Tuesday, October 4, 2011

Morning Note Oct 4th

October 4, 2011

US equity futures are lower as continuing concerns over contagion risk to the EU debt crisis, capital needs in the banking sector and slowing global growth concerns all weigh on investor sentiment. Attention will turn to Fed Chairman Bernanke's testimony on the economy to Congress today at 10:00 ET.

Libor fixings 

- Overnight Libor: Dollar: 0.143% vs prior 0.144% ; Sterling: 0.589% vs prior 0.589%; Euro: 0.880% vs prior 0.893%
- 1-month Libor: Dollar: 0.241% vs prior 0.240% ; Sterling: 0.694% vs prior 0.693%; Euro: 1.298% vs prior 1.299%
- 3-month Libor: Dollar: 0.381% vs prior 0.378% ; Sterling: 0.957% vs prior 0.954%; Euro: 1.498% vs prior 1.498%

WTI ($1.20) to $76.41

Nat'l gas ($0.004) to $3.613

Spot Gold +$12.20 at $1668.00

Asian Markets

Most Asian markets fell again today on continued worries that Greece will default, though losses were largely tame compared to yesterday’s. Builders and banks ledTaiwan down initially, but what was believed to be state-fund buying of blue chips turned the market to a gain by the end of the day. Australia recovered some early losses when the central bank said it might cut interest rates as soon as November.Thailand fell. Chinese oil producers and property stocks took Hong Kong down. SomeMacau casino stocks outperformed, either falling only slightly or posting small gains to rebound somewhat from two days of plummeting. Banks and oil refiners led South Korea, which was closed yesterday, to the largest drop in the region. China is closed until 10-Oct for National Day. The yen is trading at 76.63 to the US dollar. AustraliaAugust building approvals +11.4% m/m vs cons +1.0%. August trade balance $A3.10B vs cons A$1.90B.

European Banks

European equity markets fell for a third consecutive session in a broad-based retreat as EuroZone debt worries and macro concerns weighed. EuroGroup finance ministers agreed yesterday that Greece could wait till mid-Nov before potentially receiving the next tranche of its bailout loan, increasing worries about a Greek default, whilst European finance ministers meet today, with talks about the size of the 'haircut' on Greek debt on the agenda. Sentiment about the impact of Greece on the banking sector was exacerbated by reports Dexia's (DEXB.BB) board was meeting to discuss an effective breakup of the company, creating a bad bank to assets weighing down the company's balance sheet, though after the markets opened Belgium and France finance ministries said they will guarantee Dexia's financing. Worries about the prospects for economic growth were highlighted in an S&P ratings report which raised the probability of a recession in Europe in 2012 to around 40%, though said their base case was for sluggish, uneven growth, as well as Goldman Sachs lowering their economic outlook and forecasting a mild recession in the EuroZone at the end of 2011. With limited significant macro data or company updates, indices steadily extended declines. UK Sep Construction PMI 50.1 vs consensus 51.5, prior 52.6. EuroZone Aug PPI +5.9% y/y vs consensus +5.8%, prior +6.1%. The pound and the euro are trading at $1.5408 and $1.3193 respectively

Today's Economic Releases (Eastern Time)

04:30 UK Construction PMI (Sept); actual 50.1; consensus 51.5
05:00 Eurozone PPI y/y (Aug); consensus n/a
07:45 US ICSC-Goldman Chain Store (01-Oct); consensus n/a
08:55 US Redbook Chain Store (01-Oct); consensus n/a
10:00 US Factory Orders (Aug); consensus (0.2%)
16:30 US API Crude Inventories (30-Sep); consensus n/a 

Today's Key Events (Eastern Time)

