Interactive Brokers

IB Traders' Insight

PDF
Create a PDF of this page to save or print.
IB Traders' Insight

Global market commentary from IBG traders and market participants.

Sort by
Filter by
Region
  1    2    3    4    5   2  192
2014-04-23 15:26:27

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Options

SodaStream volatility surges after Starbucks implicated in stake

Here’s an interesting update on our April 16 posting on Sodastream (Ticker: SODA), which popped that day following an unsubstantiated report from Israeli newspaper, Calcalist that the company had been in talks to sell a stake of at least 10% to a major US company. Last week shares in Sodastream jumped by 9% and have added a further 51.0% to $46.50 in Wednesday’s excitement. At the time we noted the shift in volatility skew as uncertainty lifted the cost of upside options faster than it did the cost of downside protection. Overall implied volatility stood at around 70% at the time. Now, one week later, Globes, another Israeli business website is offering support for the same story naming Starbucks (Ticker: SBUX) as the US party interested in a stake worth $1.1 billion in the fizzy-drinks maker. Such is the uncertainty that option sellers have pulled in their horns and pumped up associated volatility such that premiums on options expiring on Friday reflect implied volatility in excess of 100%. The first chart repeats last week’s news, while the second illustrates the elevated nature of implied volatility across strike prices ranging from 40.0 to 50.0. Shares in Starbucks are down 1.19% on the day to $70.31.

Elsewhere, shares in Keurig Green Mountain (Ticker: GMCR) are falling $4.24% to $94.59 reaching its lowest price in 10-weeks as investors fear the substitution effect may dilute the company’s brand. Keurig is developing a single-serve, do-it-yourself fizzy drink maker similar to that offered by Sodastream. While Keurig has already sold a 10% stake in itself to Coca-Cola (Ticker: KO), fears are rising that alternative fizzy-drinks solutions will hamper its sales outlook as the industry garners attention. Curiously our options scanners noted 1,650 bearish put options expiring in June changing hands at the 72.50 strike (23% below today’s trading price) at around 1.26 per contract.    

Chart 1– Sodastream skew jumped following the Calcalist story….

Chart 2– but no one is giving it away after the latest story from Israeli website, Globes

2014-04-23 15:12:36

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Options

Apache calls in play

Shares in independent energy developer Apache Corporation (Ticker: APA) are extending gains and have moved 2.33% higher to $88.22 lifting the value of the company to its highest since January. The company has relatively few outstanding options contracts held by investors at just 111,000 lots. The surge in the share price is, however, leading to call option activity in Tuesday’s session with 19,000 contracts changing hands by 1:40pm. Bullish plays include call buying in the May expiration at the 87.5 and 90.0 strikes, while bulls are also positioning in the June 90.0 and 92.5 strikes. In the case of the June contracts respective call volume of 1,300 and 3,160 contracts is in excess of established open interest of 893 lots and just 34 lots ahead of today’s trading. Rising option implied volatility indicating growing uncertainty surrounding the stock has risen by 2.8% to 19.6% as a result of the surge in its shares. Several E&P names are higher in today’s session.    

Chart – Implied volatility on Apache rise as the company’s shares move without major catalyst

 

2014-04-23 12:19:01

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Stocks

Waverly Advisors Midday Update

Global Equity markets and commodity movers:

Equities

Japanese stocks (+1.3%), Spike: 1.4σ, Related tickers: EWJ

Singapore stocks (-0.6%), Spike: -1.3σ, Related tickers: EWS

Rates and Currencies

Euro / British Pound (+0.4%), Spike: 1.4σ, Related tickers: FXE, FXY

Aust Dollar / US Dollar (-0.8%), Spike: -2.1σ, Related tickers: AUD, FXA

Aust Dollar / Japanese Yen (-1.2%), Spike: -3.3σ, Related tickers: AUD, JPY, AUDJPY, FXA, FXY

Commodities

Sugar futures (+2.3%), Spike: 1.5σ, Related tickers: SB, SGG

Corn futures (+1.2%), Spike: 1.0σ, Related tickers: ZC YC

This list highlights large standard deviation moves using Waverly Advisors’ SigmaSpikes™ indicator—markets that are making significant moves today on a volatility-adjusted basis.

For more information about Waverly Advisors please click http://bit.ly/1mj1Toa.

2014-04-23 10:36:50

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Macro

New Home Sales

The latest housing report has to go down as a ‘cat amongst the pigeons’ data point, and gets to the heart of the current debate over how quickly investors fear the Fed must raise rates as the economy recovers. New home sales are approximately one million units lower per year at this stage of the recovery by comparison to the peak of activity. Does that sound like interest rates must go up any time soon?  Meanwhile, as you can see in the accompanying chart, prices of units that did sell were considerably higher in March than in the prior month. Both average and median prices advanced with the latter rising to $290,000 from $260,000 last month.

