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Posts tagged ‘Wall Street’

Diamond Foods Spiking 6% After Big Sell Off Yesterday!! Call Options?! By: Tim Bolger

Just a quick note on Diamond Foods(DMND). I posted an article yesterday: http://optionshoney.com/2012/02/09/big-shake-up-at-diamond-foods-this-is-totally-nutz-ceo-and-cfo-are-out-options-honey/recommending that investors buy shares of the San Francisco snack food maker on a huge 42% decline in the shares. DMND is up close to 6% today, on a day in the red across all the major U.S. stock indexes.  Additionally, I suggested buying the Call Options on DMND to take advantage of yesterday’s tremendous share weakness.  I bought the Feb 17, 2012 $23 strike Call Options for $1.45 yesterday and hope that a few other traders jumped on that train. Well, I know alot of Wall St. Pros are all over this big trade and yesterday was a record volume day for Options traded on DMND foods, but I hope a few Optionshoney lovers are making money on this trade as well. Forbes reports: Plunge In Diamond Foods Yields Feast Of Options Trades at Forbes(Fri 10:07AM EST). Consider locking in profits today as these DMND Options contracts are trading 61% higher over night:http://finance.yahoo.com/q?s=DMND120218C00023000. Always remember that pigs get slaughtered…no need to be greedy and it’s a very smart move to take 60% of our profits off the table on this rally in DMND shares and the Call Options…But, this stock may run to 28 by the Feb 17th expiration next week and we could still see huge upside in the value of these Call Options contracts. Options are risky financial instruments and please consult your investment advisor before buying any Options contracts or stocks that I research/trade on this site.  Stay tuned for more action at Optionshoney.com.

Check out the 2 day chart on DMND courtesy of Fidelity Investments:

Chart

Genworth Financial(GNW) Roaring Higher! Does Housing Bottom in 2012? By: Tim Bolger

Genworth Financial is a financial holding company, with its core business focused on selling insurance and additionally provides wealth management, investment, and financial solutions for individuals in the U.S. and around the World.  The three main facets of the business are: Retirement and Protection, International, and U.S. Mortgage Insurance.  See the full profile at http://finance.yahoo.com/q/pr?s=GNW+Profile.  The company has been very profitable historically, but the black swan events of the U.S. housing crisis and an unprecedented amount of defaults on mortgage loans that the company had insured led to alot of bleeding for GNW shareholders the last few years.  I have been following the stock for four years and I am beginning to see alot of value in the stock.  I believe that GNW will make it out of this housing mess alive and that it is well positioned to profit from a recovery in housing.  I strongly feel that long term investors buying more GNW shares on this temporary weakness in share price and peaking number of mortgage defaults will be rewarded in 2-3 years when the storm blows over.

GNW has been crushed over the past few years and has a high beta of 2.9 for all those momentum players out there.  I think that housing bottoms in the next 12-15 months and a significant decline in U.S. and European mortgage defaults would be great news for GNW investors.  Once the Mortgage insurance unit at GNW stabilizes and starts making money again, this will be the major catalyst and turning point for GNW stock to soar much higher.

From a deep value investor standpoint, currently GNW trades at $8.22 with a .24 Price to Book, .37 Price to Sales, and has a forward Dec 31, 2012 Price to Earnings of 6.5.  Those are extremely cheap stock valuation numbers that greatly support my thesis for buying GNW shares for the long term.  This stock could trade back to $24 a share and still be trading at only .75 book value. Wow!! Good luck to all of you Bulls…

GNW has rallied over 20% in the past 30 days.  I think the party for GNW shareholders has just begun.  Several financial stocks are rallying this week.  Check out my post yesterday on Goldman Sachs here https://optionshoney.wordpress.com/2012/01/18/goldman-sachsgs-call-options-active-on-q42011-earnings-beat-by-tim-bolger/ . Any traders that bought GS call options on my previous note made lots of money overnight as GS continues to rally higher today. Bank of America and several other financial stocks are up big again today as well.

GNW reports earnings on Feb 2, 2012.  Remember it is always a gamble to buy a stock before earnings releases, but I think GNW will beat Wall St. Analyst expectations and therefore, I want to own the stock and Call Options prior to the earnings release.  If they beat the street, the stock could sail 10% higher on positive news, especially on any positive report on a decline in mortgage defaults for their Mortgage Insurance business.  What is the Options Play on GNW?