08:00 Safeguard Scientifics Investor Day
08:30 Generac subsidiary acquires Magnum Products business: 866.730.5768 / Intl857.350.1592 pc 69681163
08:30 Somaxon Pharmaceuticals announces FDA feedback on Silenor OTC regulatory pathway: 480.629.9835 pc 4477168
09:45 Signet Investor Day and Store Tour
10:00 Actuant Analyst Meeting
10:00 Bernanke testifies on Economic Outlook before U.S. Congress Joint Economic Committee (JEC)
10:00 CME Group Analyst Day
10:30 Varian Medical Systems Investor Meeting and Year-End review at ASTRO
13:00 Apple "Let's Talk iPhone" Event
13:00 Dow Chemical Investor Day
—:— American Society for Therapeutic Radiology and Oncology ~ ASTRO
—:— Bank of America Merrill Lynch Banking & Insurance CEO Conference
—:— Black Hills Corp IR Summit Day I : 866.242.5249 / 517.444.9945 pw 2429707
—:— China: Markets Closed for National Day
—:— EU Economic and Financial Affairs Council (ECOFIN) meeting
—:— FBN Securities with Dot Hill Systems CEO & CFO
—:— FBN Securities with FX Energy
—:— FDA PDUFA (est): Lundbeck's NDA for Onfi (clobazam) as adjunctive therapy for Lennox-Gastaut syndrome
—:— Gaming Investment Forum
—:— Global Hunter Securities with Mercer International
—:— Global Hunter Securities with Mitcham Industries
—:— Johnson Rice Energy Conference
—:— NuPathe to Present at the Safeguard Scientifics Investor Day
—:— Obesity Society Annual Meeting
—:— RBC Capital Markets International Oil & Gas 

Company Specific and Other News

DB (Deutsche Bank sees Q3 significantly below expectations; Deutsche Bank says 2011 planned pre-tax target of €10B from its core businesses is no longer achievable; expects to be profitable in Q3 and expects a robust earnings level for FY11)
OZM (Och-Ziff Capital reports AUM as of 1-Oct of ~$28.5B v. ~29.4B at 1-September. Sep fund return estimates: OZ Master Fund (1.82%), OZ Europe Master Fund (0.76%), OZ Asia Master Fund (3.85%), OZ Global Special Investments (1.69%))
TISI (Team Inc reports Q1 EPS $0.33 vs Reuters $0.25. Reports Q1: Revenues $141.1M vs Reuters $123.4M. FY Guidance (May 2012): Reaffirms EPS $1.45-1.60 vs Reuters $1.55)
UBS (UBS expects to report a modest net profit for the group and positive net new money in its wealth management businesses for Q3 of 2011.)

Positive News
FTR (Frontier Communications board affirms it will maintain annual dividend of $0.75/share)
SCLN (SciClone Pharmaceuticals approves share repurchase program for up to $20M in stock; reaffirms 2011 guidance)

CAG (ConAgra files mixed securities shelf of indeterminate amount; The shelf covers common stock, preferred stock, senior debt securities and subordinated debt securities.)
FIG (Fortress Investment files $1B mixed shelf)
SBRA (Sabra Health Care REIT files $500M mixed shelf)

