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5 Trade ideas for Monday: Abbott Labs, Capital One, FedEX, ARM Holdings and Nuance

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers

Abbott Laboratories $ABT

Abbott Laboratories, $ABT, was in a long uptrend until it started lower in August with the market. It took a second leg lower when all healthcare stock were hit again in September, making a bottom at the end of the month. Since then it has rebounded and is now back at the top of the gap down area from August and consolidating. The RSI is bullish and rising along with the MACD, both supporting more upside.

ARM Holdings, Ticker: $ARMH

ARM Holdings, $ARMH, fell out of consolidation in June, making an eventual bottom with the market in August. It has crept higher since making higher lows and higher highs. Now it is consolidating at the resistance from July. The RSI is in the bullish zone and rising and the MACD is flat, while the Bollinger Bands® point higher.

Capital One Financial, Ticker: $COF

Capital One Financial, $COF, gapped lower on earnings in July and then continued lower. With a double bottom to start October it now is consolidating back near resistance of the August bounce and just below the gap just above. The RSI is trending higher and in the bullish zone with the MACD rising. Friday saw a test probe over resistance, and if it holds could be a trigger for more upside.

FedEx, Ticker: $FDX

FedEx, $FDX, started lower in June and then accelerated through support in late August. After a short consolidation it made a lower low in September and then started higher. Now it is back at resistance and over the 100 day SMA for the first time since June. The RSI is bullish and rising and the MACD is rising too. The strong Marubozu candle Friday bodes for more upside, and could give the trigger over resistance.

Nuance Communications, Ticker: $NUAN

Nuance Communications, $NUAN, pulled back from 18.50 in August and found support over the 200 day SMA. it has built a consolidation zone since with a series of higher lows. Heading into the week the Bollinger Bands® are opening higher and it has support for more upside from a rising RSI and MACD. Look for a move over resistance to participate to the upside.

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Elsewhere look for Gold to continue lower while Crude Oil moves lower in its consolidation. The US Dollar Index is breaking to the upside while US Treasuries continue lower. The Shanghai Composite also looks to continue higher while Emerging Markets consolidate under resistance.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF's SPY, IWM and QQQ. Their individual charts show some consolidation in the SPY and QQQ short term as the IWM takes the lead, but all look strong on the weekly timeframe. Use this information as you prepare for the coming week and trad'em well.

More at Dragonfly Capital

#$ABT #$COF #$ARMH #$FDX #$NUAN #$SPY

Monday’s Notable Options Activity

Here is some untied, generally directional options activity that caught my eye during Monday’s trading:

1. XOP - The S&P Oil & Gas etf had one of its worst days in years, closing down nearly 5%, closing in on last months 52 week and multi year lows. When the etf was 43.26 a trader sold 8,000 feb 44 puts at 3.37 to close and bought 8,000 feb 42 puts for 2.55 to open, with 11,400 trading on the day, making it the most active strike on the day. Total options volume ran 1.5x average daily.

2. RIG - stock made new 52 week and 20 year lows, closing down 3.6% on the day. Total options volume ran more than 2x average daily, with puts making up 80% of the volume. When the stock was 15.52 a trader paid 37 cents for 18,000 Jan 15 puts, marked closing, 44,500 ended up trading on the day.

3. LVS - There was a long dated call buyer when the stock was $54.80, with a trader paying 3.25 for 15,000 Jan2016 62.50 calls to open. Shares of LVS have been hit hard with continued economic weakness in China and what has been in apparent downtrend in high roller gambling in Macau. The stock is down 35% from the 52 week highs made early last year, but interestingly just now below the uptrend that had been in place from the 2009 lows that saw the stock rise more than 6000% from the lows:

LVS 7 year chart from Bloomberg

4. FRO - the oil tanker company's shares are up 85% in 2015, and up 300% from early December. When the stock was $4.50 there appeared to be a long holder rolling an overwrite, buying back 18,500 Jan 2 calls for 2.50 to close and selling 18,500 Feb 5 calls at .45 to open.

5. ZNGA - options volume ran 3x average daily with the buy of a risk reversal incorporating more than half of the total volume. When the stock was 2,57, a trader paid .54 for 10,000 Jan16 3 calls and sold 10,000 Jan16 2.5 puts at .52,this trade was marked closing, and there is about 32,000 open interest in each line. This could have been closing a collar against 1 million shares of long stock.

6. NUAN - yesterday in this space I highlighted a decent size put purchase that looked to be a hedge against a long position:

NUAN - total options volume ran 6x avg daily volume, with more than half the volume coming in one trade. When the stock was $13.65 (also a new 52 week low) a trader paid .35 for 20,000 Feb 13 puts to open. These puts are likely dollar cheap protection for a long, or a fairly reasonable vol purchase into the company’s fiscal Q1 results that should fall in Feb expiration. Implied vol should rise into the mid to high 40s prior to results.