Options Trade#1: If you are bullish on GNW going foward and would like to get long exposure to a continued rise in GNW shares, I  would think about buying the Mar 16, 2012 9 and 10 strike Call Options.  If GNW blows out earnings on Feb 2, 2012 these contracts will double or triple in value very quickly.  Remember that if GNW has a poor earnings report, these contracts will likely lose 30 to 50% on a bad report.  Alot depends on the EPS for the quarter and any forward looking comments by management that the housing mess could be nearing an end and any improvements in there mortgage insurance business. Attached are the Options Chains for this hypothetical trade courtesy of YahooFinance.  http://finance.yahoo.com/q/op?s=GNW&m=2012-03  I like the March 9 strike call options at a price of .30 cents and the March 10 strike call options for .09 cents.

Options Trade #2: For a more conservative and longer term trade, I also like buying the GNW Jan 18, 2013 7.50 Call Options for 1.90 a contract. Good luck to all and stay tuned for more news on GNW and the financials. Trading involves inherent risks and please consult your financial advisor before buying or selling any stocks/options. Optionshoney.com disclaimer.

http://finance.yahoo.com/q/ta?s=GNW+Basic+Tech.+Analysis&t=3m

Chart forGenworth Financial Inc. (GNW)

Goldman Sachs(GS) Call Options Active on Q42011 Earnings Beat!! By: Tim Bolger

Goldman Sachs(GS) is arguably the most powerful and innovative investment firm on planet Earth and runs Wall St. in my opinion.  Run by Wall St. legend Lloyd Blankfein (CEO of GS), they are at the forefront of several capital markets deals, stellar traders, have an amazing advisory services business, investment management, investment banking, etc.  Many of the smartest financial professionals in the world flock to Goldman for an opportunity to make millions of dollars.  If you work at Goldman, in my opinion you are the creme de la creme of financial services pros…When Goldman talks, investors listen…whether they like the news they are hearing or not. GS can move markets with their fundamental research and analysis of the markets.  GS is also brilliant on the technical side of trades as well and I think they are among the best trading firms in the world…they definitely have a spectacular track record in that department…

Despite their brilliant fleet of financial wizards, GS stock had a terrible year in 2011 alongside a majority of financial stocks and declined over 45%. Today, they beat Wall St. earnings estimates and the stock is up over 5% on big volume. GS earned $1.01 Billion in Q4 2011 and had Earnings Per Share(EPS) of $1.84 for the quarter. Fourth quarter EPS beat the street by a whopping 60 cents a share and investors are reacting very positively to this quarterly news report and piling into both the shares of stock and options contracts. Is the slide in GS shares over?? Is it time to get in the shares for the long term??  I would argue that owning the shares anywhere around a $100 is a great buying opportunity for longer term investors who believe in both the survival of Wall Street and the global capital markets…I certainly do and GS will be one of the biggest and most powerful whales in the sea. Businesses need capital for growth/survival in difficult economic cycles and to compete in this ever fast changing world…

GS Call Options are very active today and might be time to load up…Check out the front month GS 105 strike Jan 20,2012 Call Options being bought like hot cakes today as investors pile in to position for a bigger move up in the shares over the next few days.  Here is the options chain for Jan 20, 2012:  http://finance.yahoo.com/q/op?s=GS+Options. This is a very risky but potentially lucrative trade for those traders with a hunger for risk and is a trade being executed by many professional options traders and savvy investors today.  A more conservative play would be to think about buying the April 20, 2012 110 or 115 strike Call Options on GS to position yourself for a continued rise in the shares. Here is the GS April 20, 2012 Options chains:  http://finance.yahoo.com/q/op?s=GS&m=2012-04. GS traded close to 175 last year and definitely has alot of room to run if the stock continues to gain momentum and more positive investor sentiment. If a few analysts upgrade the stock as well, that would be very favorable for GS shares and could easily send the shares higher to 125+ in the next couple of months…We shall see and only time will tell the story… On a bearish note, the markets may be nearing a short term top and if the market falls, GS may decline with the rest of the equity markets…We might want to wait on the side line for a pullback in the shares and the overall markets before jumping into this trade on GS. Remember patience and timing is key to making successful Options trades…And yes alot of luck is involved in making money with Options as well…No investor or trader has a magic crystal ball that will tell for certain what actually will happen on Wall Street or to any individual stocks for that matter. Check out the 5 day chart on GS courtesy of YahooFinance below. Big volume today and the shares are spiking to the upside!! Optionshoney.com disclaimer.  Until next time folks. Stay tuned for more…

—Tim Bolger

http://finance.yahoo.com/q/ta?s=GS&t=5d&l=on&z=l&q=l&p=&a=&c=

Chart forThe Goldman Sachs Group, Inc. (GS)

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