Other News

Eurozone sovereign debt crisis 
- Eurozone considers making banks pay more for Greece: Reuters reported that Eurozone finance ministers are considering making banks take bigger losses on Greek debt. The article noted that Eurogroup Chairman Jean-Claude Juncker said that ministers were reassessing the extent of private sector involvement in a planned €109B second bailout package for Greece after Athens said it would miss key deficit targets. Recall that under the July deal, creditors agreed to take a 21% haircut on their Greek holdings via a plan to lighten and extend the duration of the debt burden. Junker told reporters that "As far as the PSI is concerned, we have to take into account the fact that we have experienced changes since the decisions we took on the July 21, so we are considering technical revisions, so yes".
- Crucial aid to Athens delayed: The WSJ reported that in a lengthy meeting inLuxembourg that included wide-ranging discussions on Greece, finance ministers delayed their most immediate task: approving an €8B payment to Greece under its initial bailout plan. The paper noted that Eurogroup Chairman Jean-Claude Juncker said he expected the decision would be made "in the course of October," but likely not on 13-Oct, as had previously been suggested (other reports have said the money will not be paid until November). The article said that despite the delay,Greece's creditors are still likely to give it the money. It also pointed out that whileGreece's deputy finance minister said last month that the country could run out of money by mid-October, Juncker and other officials said on Monday that Greece has enough until mid-November.
- Junker avoids the word "leveraging": Bloomberg noted that Eurogroup chairman Jean-Claude Juncker said that Eurozone finance ministers had made "good progress" on the credit lines and bank recapitalization tools. The article noted that avoiding the word "leveraging," Junker added that work is under way to scale up the fund's capacity without requiring each country to pony up additional capital. Junker said that “We are checking if yes or no we could increase the efficiency of the different instruments,” though he noted that using the ECB to boost the fund's firepower is unlikely to be "the main avenue of our considerations".
- Collateral deal reached: The FT noted that under a deal brokered by Klaus Regling, the head of the Eurozone’s €440B bail-out fund, Finland will now be able to get the collateral it has demanded in exchange for participating in the new bailout. However, the paper said that Finland will only get the collateral on highly onerous terms that all other Eurozone countries have decided to pass on. The article said that the collateral deal will force Finland to pay in billions of euros into the €500B ESM in 2013, the year it comes into operation. All 16 other Eurozone countries are allowed to make payments into the ESM over a five-year period. In addition, Finland will be forced to forfeit most of the profits it would be due on bailout loans to Greece. IfGreece were to default, Finland would not be able to access its collateral for more than 15 years.
- Dexia, BNP resist Greek losses 3x worse than booked: Bloomberg said that Dexia, BNP Paribas and SocGen are resisting pressure from regulators to accept bigger losses on their holdings of Greek government debt. Regulators are concerned that the banks have not written down the bonds sufficiently. The article said that while most banks have marked their debt to market (a decline of as much as 51%),France's two biggest lenders and Belgium's largest have cut the value of some holdings by 21%. Bloomberg said that the three firms, among the top foreign holders of Greek government bonds, would have about €3B of additional losses if they took the writedowns of 50%.
- Hedge funds eye outright bet against France: The FT said that an outright bet against France has become a popular hedge fund trade. The article noted thatFrance's bond yields have already broken away from Germany, while its CDS are significantly higher. In addition, French banks are weak and if they do not get recapitalized, economic growth is likely to slow further. If the banks do get bailed out, the additional debt is bad for France's credit rating. The article also discussed a long Italy-short France trade that could provide additional protection.
- Is Greek debt a good bet?: The WSJ noted that Greek bonds have lost nearly half of their value in the past six weeks, trading at 38 cents on the dollar. The article said that some hedge funds are scooping up the bonds on the bet that Greece's financial system is too important to the global market for the ECB to stop lending money so that it can pay off its debts. However, the paper added that history has shown the risks inherent in such a bet, pointing out that on average, investors have recovered 36 cents on the dollar from past sovereign defaults.

Currency/trade wars 
- Senate moves to punish China for yuan's low value: The WSJ reported that the Senate voted on Monday to move forward with a bill that would punish China for keeping the value of its currency, the yuan, low. The bill advanced in the Democratic-controlled Senate with a strong bipartisan vote of 79-19, though the paper added that it has uncertain chances in the Republican-controlled House. It also pointed out how the Senate vote puts the White House in a delicate position, particularly given the ongoing election dynamics. The article went on to note that many business leaders, especially those from global firms, are against the bill, though the National Association of Manufacturers has decided not take a position given that its members are divided.
- House unlikely to take up legislation: Politico cited comments from House Majority Leader Cantor who said that the House was unlikely to take up the legislation cracking down on China's currency policies, even if it clears the Senate later this week with strong bipartisan backing. According to the article, Cantor expressed concern that the bill would raise the cost of cheap imported materials from China, which would in turn raise prices on consumers. Politico noted that the White House, which said it is reviewing the legislation, is in no hurry to get into a confrontation with one of its most important economic partners.
China warns of trade war over US bill: The FT noted that China has warned of a potential trade war with the US if lawmakers decide to pass a proposed anti-China currency bill. The paper cited comments from foreign ministry spokesman Ma Zhaoxu, who said that “By using the excuse of a so-called ‘currency imbalance’, that bill escalates the exchange rate issue, takes protectionist measures, gravely violates the rules of the World Trade Organization and severely upsets China-US economic and trade relations; China expresses firm opposition to it,” The FT added that China's central bank argued that the bill would not solve structural problems in the US such as a large trade deficit and high unemployment, but added that "it may seriously affect the entire progress of China’s reform of its yuan exchange rate regime and also lead to a trade war, which we would not like to see.”

Newspaper Articles / Headlines

European Court of Justice rules that national laws against import/sale/use of foreign decoder cards are contrary to freedom to provide services

Calgary Herald
For sale: Birchcliff Energy. The Calgary Herald reports that after receiving an unspecified offer from an unidentified party, Birchcliff decided to put itself on the block today. An analyst says Athabasca Oil Sands (ATH.CN) is more likely to have made the first bid than is a Chinese or American company.

Detroit News
UAW summons local presidents to Detroit. The Detroit News reports that the action usually means that the UAW has reached a tentative agreement with an automaker, in this case, Ford, with whom talks continued last night.'