In the month of March exactly 10-years ago, the number of new homes sold ran at an annualized pace of 1.276 million units. At that point the construction industry could look forward to another 16-months of over-building across the reaches of the US economy before activity would face a multi-year plunge. In July 2005 new home sales peaked at 1.389 million units. By contrast today’s latest report for March shows a far worse-than-expected pace of 384,000 sales – the fewest in eight months – despite the fact harsh winter weather improved. Sales tumbled by 21.5% in the Mid-West to the least since September and by 16.7% in the West to the lowest level since January 2012. The South and West comprise the two largest selling areas, while only in the smallest – the North East – did sales advance. At the end of March the supply of 193,000 units was the largest available since November 2010. At the latest pace of sales it would take six months to sell the entire inventory, up from five months in February.

Chart – Existing home sales plunged in March

2014-04-23 09:02:20

Posted by
Jamie Lissette
Trading Analyst
Hammerstone Group
Contributor

Stocks

Hammerstone recap

Stocks extended their winning streak to 6 sessions on Tuesday as the S&P 500 continued its strongest rally of 2014. After rising to within 6 points of its all-time high, the S&P 500 surrendered some of its gains to close at 1880, a 0.4% rise from the previous day.

The Macro

On the macro front, the most important data-point yesterday was Existing Home Sales. Sales of previously owned homes fell in March for a third consecutive month to an annual rate of 4.59 million units, the lowest level in more than 18 months. However, the number was still better than analysts’ expectations of 4.55 million.

The other important data point yesterday was the Richmond Fed manufacturing index, which rebounded to +7 in April from -7 in March. This was much better than economists’ forecast of 2. The components of the survey also were positive, as new orders and shipments gained 19 and 15 points, respectively.

On The Hammerstone Forum

We had mentioned earlier that many participants on the Hammerstone Forum were playing a wait-and-see game before taking positions in the hard-hit momentum names, and from the recent comments on the forum, it seems that many investors are ready to take on more risk on the back of a generally improved sentiment and positive earnings numbers thus far. In fact, there was so much interest in one particular momentum name that one of the forum participants talked about taking a contra position in the stock based on such huge interest.

Looking Forward

After in-line Existing Home Sales yesterday, we will get more housing data in the form of New Home Sales at 10AM ET. Also coming up in the U.S.:  Durable Goods Orders, Claims (tomorrow); and Markit US Services PMI and U. Michigan Confidence (Friday.) 

Although we have had a generally positive earnings season thus far, the earnings and guidance by some of the high-growth names last night were disappointing. Tonight is going to be very important for tech earnings with AAPL, FB, QCOM, and TXN reporting after close. Disappointing figures from these names could potentially be a reason to lead the market lower after the recent quick spike. Other earnings this week include: AAL, CAT, GM, MMM, UPS, VZ, AMZN, BIDU, BRCM, LVS, MSFT, P, SBUX, V (tomorrow); and F (Friday.)

 

The Hammerstone Institutional Forum, a chat-based platform for traders, provides subscribers with up-to-the-minute breaking news headlines and instant analysis that drive the market. For more information please visit www.thehammerstone.com.

2014-04-23 05:17:26

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Netherlands / Belgium

  • ROYAL VOPAK (NL): FY Ebitda ex-items to be 5%-10% lower than EU753m in 2013. * Co. says no major improvements in business climate following FY results, continues to face challenges mainly in EMEA; current performance not in line with long-term ambitions * Co. to review performance of current terminals * 1Q occupancy rate 88% vs 89%.
  • UNIBAIL-RODAMCO (NL): Unibail-Rodamco 1Q Rev. EU463m vs EU430m Y/y. Reiterates full-yr recurring EPS growth forecast of at least 5.5%.
2014-04-23 05:16:20

