Brent Archer
Virginia, US - http://www.investorsobserver.com
Brent Archer is an options analyst and writer at Investors Observer.
Merck (MRK) higher on Buy rating despite Vioxx settlement news
Merck & Co (NYSE: MRK) shares are trading higher today after a Citi Investment Research analyst initiated coverage on the stock with a "Buy" rating, saying the company will benefit as rivals' drug patents expire in the coming year. This is despite news that came out today that Merck will soon start to send out almost $5B in Vioxx settlement checks. 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 MRK.After hitting a one-year high of $61.62 in December, the stock hit a one-year low of $34.49 in June. MRK opened this morning at $37.12. So far today the stock has hit a low of $36.60 and a high of $37.38. As of 1:05, MRK is trading at $37.38, up 42 cents(1.1%). The chart for MRK looks neutral and improving, 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 $32.50 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 16.3% return in just three months as long as MRK is above $32.50 at October expiration. Merck would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
MRK hasn't been below $34.50 at all in the past year and has shown support around $37 recently. This trade could be risky if the company's earnings (due out 7/21) disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low, which is just below $35.
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.
Oracle (ORCL) lifted by IBM earnings strength
Oracle (NASDAQ: ORCL) shares are trading higher today after competitor IBM (NYSE: IBM) posted a strong second-quarter profit that beat analysts' estimates. IBM said its sales were strongest in its information technology services division, which could be a good sign for ORCL. 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 ORCL.After hitting a one-year low of $18.18 in February, the stock hit a one-year high of $23.57 in June. ORCL opened this morning at $20.89. So far today the stock has hit a low of $20.65 and a high of $21.20. As of 1:15, ORCL is trading at $21.14, up 37 cents(1.8%). The chart for ORCL looks bearish and steady, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $18 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 7.1% return in just two months as long as ORCL is above $18 at September expiration. Oracle would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
ORCL hasn't been below $18 at all in the past year and has shown support around $20 recently. This trade could be risky if the company's earnings (due out in mid September) come out before expiration and disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low, which is just above $18.
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 owns and controls positions in ORCL and IBM.
Mattel (MAT) scores win in Bratz case
Mattel (NYSE: MAT) shares are trading higher today after the company posted a second-quarter profit of $11.8 million, or 3 cents per share, beating analysts' estimates of 2 cents per share. Also, last night Mattel won a copyright case against rival MGA Entertainment over the origins of MGA's Bratz dolls. Next week a jury will decide on any damages owed to MAT by MGA. 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 MAT.After hitting a one-year high of $26.12 last July, the stock hit a one-year low of $16.42 in January. MAT opened this morning at $20.42. So far today the stock has hit a low of $19.96 and a high of $21.18. As of 1:05, MAT is trading at $20.48, up $2.20 (12.0%). The chart for MAT 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 a January bull-put credit spread below the $15 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 13.6% return in just six months as long as MAT is above $15 at January expiration. Mattel would have to fall by more than 26% before we would start to lose money. Learn more about this type of trade here.
MAT hasn't been below $16.40 at all in the past year and has shown support around $17 recently. This trade could be risky if the damages turn out to be negligible, but even if that happens, this position could be protected by the support the stock might find around $16.50, where it has bottomed out twice in the past seven months.
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 MAT.
Regions Financial boosted by finance sector earnings
Regions Financial (NYSE: RF) shares are trading higher today with other financial stocks after a slew of positive financial earnings. JP Morgan Chase (NYSE: JPM) reported a second-quarter profit of $2 billion, or 54 cents per share, beating analysts' predictions of 44 cents per share, while PNC Financial (NYSE: PNC) and Comerica (NYSE: CMA) also reported earnings and are trading higher. If you think that the company 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 RF.After hitting a one-year high of $33.65 last July, the stock hit a one-year low of $6.41 on Tuesday. RF opened this morning at $8.88. So far today the stock has hit a low of $8.09 and a high of $9.91. As of 12:45, RF is trading at $9.07, up 1.06 (12.8%). The chart for RF 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 $5 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 13.6% return in just one month as long as RF is above $5 at August expiration. RF would have to fall by more than 44% before we would start to lose money. Learn more about this type of trade here.