Financial Times
EADS cutting back on production of Typhoon fighters. The FT reports that the company announced the cutbacks, without layoffs, yesterday. Finmeccanica (FNC.IM) also does not expect any layoffs. Eurofighter is ramping production down to 43 from the current 53 jets a year.

- Dexia appears to be heading for dismantling. A source close to Dexia shareholders tells L'Echo that the board probably wants to avoid a capital increase, but the source thinks French subsidiary Crédit Local may be up for sale. The article prints part of the bank's statement yesterday saying that the board has asked the CEO to take actions to address Dexia's structural problems.
KBC Groep expected to get less than hoped-for €1.2B from selling Polish subsidiaries

LA Times
- Real cellphones are new flavor of the month in China. The LA Times reports that as prices of the real ones have come down and their functionality has gone up, there aren't many incentives left for people to buy pirated phones. A market researcher says that fakes made up 7% of shipments last year, vs 20% in 2007. The article notes that fake phones remain popular for poorer people.

London Times
London Metal Exchange CEO says sale could take nine months. A shareholder makes a point of telling the Times that the LME does not need to sell itself.

New York Post
- Bank of America pulling back from leveraged-loan market. Sources tell the NY Post: BAC, Credit Suisse (CSGN.VX), and Morgan Stanley (MS) are reselling their $4.7B in loans to finance the purchase of Kinetic Concepts at a discount that will result in their taking a $235-470M haircut.
BAC may end up with more than $150M in leveraged-loan losses after fees; JPMorgan (JPM) and Goldman Sachs (GS) have indicated they will take on BAC's role.

New York Times
- How much is Yahoo! worth? An NYT analysis concludes that Yahoo's parts are easily worth more than the $17.1B market value of the whole, though the exact sum of those parts is open to debate, since it depends on valuing Yahoo's internet business. Selling the company as a whole would bring tax advantages, but some buyers, unsurprisingly, may only want certain parts of Yahoo.

South China Morning Post
- Macau casino stocks getting hammered in Hong Kong. The SCMP notes that SJM Holdings (880.HK) plunged 25% yesterday, other shares in the sector did roughly the same, and nobody knows why the funnel has opened over the last two trading days. There are worries that China's black-market lending schemes are on the verge of collapse, which would interfere with gamblers' abilities to visit Macauand spend money there. Short-selling may also be playing a part in the sector rout.

Orkla chairman willing to consider merging Norsk Hydro (NHY.NO), Norsk Sapa. A "key Orkla source" tells VG that creating a listed Norwegian aluminum giant is an appealing prospect. But sources from Norsk Hydro say the resulting company would probably meet antitrust issues due to its combined market share.

Wall Street Journal
- Goldman Sachs cuts global growth forecast; forecasts a mild recession inGermany and FranceIn a strategy note, the firm cut its forecast as follows: year-end euro forecast to $1.38 from $1.40. year-end sterling to $1.53 from $1.56. a "bit less dollar weakening" than previously forecast
2012 golbal economic growth forecast to 3.5% from 4.3%. now sees odds of USrecession at 40%. S&P 500 forecast for rest of year to 1,200 from 1,250
10-yr yield of 2.25% from 2.75%. Brent crude year-end forecast to $112.50 from $120.
WSJ is extremely cautiously positive on Arch Coal. A "Heard on the Street" column says that as long as the global economy avoids a complete tanking, it appears that the coal sector has fallen just about as low as it can possibly go.
- Citi now needs to focus on selling the stuff that nobody wants to buy. The WSJ reports that Citi's success in disposing of the first half of Citi Holdings is unlikely to be repeated. In an interview, Citi Holdings CEO Mike Corbat acknowledges that the sale process is going to slow down, and while some things like the stake in Smith Barney might find some buyers, people aren't lining up to take on home mortgages. Corbat would rather make no sale than a sale at a price he dislikes. People familiar with the situation tell the WSJ that Citi is more likely than not to keep the private-label credit-card business.
- Customers may end up with part of Full Tilt. A person familiar with the matter and an attorney tell the WSJ that last week's proposed acquisition of Full Tilt by Groupe Bernard Tapie could involve players who are owed the most money being offered stakes in the company.