Today options volume ran almost 3x average daily with short dated calls active. The most active strike was 7300 of the Feb 15 calls, most bought to open. There was a rumor on the Twitters suggesting that Baidu was interested in buying them, but the stock only rallied about 2.5% on the rumor.

7. XHB - the homebuilding etf made a new 52 week and 7 year high today. When the etf was $35.11 a trader rolled a bullish view up selling 8500 March 34 calls at 1.86 to close and bought 8500 March 36 calls for .83 to open.

This post by Dan Nathan (@riskreversal) originally appeared on RiskReversal.com

#$XOP #$RIG #$LVS #$NUAN #$FRO #$ZNGA

Friday's Notable Options Activity: Gold Calls Shine

1. GDX - on a day that saw the Gold Miner etf make new 2 month highs, call volume ran hot at almost 2.5x average daily volume. There was a bullish roll down in Jan 16, trader sells 10,000 Jan 2016 40 calls at .30 to close and pays 1.15 for 10,000 Jan 2016 29 calls when the etf was 20.49

2. GLD - call volume was almost 2.5x average daily volume with calls outnumbering puts 117,000 to 41,000. There appeared to be a buyer accumulating the March 120 calls, with 41,000 trading on the day, with the largest block a buy of 15,700 for 2.26 when the etf was $116.97.

3. NUAN - total options volume ran 6x avg daily volume, with more than half the volume coming in one trade. When the stock was $13.65 (also a new 52 week low) a trader paid .35 for 20,000 Feb 13 puts to open. These puts are likely dollar cheap protection for a long, or a fairly reasonable vol purchase into the company's fiscal Q1 results that should fall in Feb expiration. Implied vol should rise into the mid to high 40s prior to results:

NUAN 1yr chart of 30 day at the money IV from Bloomberg

NUAN is a voice recognition software maker, which Carl Icahn is the largest shareholder (in their latest filing) with 60,785,ooo shares, or about 19% of the shares outstanding.

4. JCP - after the monster 20% one day move earlier in the week, a trader pays 1.30 for 10,000 of the Feb 9 puts when stock was 7.87, possibly a long holder setting a stop, hard to tell. These are 80 delta options, and seems a bit hefty for a hedge, and expensive given the time left to expiration for an outright bearish bet

5. MCD - for the second time last week, call buying was the story, when stock was 93.32 a trader paid 1.15 for 11,500 Feb 97.50 calls to open. On Tuesday a trader did the following:

MCD - when stock was 93.43 early in the trading session a trader rolled a bullish view, selling 35,000 Jan 95 calls at .90 to close and bought 35,000 Feb 95 calls for 2.27 to open.

7. AAL - saw bullish activity, when the stock was 53.05 looked like a trader sold 3500 Feb 48 calls at 6.20 to close and bought 5,000 May 60 calls for 2.89 to open. AAL also saw what looked like some opening put selling, when stock was 52.66, 5000 of the March 50 puts were sold at 22.85

8. UAL - saw a bullish roll, when stock was 65.53 a trader sold 5000 jan 65 calls at 1.90 to close and bought 5000 Feb 65 calls for 4.37 to open. Friday seemed like one of the few days in the last few weeks where crude oil declined and airline stocks did with it. No worries though, they keep buying calls :)

9. RAD - saw what looked like an opening overwrite of long stock,when stock was 7.78 a trader sold 10,000 of the Aug 8 calls at .90 to open, offering a call-away level of 8.90, up 14%

10. DD - Trian fund launched a proxy fight for board representation as expected, stock opened very near a new all time high. Shortly after the open when the stock was 75.22 a trader sold to close 10,000 Jan 23rd exp 74.5 calls at 1.84 to close. Options volume ran 2.5x average daily volume with calls outnumbering puts more than two to one, but at least some call activity looked to be closing.

11. AAPL - total options volume ran almost 1.5x avg daily with calls outnumbering puts almost 2 to 1. Two of the five most active single stock options were both Jan (next week expiration) calls in AAPL, with 28,500 of the Jan 115 calls trading, and 25,900 Jan 112 calls trading.

This post by Dan Nathan (@riskreversal) originally appeared on RiskReversal.com

#$AAPL #$GDX #$GLD #$NUAN #$DD #$RAD #$AAL #$UAL #$MCD #$JCP

What We're Trading

TIF - Tiffany was down 2% after a slight EPS miss and lowered guidance, but now turned around to a 2% gain as traders used weakness to buy in the pre. BRCD - Brocade down 4% after missing whisper numbers on top and bottom lines.

NUAN - Nuance is up 5% in the pre after they beat EPS on stronger revenue. CBRL - Cracker Barrel beat EPS forecasts by 13 cents on stronger revenus, shares up $3.70 on the TradeMONSTER extended hours platform. DANG - The E-Commerce giant mised EPS forecasts shares down 3.6% in the pre. QIHU - Qihoo 360 is up over 3% after an EPS beat and raised sales guidance.