RF hasn't been below $6.40 at all in the past year and has shown support around $7 recently. This trade could be risky if the company's earnings (due out on 7/22) disappoint, but most of the banks that have reported so far have responded well to their earnings reports.
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 RF nor CMA. He does own and control bullish hedged trades on PNC and JPM.
Texas Instruments rises on Nokia earnings, outlook
Texas Intruments (NYSE: TXN) shares are trading higher today after mobile-phone maker Nokia (NYSE: NOK) reported a second-quarter profit of $2.18 billion, beating analysts' estimates on strong sales growth. TXN's semiconductor chips are used in NOK phones, so this is good news for TXN. If you think that the company 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 TXN.After hitting a one-year high of $38.99 last July, the stock hit a one-year low of $26.48 on Tuesday. TXN opened this morning at $28.72. So far today the stock has hit a low of $28.03 and a high of $29.18. As of 1:05, TXN is trading at $28.65, up 0.59 (1.6%). The chart for TXN 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 an 8.7% return in just one month as long as TXN is above $25 at August expiration. TI would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.
TXN hasn't been below $26 at all in the past year and has shown support around $27 recently. This trade could be risky if the company's earnings (due out on 7/21) disappoint, but even if that happens, this position could be protected by the support the stock might find just below $27, where it bottomed over 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 TXN nor NOK.
United Technologies lifted by strong Q2 earnings
United Technologies (NYSE: UTX) shares are trading higher today after the company reported a second-quarter profit of $1.28 billion, or $1.32 per share, beating analysts' estimates of $1.30 per share. UTX said demand was strong for its Otis elevators and fire and security equipment for the commercial construction sector. If you think that the company 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 UTX.After hitting a one-year high of $82.50 in October, the stock hit a one-year low of $58.87 on Tuesday. UTX opened this morning at $64.50. So far today the stock has hit a low of $62.58 and a high of $65.31. As of 12:45, UTX is trading at $63.82, up 2.71 (4.4%). The chart for UTX looks bearish and steady, 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 a November bull-put credit spread below the $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 8.7% return in just 4 months as long as UTX is above $50 at November expiration. UTX would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.
UTX hasn't been below $58 at all in the past year and has shown support around $59 recently. This trade could be risky if the US military efforts in the Middle East slow down in the next few months, but even if that happens, it is tough to imagine military spending really decreasing by a significant amount.
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 UTX.
ExxonMobil (XOM) tumbles with oil futures on supply numbers
ExxonMobil (NYSE: XOM) shares are falling today, pulled down by declining oil futures following a report the US supplies rose unexpectedly. 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 XOM.After hitting a one-year high of $96.12 in May, the stock hit a one-year low of $77.55 in January. This morning, XOM opened at $81.99. So far today the stock has hit a low of $79.41 and a high of $81.99. As of 2:10, XOM is trading at $80.07, down $2.12 (-2.6%). The chart for XOM 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 $90 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 one month as long as XOM is below $90 at August expiration. ExxonMobil would have to rise by more than 12% before we would start to lose money.
XOM hasn't been above $90 since late May and has shown resistance around $89 recently. This trade could be risky if the price of oil is driven back up soon, but even if that happens, this position could be protected by resistance XOM might find at its 200 day moving average, which is currently around $89 and falling.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in XOM.
Trade idea for Walgreen's (WAG) upgrade
Walgreens (NYSE: WAG) shares are trading higher today after Credit Suisse upgraded the stock to "Outperform," from "Neutral," saying that plans to limit store growth and cut down on spending should lead to better earnings. 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 WAG.After hitting a one-year high of $48.09 in September, the stock hit a one-year low of $31.25 earlier this month. WAG opened this morning at $32.55. So far today the stock has hit a low of $32.26 and a high of $33.48. As of 1:45, WAG is trading at $33.30, up $0.97 (3.0%). The chart for WAG 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 $30 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 one month as long as WAG is above $30 at August expiration. Walgreens would have to fall by more than 10% before we would start to lose money. Learn more about this type of trade here.
