Options Activity for Green Mountain Coffee Roasters Inc. (GMCR), Amazon.com, Inc. (AMZN), Chesapeake Energy Corporation (CHK) and Wynn Resorts, Limited (WYNN).
Wednesday, September 29, 2010
I hope that your trading is going well, as I know that members of S.O.M.E. (Stock Options Made Easy) are making the most of the market movements and their returns.
Today's newsletter includes a regulatory probe for Green Mountain Coffee Roasters Inc. (GMCR), high hopes for Amazon.com, Inc. (AMZN), and new bullish ratings for Chesapeake Energy Corporation (CHK) and Wynn Resorts, Limited (WYNN). The purpose of this newsletter is to focus on stocks seeing heavy options trading and gives you a unique insight into each stock's sentiment backdrop.
Green Mountain Coffee Roasters Inc. (GMCR)
Late Tuesday, Green Mountain Coffee Roasters Inc. (GMCR) confessed that the U.S. Securities and Exchange Commission (SEC) is conducting an inquiry into the company's revenue recognition practices, as well as GMCR's relationship with one of its fulfillment vendors. Regulators have requested various documents and information from GMCR, and the Vermont-based coffee company says it's cooperating with agency.
Additionally, an SEC filing revealed that GMCR overstated its after-tax income by $4.4 million, or 3 cents per share, on a cumulative basis due to a 2007 accounting error. A correction for the mistake will be made in the firm's fiscal fourth quarter, which ended last week.
GMCR is poised to plummet more than 14% this morning, with the stock threatening to gap below support at its 10-week moving average. Potential support could emerge near the round-number $30 region, which is home to GMCR's 20-week trendline.
Plus, the October 30 strike is home to peak put open interest of 3,566 contracts. This heavy accumulation of out-of-the-money puts could be a boon for GMCR, as the equity could benefit from options-related support in this region as expiration draws closer.
Amazon.com, Inc. (AMZN) scored a price-target boost from Barclays this morning, as the brokerage firm predicted that the online retailer will sell more than 5 million Kindle e-readers in 2010. That number is expected to climb toward 11.5 million by 2012, with Barclays forecasting Kindle-related revenue to reach $1.7 billion in 2010 and $4.3 billion by 2012. As a result of its bullish outlook for the gadget, Barclays hiked its price target for AMZN to $180 from $132 and backed its "overweight" rating.
However, AMZN has staggered fractionally lower ahead of the open. The equity has enjoyed a rapid ascent since Sept. 1 along the support of its 10-day and 20-day moving averages, pushing its Relative Strength Index (RSI) to a bloated 81. In other words, the stock may be short-term overbought, and due to consolidate some gains.
Option players certainly seem to be bracing for a pullback. AMZN's put/call open interest ratio (SOIR) arrives at 1.22, with puts outnumbering calls among options set to expire within three months. This ratio rests in the 79th annual percentile, as short-term speculators have been more bearishly aligned just 21% of the time during the past year.
Chesapeake Energy Corporation (CHK)
Chesapeake Energy Corporation (CHK) garnered a bullish brokerage recommendation this morning. MKM Partners initiated coverage on a slew of energy stocks, and doled out an upbeat "buy" rating for CHK. Plenty of analysts already maintain an optimistic outlook for CHK; Zacks reports 21 "buy" or better ratings, along with 14 "holds" and just one "strong sell."
CHK has eked out a pre-market gain of 0.4%, but the stock could struggle to overcome resistance at its 20-week moving average. This intermediate-term trendline hasn't been surmounted on a weekly closing basis since June 18, and has kept a tight lid on CHK's progress throughout the month of September.
In light of the stock's technical troubles, it's no surprise that traders are favoring bearish bets on CHK. During the past 10 days, speculators on the International Securities Exchange (ISE) have bought to open 1.05 puts for every call on the shares. This ratio ranks higher than 95.5% of comparable readings taken during the previous year, revealing that traders have rarely purchased puts over calls at a faster pace.
Wynn Resorts, Limited (WYNN)
Wynn Resorts, Limited (WYNN) found itself on Wells Fargo's good side this morning, as the casino concern earned a new "outperform" recommendation from the brokerage firm. Only Bally Technologies (BYI) earned a similarly optimistic rating; Wells Fargo slapped the rest of WYNN's peers with lukewarm "market perform" opinions.
Despite the new bullish note, WYNN is fractionally lower ahead of the bell. The stock has added an impressive 50.5% year-to-date, though, and is perched comfortably above familiar support at its 10-month moving average.
Short sellers don't seem too impressed by WYNN's technical outperformance, with short interest ramping up by 17.2% during the past month. These pessimistic positions now account for 10.2% of the equity's float, hinting at a healthy supply of sideline cash that could unwind to help perpetuate WYNN's uptrend.
br>Success is simple. Do what's right, the right way, at the right time.
Legal Notices and Disclaimers