Options Trader: Thursday Wrapup

by: Philip Davis

25 points from a new S&P record!

There’s nothing sexy about a 1,527 hat, but I’ll sure wear one as we get close. Breaking that March 2000 record would mean a lot more than Dow 13,500 but the two will probably come on about the same day.

Today the market seemed invulnerable as even the transports gapped up and held it for the day. Biotech was market Kryptonite today with Celgene Corporation (NASDAQ:CELG) disappointing, but following our rule that companies with p/e’s of 336 really have a hard time beating expectations.

Speaking of not living up to expectations - Tesoro Corp. (NYSE:TSO) finally had to show us the money and it was a little short. Profits at everybody’s favorite refiner zoomed up from .61 a share last year to $1.67 a share for Q1, but 20 analysts who follow this stock had expected an average of $1.86 (and I’d love to meet they guys who were on the high side!). The stock fell $8.88 for the day after failing to break back up from a consolidation at 10:35 when it was, very appropriately, down $6.66.

I said last week that if shorting this stock at $120 didn’t work, the next thing I would do is try holy water and a stake - luckily the new puts worked, albeit after much (also appropriately) heartache. Intel Corp. (NASDAQ:INTC) gave us some heartache this morning, but our intra-day decision was to pick up the June $22.50s anyway and they finished the day down .08 at .42. Even without Intel’s help, the SOX and the Nasdaq had a good day, but the Transports were strong across the board as oil fell for the fourth straight day (down 5% for the week). It was saved at the bell, however, from closing below $63.















Dow 13,241 29 12,468 12,600 13,000 13,500
Transports 2,899 24 2,825 2,900 3,000 3,250
S&P 1,502 6 1,430 1,460 1,500 1,550
NYSE 9,753 35 9,218 9,465 9,600 10,000
Nasdaq 2,565 7 2,454 2,500 2,600 2,750
SOX 500 2 477 490 500 560
Russell 828 0 803 820 850 900

US Markets

The Russell was held down by the biotech drop-off, but if the Transports can give us a green light tomorrow and the other indices can hold theirs (the SOX are about to confirm a breakout too!), then we will go into the weekend with some serious momentum.

From the "Duh" file: Las Vegas Sands Corp. (NYSE:LVS) earnings were a disappointment. I’m actually starting to like them at this price, but we don’t buy a stock that finishes the day at the 5% rule. GM continues to embarrass the Dow with its presence as profit falls 90% from last year but, for variety’s sake, now they are blaming sub-prime loans instead of sub-standard autos. In effect, by losing money on record sales, aside from making semiconductor stocks look better, GM is telling the street that some way, somehow, they will always find a way to lose money. Crocs. Inc. (NASDAQ:CROX) had a huge beat and a spectacular report - congrats to all our guys who played this one.

A Surprise Around Every Corner

In the surprise file: Sears Holdings (NASDAQ:SHLD) pre-announced some disappointing numbers, but we’ll probably just use this as a great opportunity to take out our caller ahead of earnings and perhaps roll down our longer calls as they are still on track for 20% profit growth for the year, and poor sales may accelerate the inevitable talks about selling off some of those real estate assets in a hot market. TASER International, Inc. (NASDAQ:TASR) gave us a nice triple on the June $10s (thank you, Cramer!) and we’re half out on all that fun.

We’ve been playing the French election all week and Jimbo caught up to us last night - so we sold our calls to his mad minions!

Starbucks Corporation (NASDAQ:SBUX) surprised analysts but not us. My call on Tuesday was: "SBUX - earnings, taking a chance (leaving uncovered)." QLogic Corporation (NASDAQ:QLGC) missed by a penny, and that was enough to cost them 3% in after hours trading and our spread should be well in the money tomorrow.

The dollar made a quick run at 82 and finished right around there, but gold decided to make a comeback with a $9 gain back to $684, giving new life to our mining plays. This is very well timed as Barrick Gold Corporation's (NYSE:ABX) earnings just gave a nice lift to the sector as well.