Melancholy start to Q4. Greece's admission that it will miss its budget-deficit targets roiled markets Monday as stocks kicked off Q4 on a sour note, with the S&P falling 2.85% to a 13-month low of 1,099.23, led by weakness in bank stocks. Morgan Stanley (MS) fell 7.6% and Bank of America (BAC) dived 9.6% as traders worried about counterparty risk if Europe continues to deteriorate. Futures are near session lows at 7:00, with benchmark S&P -0.8% to 1078, reflecting broader losses across Europe.
Europe double-dip? S&P dropped its 2012 outlook for Europe growth - for the second time in five weeks - to 1.1% from 1.5%, and now pegs the risk of a double-dip recession at 40%. Recent data "point to a fresh deterioration in the business climate," S&P said, not only in debt-strapped countries, "but also in the core countries of the eurozone and in the U.K." In a report today, Goldman said it now expects the eurozone to sink into a mild recession in Q4.
Deutsche Bank scraps profit target. Deutsche Bank (DB) said this morning it would not reach its 2011 profit target, predicting a €250M Q3 impairment on Greek sovereign debt. DB will also reduce headcount by another 500 "in response to the significant and unabated slowdown in client activity." While most banks have marked down Greek debt, Dexia (DXBGY.PK), BNP Paribas (BNPQY.PK) and SocGen (SCGLY.PKhave not - a decision analysts say is contributing to the downdraft in their share prices. Shares of DB were recently -5.8% in Frankfurt.
UBS sees modest Q3 profit. UBS (UBS) said this morning it expects to turn a "modest net profit" in Q3, despite the recent $2.3B rogue trading loss. But if you factor out €2.2B in 'adjustments,' UBS's modest profit is likely to fall well short of the €1.5B Street consensus, likely due to ongoing poor performance at its I-bank. UBS was recently +0.1% in Zurich.
Dexia props. French and Belgian FMs pledged to guarantee financing raised by teetering Dexia (DXBGY.PK), and said they'll intervene if necessary to protect account holders and creditors. Dexia needs about €5B to achieve its required 9% Tier I ratio. Shares fell Tuesday as much as32% to an all time low, and are down 59% since June (PR). In a throwback to 2008, a French government source today insisted Dexia "has a problem of liquidity, not of solvency."
Google forges ahead with YouTube TV. Sources say Google (GOOG) is in late-stage talks with superstars and media outlets (TWXNWS) to produce YouTube-only content, a first step to becoming "a next-generation cable provider that oversees dozens of free online channels with professional-grade shows." GOOG is forking over than $100M in advances to secure the exclusive shows.
A backstop for the Greece backstop. Eurozone FMs - including Finland - agreed on a deal to provide collateral for loans to Greece. The deal is available to all eurozone members; other member nations had vetoed an earlier bilateral deal between Greece and Finland.
AMR crash alert? American Airlines parent AMR (AMR) dove 33% Monday on renewed fears the third-largest U.S. carrier may be forced to seek bankruptcy protection. Fueling the speculation are concerns AMR has burned through its cash reserves, and reports that more than 200 pilots have retired from its central hub over the last two months, compared with a typical monthly dozen. AMR denied the reports, saying a bankruptcy filing is "not our goal or preference," but conceded that "we need to improve our results." Peer impact: LCC -16%UAL -12%DAL -11%LUV -9%.
McGraw-Hill sells broadcasting business for $212M. McGraw-Hill (MHP) unloaded its nine-station broadcasting group to E.W. Scripps (SSP) for $212M, cashing in on a "non-strategic asset" as it works toward completing its split into two "pure play" companies.
Next up, $15T. The U.S. government ended its fiscal year with an unprecedented debt of $14.79T, including $95B tacked on in the final day.
China lashes out at U.S. yuan bill. In a veiled threat of a trade war, China expressed "deep regret" over a proposed bill - approved yesterday by the Senate - designed to pressure Beijing on its currency policy, saying it "seriously violates rules of the WTO and obstructs China-U.S. trade ties." The PBOC maintains that after factoring in inflation, the yuan is now close to a balanced level. House Republicans remain skeptical of the bill and the White House hasn't endorsed it.
IPO weakness not echoed in PE markets. In further evidence of the chill that's descended over the IPO scene, only 5 venture capital-backed companies went public in Q3, the lowest number since late 2009. On the other hand, 101 VC-backed companies were bought out; the dollar amount for deals with disclosed terms at its highest level since Q4 2009.