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: France

  • SAFRAN (FR): Safran 1Q Adj Revenue Climbs 3.3% Y/y to EU3.44b on OE, Services. FY 2014 outlook confirmed despite the Euro’s persistent strength, co. says in e-mail. Mid-single digit growth 2014 achievable if average EU/$ spot rate 1.37 remains. 1Q Aerospace propulsion rev EU1.8b, up 2.2% Y/y. 1Q Aircraft Equipment rev EU1.02b, up 11% Y/y. 1Q Defence rev EU257m, down 12% Y/y. 1Q Security business rev EU345m, up 1.5% Y/y. NOTE: Feb. 21, Safran Lacks Upside, Cut to Hold, Deutsche Bank Says.
  • ZODIAC (FR): Zodiac Aerospace Sees Further Year of Organic Growth in 2013/14. Zodiac Aerospace says 1H rev. rises 9.2% to EU1.998m, LFL growth 7.8%, continues to benefit from growth in air traffic, increase in air deliveries, growth in after-sales business. 1H current operating income +7.2% to EU255.7m, LFL growth 8.8%. 1H net income attributable +11% to EU162.8m. Says FX rates had negative impact of -3.1ppts. Sees a further year of organic growth in co.’s business.
  • EIFFAGE (FR): Co. says APRR highway toll 1Q toll revenue rose 2.2% to EU479.6m.
  • GL EVENTS (FR): Co. says 1Q revenue rose to EU219.3m, up from EU214.6m year-earlier.
  • JCDECAUX (FR): Outdoor advertising co. appointed Emmanuel Bastide and Daniel Hofer to its executive board.
  • ORANGE (FR): Phone co. signs wage agreement for 2014 with CFDT and FO unions.
  • RENAULT (FR): Car maker may manufacture electric vehicles in China, Nikkei reports, citing Asia-Pacific Chairman Gilles Normand.
  • SOCIETE GENERALE (FR): Jerome Kerviel, facing prison for unauthorized trades that led to one of the biggest losses in banking history, is suing Societe Generale for allegedly bribing a witness in his appeals trial, Agence France-Presse reported, citing Kerviel’s lawyer. * Eric Cordelle, formerly Kerviel’s boss, dropped employment lawsuit against SocGen last year over the terms of his dismissal: AFP * SocGen says in a statement it heard about Kerviel’s plan to file a complaint and calls it another attempt to divert attention from his responsibilities.
2014-04-23 05:15:13

Posted by
Stephen Alley
IB Asia Trade Desk
Contributor

Stocks

Nikkei shrugs off China PMI numbers to close at the day-high

The Nikkei opened +91 at 14,480 after the rally in the US overnight and with the Yen 0.1% weaker against the USD at 102.6. The Nikkei briefly dropped to 14,459 as Hong Kong and China stocks dropped following the HSBC/Markit China Flash Manufacturing PMI. However, the Nikkei later recovered to close at the day-high +158 at 14,546 (+1.1%).

Mining stocks outperformed after Mitsui Mining and Smelting (5706) guided after yesterday's market close that its full-year operating profit forecast was expected to rise to JPY 25.7 billion from JPY 22.3 billion. Mitsui Mining and Smelting (5706) closed +4.5%, while Sumitomo Metal and Mining (5713) closed +4.2%.

 

2014-04-23 05:13:16

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Spain/Italy

  • UNIPOL (IT): UnipolSai May Issue EU500m Hybrid Bond to Cut Debt, Sole Says. UnipolSai is considering selling EU500m hybrid bond to partially repay subordinated debt with Mediobanca, Il Sole 24 Ore reports without citing anyone. NOTE: Italy’s antitrust reg. told UnipolSai to cut subordinated debt by EU350m as part of Unipol/Fondiaria merger last year.
  • ALITALIA (IT), AIR BERLIN (DE): Alitalia says CEO gave report on state of talks with Etihad.
  • INTESA, UNICREDIT (BOTH IT): Intesa +2.1%, UniCredit +2.6% after memorandum on bad loans with Alvarez & Marsal, Intesa, KKR.
  • LIBERBANK (ES): Liberbank Sees Non-Performing Loans Ratio Peaking in 2014.
  • ACS, FERROVIAL (BOTH ES): ACS, Ferrovial Bid on EU700m Canada Highway Contract.
  • TELEFONICA (ES): Telefonica SA called on Mexican regulators to crack down on America Movil SAB, saying the company isn’t obeying regulations on sharing its network or selling unlocked mobile phones. America Movil’s landline units refused to provide information about their network infrastructure, Telefonica said today in an e-mailed statement. Instead, the units responded to Telefonica’s request with a letter that said they disagree with the rules set by the Federal Telecommunications Institute. Telefonica filed a complaint asking the government agency, known as IFT, to force America Movil to follow the rules or require it to divest assets. IFT imposed the regulations on Mexico City-based America Movil earlier this year after finding the company dominant in the mobile and landline markets. Press officials at America Movil and IFT didn’t immediately reply to requests for comment. Madrid-based Telefonica has about 20 percent of Mexico’s wireless subscribers, trailing America Movil’s 70 percent.
2014-04-23 05:11:24

