Two big movers
Today we have another sleepy day moving into the weekend. As I write this VIX Is up about .18 to 13.15 but probably will not be there for long with the volatility futures hovering just up for the day. As catalysts go, the consumer confidence number hit a 6 year high and that did not do much to push the market into higher territory. My closet theory is the US budget talk is coming again and there has been a solid two year history now of how destabilizing that patter can be. The current back and forth is not what I would call a bullish conversation. The market in 2013 has weathered the payroll tax hike and spending cuts in, well, record fashion. That should make the Keynesians go back to their drawing boards. The broad market stuff just does not look that interesting right now. Fun will be had in the individual names for the balance of the summer, and a couple of moves were really off the charts.
The funny thing is that they could not be in more different industries. Facebook (FB) and Federal Mogul (FDML) both had the biggest upside gaps this week in the consumer discretionary sector. Facebook is rolling in some bucks from a fast shift to mobile devices and FDML is selling lots of stuff for cars. The 20% up moves are a bit of a surprise as none of that was priced into the option before earnings.
From an option trading point of view there is not much to FDML. The markets really are too wide to get anything done but the earnings power is a good sign for the automobile industry as a whole. FB is a bit of a different animal. The big issue was always if FB could keep subscribers and monetized the 1 billion users. This is the 3rd report in a row where the actual is starting to match the hype. You can use the upside skew to get long for small dollars. I like a wide strike butterfly like the Sep 34/39/44 for just over $1 or adjust to a slightly ITM fly with very wide strikes. If one of the oldest industries and newest industry can report blowout numbers, things are probably not that bad.
OptionVision™ – data from ORATS
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