Bank of America Merrill Lynchh: downgraded CLI, OFC, AGCO
Barclays: upgraded PLCM, SHOR; downgraded RVBD
Canaccord Genuity: upgraded FST
Citi: upgraded AWC, MASI, ARE, KIM, EXC, EQR, PPS; downgraded PPDI
Credit Suisse: upgraded TGB, AEM
Deutsche Bank: upgraded SODA; downgraded AMED, GTIV, GR
Goldman Sachs: upgraded KMI; downgraded MDR, PPDI
Jefferies: downgraded COF, AXP
Mizuho: downgraded NIHD
Nomura Securities: upgraded WYNN; downgraded BBBY
Rodman & Renshaw: upgraded AMR, CTIC
Susquehanna: upgraded EXPE
Wunderlich Securities: downgraded BPZ, CWEI, CZO, OAS


Singin’ the Insurance Blues

Presently, a put option that protects against a 10% (or greater) move down in the SPX through year end (3 months) costs roughly $47.50 (4.32%) the highest premium since April 2009.

The VIX is 45.45. Historically when vol is high, spot VIX trades at a healthy premium to the rest of the futures curve but is currently rather close to the nearest expiring VIX future. During the heart of the financial crisis, spot VIX averaged an 11% and 28% premium to front and second month futures respectively. At the height of the 2010 “flash-crash”, the VIX (45.79) traded at a 27% and 28% premium to front and second month expiring futures. This relationship reflects the implicit assumption (right or wrong) that vol will not stay high (or as high) for an extended period. With current spot VIX trading at just an 89bp and 12% premium to front and second month VIX futures, no such assumption is being made and the market refuses to price in a meaningful moderation in volatility over the near-term; a real cause for concern in our opinion.

Names where Credit and Vol Diverge

Few would argue that both CDS and volatility markets are efficient vehicles in terms of reflecting the relative riskiness of an entity or collection of entities. Looking through our universe of optionable US equities (names with >25K contracts of open interest) we found that stocks carrying 5 year CDS spreads greater than 500bps (65 names) had an average 3-month implied volatility was 85 - far higher than the 47.25 average implied vol in names that carried CDS spreads under 500bps.

Yet among those stocks with wide CDS spreads, we found the following anomalies- stocks with 3-month implied vols under 60: FTR (Telecom), HCA (Health Care), NRG (Utility), SFD (Cons. Staple), AES (Utility), WIN (Telecom), HRB (Cons Disc), CCJ (Energy). We favor long vol positions in these names via downside puts out to Dec11 or Jan12.

Avoid the ‘Crowd’ in a Bouncing Market

With the market taking another big leg down, short investors may be getting increasingly nervous about the potential for a gap higher in the market on some type of ‘positive’ development out of Europe. Not surprisingly the most crowded short trades may have the largest upside potential under a ‘squeeze’ scenario. One that we think fits the bill is short China. Investors looking to protect against an upside move in FXI, may want to consider buying the Nov 32-36 call spread for $1.

While we continue to stand by our negative view for the market, we are becoming somewhat concerned that nearly everyone we speak with is just as bearish. We still prefer leaning short we would hedge upside risk with calls and/or call spreads. We screened for liquid (Total OI >10,000), oversold (RSI <30) names where upside skew is flat (2nd month 40/25 delta call skew ≤1.05), as these could present attractive candidates for buying call spreads in the event we get a bounce.

NAK – RSI 18% - Skew 0.99 - Buy Nov 6/8 Call Spread for 40c (4x1 max net payout)

HL – RSI 22% - Skew 1.02 – Buy Nov 5/7 Call Spread for 55c (2.6X1 max net payout)

NBR – RSI 24% - Skew 1.02 – Buy Nov 13/16 Call Spread for 64c (3.7x1 max net payout)

TLM – RSI 25% - Skew 1.03 – Buy Nov 12/15 Call Spread for 78c (2.8x1 max net payout)

HAS – RSI 28% - Skew 1.03 – Buy Nov 32.5/37.50 Call Spread for $1.25 (3x1 max net payout)

FCX - RSI 24% - Skew 1.04 – Buy Nov 32/40 Call Spread for $1.83 (3.4x1 max net payout)

EOG – RSI 27% - Skew 1.04 – Buy Nov 75/85 Call Spread for $2.23 (3.5x1 max net payout)


 *Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow! 

 No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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