-4.2% this year), P/S ratio of 2.78x, P/B ratio of 11.16x, 5.48% dividend yield (goes ex-dividend on 8/6), and has an average analyst price target of $54. Beaufort Securities and Shore Capital both maintained buy ratings on the stock this morning. Last month the stock did breakthrough long-term support at the 40-week SMA.
- MPEL- 2,500 Jan 2015 $36 calls were purchased for $2.15 each, against open interest of 3,740 contracts. Earnings are due out on 8/7. 40,456 still sets in open interest in the Jan 2016 $39.66 calls from buying earlier in the year. On 7/9, JPMorgan Chase lowered their price target to $46 from $47.
- XLU- The Sep 20 $39/$41 bull risk reversal was put on 20,000 times for a $0.25 debit. Volume was above the open interest in both options. The Utility ETF is down 8% from the highs and is nearing a test of the 200-day SMA.
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