Continue reading Trade idea for Walgreen's (WAG) upgrade
AMD lifted into earnings by Intel results, EU news
Advanced Micro Devices (NYSE: AMD) shares are trading higher today after rival Intel Corp. (NASADQ: INTC) posted a second-quarter profit of $1.6 billion, or 28 cents per share, ahead of analysts' estimates of 25 cents per share, reflecting strong demand for processors. AMD is also getting a boost into its earnings tomorrow from news that INTC may face new charges from European antitrust regulators, according to a report in The Wall Street Journal. 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 AMD.After hitting a one-year high of $16.19 last July, the stock hit a one-year low of $4.53 yesterday. AMD opened this morning at $4.90. So far today the stock has hit a low of $4.68 and a high of $4.95. As of 1:55, AMD is trading at $4.93, up 21 cents (4.4%). The chart for AMD 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 a January covered call at the $5 level. A covered call is an options position that combines the purchase of stock with the 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 30% return in just 6 months if AMD is above $5 at January expiration. AMD would have to fall by more than 21% before we would start to lose money.
AMD hasn't been below $3.90, which would be the break-even point, at all in the past year and has shown support around $4.50 recently. This trade could be risky if today's encouraging Intel results are a result of them taking even more market share from AMD, but even if that happens, this position could be protected by the 30% downside protection on this trade.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in AMD. He does control bullish hedged positions in INTC.
Kimberly Clark (KMB) drops guidance, says inflation costs double
Kimberly-Clark (NYSE: KMB) shares are falling today after the company lowered its second-quarter and full-year outlook well below analysts' expectations yesterday evening. The company said inflation costs would reach $900 million, double the company's original estimate. 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 KMB.After hitting a one-year high of $71.16 in October, the stock has hit a new one-year low of $50.42 today. This morning, KMB opened at $54.25. So far today the stock has hit a low of $50.42 and a high of $57.68. As of 12:50, KMB is trading at $55.87, down $2.93 (-5.0%). The chart for KMB looks neutral and slightly improving while S&P gives KMB a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $60 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 14.9% return in three months as long as KMB is below $60 at October expiration. Kimberly-Clark would have to rise by more than 7% before we would start to lose money. Learn more about this type of trade here.
Continue reading Kimberly Clark (KMB) drops guidance, says inflation costs double
Evergreen Solar (ESLR) signs $1.2 billion contract
Evergreen Solar (NYSE: ESLR) shares are trading higher today after the company announced today it has signed a sales contract with Germany's IBC Solar AG valued at $1.2 billion. Under the deal, the company will make the solar panels at a recently opened plant in Devens and at another factory expected to open in 2010. 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 ESLR.After hitting a one-year high of $18.85 in December, the stock hit a one-year low of $7.52 in March. ESLR opened this morning at $10.16. So far today the stock has hit a low of $9.58 and a high of $10.22. As of 12:40, ESLR is trading at $10.11, up $0.95 (10.4%). The chart for ESLR looks bullish but deteriorating while S&P gives ESLR a very positive 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $7.50 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 19.0% return in just two months as long as ESLR is above $7.50 at September expiration. Evergreen would have to fall by more than 25.7% before we would start to lose money. Learn more about this type of trade here.