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Scandinavian Region

  • KEMIRA (NORD): Kemira 1Q Net, EPS Beat Ests., Sales Miss; Outlook Is Maintained. Kemira reports 1Q net sales of EU529.9m vs est. EU557.6m. 1Q op. Ebit EU36.3m vs EU42.2m y/y. 1Q EPS EU0.28 vs est. EU0.17 (4 ests.). 1Q pretax profit EU49m vs est. EU40.4m. 1Q net income EU41.9m vs est. EU26.2m (4 ests.) Keeps guidance; sees revenue in local currencies ex- divestments, acquisitions slightly higher than in 2013; sees FY op. Ebit higher than in 2013. Kemira separately says new coagulant plant started up in Tarragona, Spain; Tarjei Johansen named as head of oil, mining unit and Americas region.
  • ERICSSON (NORD): Ericsson Boosts Margins as Sales Drop Amid Capacity-Order Focus. Ericsson AB, the world’s biggest maker of wireless networks, reported a profit margin that beat analysts’ estimates while sales fell short as the company focused on more lucrative contracts. Gross margin, a key measure of profitability, expanded to 36.5 percent of sales in the first quarter from 32 percent a year earlier, Ericsson said today in a statement. Analysts predicted 34.4 percent, the average of estimates compiled by Bloomberg. Sales fell about 9 percent to 47.5 billion kronor ($7.2 billion), compared with the average estimate of 50.8 billion kronor. Carrier spending in the U.S. and Japan is cooling after a wave of investments in speedier, fourth-generation networks, leaving Stockholm-based Ericsson and rivals Nokia Oyj, Alcatel- Lucent SA and Huawei Technologies Co. to compete for fewer deals. To respond, Ericsson is trying to win more profitable network contracts while expanding its services business. “Our focus on profitability is paying off,” Chief Executive Officer Hans Vestberg said in the statement. “The business mix in the quarter was predominantly driven by mobile broadband capacity projects.” Ericsson’s profitability improved year-on-year for the fourth consecutive quarter, helped by a focus on projects to increase carriers’ network capacity. Such deals are often more lucrative than labor-intensive network-modernization contracts. Ericsson’s gross margin, or the proportion of sales remaining after production costs, has rebounded from 30.2 percent in the fourth quarter of 2011, the lowest since at least 1989. Net income almost doubled to 2.12 billion kronor from 1.21 billion kronor a year earlier, when the company had 1.8 billion kronor of reorganization costs, mostly related to job cuts in Sweden. Shares of Ericsson rose 2 percent to 86.25 kronor yesterday, giving the company a market value of about $43 billion. The stock has gained 9.9 percent this year.
  • TELIASONERA (NORD): TeliaSonera 1Q Sales Miss, Sees Modest Risk to FY Rev. Outlook. TeliaSonera reports 1Q sales SEK23.97b vs est SEK24.23b, reiterates 2014 forecast although sees “slightly” higher risk to rev. guidance due to lower equipment sales. Says 1Q organic sales drop driven by lower equipment sales and cuts to mobile termination rates. 1Q Ebitda SEK8.35b vs est SEK8.33b, Ebitda margin 34.8% vs 34.6% y/y. 1Q net income SEK3.95b vs est SEK3.97b.
Sort by
Filter by
Region
  1    2    3    4    5   2  192

We appreciate your feedback. If you have any questions or comments about IB Traders' Insight please contact ibti@ibkr.com.

Options involve risk and are not suitable for all investors. For more information read the "Characteristics and Risks of Standardized Options". For a copy visit interactivebrokers.com/disclosures or call 203-618-5800.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

The material (including articles and commentary) provided on IB Traders' Insight is offered for informational purposes only. The posted material is NOT a recommendation by Interactive Brokers (IB) that you or your clients should contract for the services of or invest with any of the independent advisors or hedge funds or others who may post on IB Traders' Insight or invest with any advisors or hedge funds. The advisors, hedge funds and other analysts who may post on IB Traders' Insight are independent of IB and IB does not make any representations or warranties concerning the past or future performance of these advisors, hedge funds and others or the accuracy of the information they provide. Interactive Brokers does not conduct a "suitability review" to make sure the trading of any advisor or hedge fund or other party is suitable for you.

Securities or other financial instruments mentioned in the material posted are not suitable for all investors. The material posted does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before making any investment or trade, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. Past performance is no guarantee of future results.

Any information posted by employees of IB or an affiliated company is based upon information that is believed to be reliable. However, neither IB nor its affiliates warrant its completeness, accuracy or adequacy. IB does not make any representations or warranties concerning the past or future performance of any financial instrument. By posting material on IB Traders' Insight, IB is not representing that any particular financial instrument or trading strategy is appropriate for you.

Interactive Brokers LLC is a member NYSE - FINRA - SIPC