Real-time equity news [E U]
U.S. stock market report
1107 ET 17Oct2012 Chipotle options imply 8.5 pct earnings move
—————————————————————————–
Options on Chipotle Mexican Grill Inc are implying an 8.5 percent
move up or down for shares off of its coming earnings, which is in line with the
8.5 percent average move over the past four quarters but slightly above the 7.5
percent average over the past eight announcements, according to
RiskReversal.com. Chipotle is to report third-quarter results on Thursday after
the stock market close.
Shares of the Denver-based upscale burrito chain have closed lower on five
of the last six earnings reports, said Enis Taner, global macro editor at
RiskReversal.com, in a report. The stock was down 21.5 percent on the July
earnings report after Chipotle’s closely watched sales at established
restaurants missed analysts’ expectations.. Taner noted that
short interest has climbed since July and now stands at 10.5 percent of the
float.
Reuters Messaging:
doris.frankel.reuters.com@reuters.net
1037 ET 17Oct2012 SFG looks at recent option trades in Hess, SandRidge
————————————————————————–
Derivative strategists at Susquehanna Financial Group, in a recap of key
option trades this week, spotted downside positioning in U.S. oil and gas
producer Hess Corp and a bullish spread on SandRidge Energy that
would appear to add support to SFG’s bullish view on the oil and gas producer.
On Tuesday, 10,000 Jan $52.50 puts on Hess were purchased for $2.91 with the
stock around $55, the third large print in these puts over the past two weeks,
SFG said. In that strike, 15,000 contracts traded on Oct. 5 and another 15,000
on Oct. 11. In all, it appears as if an investor accumulated 40,000 of these
puts. SFG surmised the investor may be using these puts to gain downside
exposure between now and January expiry, acquiring the right to sell four
million shares at the $52.50 level. With the puts slightly out-of-the-money, it
is also possible they were bought as insurance against a stock position.
Whatever the case, SFG said it appears at least one investor is becoming more
cautious/bearish on the stock heading into January timeframe.
In SandRidge, in what appeared to be a spread, investors on Tuesday sold
10,000 March $7 puts at 69 cents versus buying 12,000 March $8 calls for 60
cents, SFG said. Through the trade, the investor gets long the equivalent of
915,000 shares. SFG said in this bullish risk reversal, it looks like investors
are positioning for upside above $8 and taking on downside risk below $7 to help
finance the upside. SFG has a positive rating on the stock with a $12 price
target.
Reuters Messaging:
doris.frankel.reuters.com@reuters.net
0950 ET 17Oct2012 SFG highlights LyondellBasell call spread
————————————————————————-
Derivative strategists at Susquehanna Financial Group highlight an upside
November $57.5-$60 call spread initiated on chemical maker and refiner
LyondellBasell Industries NV on Tuesday, which was bought for 65 cents.
The spread involved the purchase of 50,000 $57.50 calls versus the sale of
50,000 $60 calls with the stock trading around $54 at the time. With the stock
up on Tuesday, bullish flow is typical alongside the strength. But the
strategists note that November call buyers emerged on Monday as well, when
investors bought 6,000 November $55 LYB calls. The spread equated to roughly
700,000 shares, which is notable given that a total of 9.4 million shares traded
on the day. “Should the options move into exercise, the position would give the
buyer the right to control 5 million shares between $57.50 and $60.00,” SFG
said. It appears as if the investor is seeking upside through $57.50 but reduced
the cost of exposure by capping the upside above $60, apparently implying that
they see a ceiling around that level, the SFG report said.
SFG converted the spread into rough approximations of probabilities. When
combined with the November $55 call buying on Monday, trading in LyondellBasell
appears bullish in aggregate, with investors positioning for additional strength
and implying that they believe a move to the $60 level may be more likely than
what the market is pricing in, SFG said.
Reuters Messaging:
doris.frankel.reuters.com@reuters.net
0732 ET 17Oct2012-Economic and earnings diary for Oct. 17
——————————————————————————
Economic data expected on Wednesday includes housing starts and permits for
September.
S&P; 500 companies still expected to post earnings include Abbott
Laboratories, Amphenol Corp, American Express Co, eBay
Inc, Lam Research Corp, M&T; Bank, Noble Corp,
SLM Corp , Stryker Corp and Xilinx Corp.
Charles.mikolajczak@thomsonreuters.com
; +1 646 223 5234; Reuters Messaging:
Charles.mikolajczak.thomsonreuters.com@reuters.net