Continue reading Evergreen Solar (ESLR) signs $1.2 billion contract
Home Depot (HD) fluctuates on economy concerns
The Home Depot (NYSE: HD) shares are trying to find their way today as investors digest Federal Reserve Chair Ben Bernanke's testimony on the state of the economy before the Senate Banking Committee. Investors are worried that inflation and weakness in credit markets will continue to drag down the economy and were less than impressed by this morning's PPI numbers. 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 HD.After hitting a one-year high of $40.75 last July, the stock has hit a new one-year low today. This morning, HD opened at $21.39. So far today the stock has hit a low of $20.76 and a high of $21.69. As of 12:10, HD is trading at $21.47, down $0.06 (-0.3%). The chart for HD 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 a November bear-call credit spread above the $27.50 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 four months as long as HD is below $27.50 at November expiration. Home Depot would have to rise by more than 26% before we would start to lose money. Learn more about this type of trade here.
Continue reading Home Depot (HD) fluctuates on economy concerns
Icahn files new proxy to replace Yahoo! (YHOO) board
Yahoo! (NASDAQ: YHOO) shares are falling today after billionaire investor Carl Icahn criticized YHOO's board, accusing it of neglecting to disclose critical details of Microsoft's (NASDAQ: MSFT) buyout offer. Icahn also filed a proxy on Monday to nominate a slate of nine directors to replace YHOO's board and chief executive officer. 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 JPM.After hitting a one-year high of $34.08 in October, the stock hit a one-year low of $18.58 in January. This morning, YHOO opened at $23.12. So far today the stock has hit a low of $22.22 and a high of $23.24. As of 1:25, YHOO is trading at $22.40, down $1.17 (-4.9%). The chart for YHOO 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 $27.50 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 weeks as long as YHOO is below $27.50 at August expiration. Yahoo! would have to rise by more than 22% before we would start to lose money. Learn more about this type of trade here.
YHOO hasn't been above $27.50 since late May and has shown resistance around $24.50 recently. This trade could be risky if the company ends up agreeing to a deal with Microsoft in the coming month, but even if that happens, this position could be protected by resistance YHOO might find at its 200 day moving average, which is currently around $26.50 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 YHOO. He does own and control bullish hedged positions in MSFT.
Halliburton (HAL) rises on WSJ oil industry commentary
Halliburton (NYSE: HAL) shares are trading higher today after an analyst wrote in the Wall Street Journal over the weekend that despite rises in oil prices, many oil stocks and oil service companies are undervalued based on price/earnings ratios. 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 HAL.After hitting a one-year low of $30.00 in January, the stock hit a one-year high of $55.38 earlier this month. HAL opened this morning at $48.23. So far today the stock has hit a low of $48.23 and a high of $50.08. As of 1:05, HAL is trading at $48.90, up $1.03 (2.1%). The chart for HAL looks bullish but deteriorating, while S&P gives the stock a positive 4 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 $42.50 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 11.5% return in just five weeks as long as HAL is above $42.50 at August expiration. Halliburton would have to fall by more than 13% before we would start to lose money.
HAL hasn't been below $44 at all since April and has shown support around $45 recently. This trade could be risky if the price of oil drops off in the coming month, but even if that happens, this position could be protected by the support the stock might find around $45 where it formed a bottom in early May.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in HAL.
Nasdaq OMX (NDAQ) lifted by Barron's report
NASDAQ OMX (NASDAQ: NDAQ) shares are trading higher today after an analyst at Barron's said the stock is undervalued, adding there is "an extraordinary opportunity" to buy NDAQ at a discount. 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 NDAQ.After hitting a one-year high of $50.47 in November, the stock hit a one-year low of $22.76 last week. NDAQ opened this morning at $27.14. So far today the stock has hit a low of $24.57 and a high of $27.20. As of 1:00, NDAQ is trading at $24.81, up $0.48 (2.0%). The chart for NDAQ 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 $20 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 13.6% return in just five weeks as long as NDAQ is above $20 at August expiration. NDAQ would have to fall by more than 19% before we would start to lose money.
NDAQ hasn't been below $22.50 at all in the past year and has shown support around $23 recently. This trade could be risky if the company's earnings (due out 8/6) disappoint, but even if that happens, this position could be protected by the support the stock might find around $22.50 where it has bottomed thus far.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in NDAQ.
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