DSW - We all have much to be thankful for. Today, I'm thankful that DSW posted such stellar numbers, as I had made this my final trade on CNBC's Fast Money Halftime November 13th! Our wealth management clients didn't have to wait long for shares to jump from $31.53 to over $36! BANG!

#$DSW #$NUAN #$BRCD

Top Trade Ideas for the Week of July 28, 2014: Bonus Idea

Here is your Bonus Idea:

Nuance Communications, $NUAN, traced out a bearish Bat harmonic and pulled back nearly 38.2% of the pattern before turning back higher last week. This gives a natural stop loss level just under last week's low at about 17.50 and the rising 50 day SMA to trade long against. The RSI is heading back higher and held in the bullish zone on the pullback as the MACD is turning back up and near a cross. Both support the upside continuing. An AB=CD pattern would target a move higher to 22. There is resistance at 18.55 and 19 before 19.50 and 20. Support lower may come at 17.50 and then 17.30 and 17 before 16.50. Short interest is elevated at 7% and there is large open interest at the 20 Strike on the Call Side in August and the 17 Strike on the Put side. The company reports earnings August 11th.

Trade Idea 1: Buy the stock with a stop at 17.30.

Trade Idea 2: Buy the August 18 Calls (offered at 95 cents late Friday).

Trade Idea 3: Buy the August 18/20 Call Spread (70 cents).

Trade Idea 4: Buy the August 18/20 Call Spread and Sell the August 17 Put (40 cents).

Trade Idea 5: Buy the August 18/20 1x2 Call Spread (45 cents).

Trade Idea 6: Buy the August 18/20 1x2 Call Spread and sell the August 17 Put (5 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the last days of July, sees the Equity Indexes again are mixed. Elsewhere look for Gold to continue lower in its consolidation while Crude Oil slowly climbs in its broad consolidation. The US Dollar Index is breaking higher and looks to continue in the short run while US Treasuries continue to look good to the upside. The Shanghai Composite and Emerging Markets are also biased to the upside now with the risk that Emerging Markets find resistance. Volatility looks to remain at low levels keeping the bias higher for the equity index ETF's SPY, IWM and QQQ. There chart paint a mixed picture though with the QQQ looking strong and ready to continue higher while the SPY consolidated in the uptrend and the IWM pulls back in the consolidation range. Use this information as you prepare for the coming week and trad'em well.

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#$NUAN

Here's How The Buy Side Expects Nuance Communications to Report

Nuance Communications Inc. (NUAN) is set to report FQ1 2014 earnings after the market closes on Monday, February 10th. Nuance Communications is an American software and communications technologies company. Nuance stock got a boost in January when the company preannounced better than expected December sales. However, in the 4 trading days following the report the stock’s 8% gains were completely erased. This quarter Wall Street is expecting Nuance to report slightly less revenue than FQ1 last year and 40% less profit.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

(Click Here to see All Estimates for Nuance Communications)

The current Wall Street consensus expectation is for HAS to report 21c EPS and $486.46M revenue while the current Estimize.com consensus from Buy Side and Independent contributing analysts is 22c EPS and $486.11M revenue. This quarter the buy-side as represented by the Estimize.com community is expecting HAS beat the Street’s expectations on profit but come up slightly short on revenue.

By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller differential compared to previous quarters.

The distribution of estimates published by analysts on the Estimize.com platform range from 21c to 23c EPS and $482.00M to $489.00M in revenues. This quarter we’re seeing a smaller distribution of estimates compared to other quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A narrower distribution of estimates signaling more agreement in the market, which could mean less volatility post earnings.

Throughout the quarter the EPS estimate from Wall Street decreased from 32c to 21c while the Estimize consensus remained flat at 22c. Over the same time period Wall Street reduced its revenue expectation from $490.45M to $486.86M while the Estimize forecast increased at the end of the period from $484.40M to $486.11M. Timeliness is correlated with accuracy and rising analyst expectations at the end of a quarter are often a bullish indicator.

The analyst with the highest estimate confidence rating this quarter is BB9166 who projects 21c EPS and $482.00M in revenue. In the Winter 2014 season BB9166 rated as the 20th best analyst and is ranked 57th overall among over 3,800 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case BB9166 is expecting NUAN to report in-line with Wall Street on profit but come up short on sales.

This quarter the Estimize community expects Nuance to match Wall Street’s consensus on revenue and beat the profit forecast by a small margin. However, both groups expect Nuance’s year over profit to be down by a considerable amount and the company will need to continue to cut costs to restore EPS to previous levels.

Get access to estimates for HAS published by your Buy Side and Independent analyst peers and follow the rest of earnings season by heading over to Estimize.com. Register for free to create your own estimates and see how you stack up to Wall Street.

#$NUAN