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- Unusual Options Activity: Facebook (FB)
- Building Permits See Biggest Decline in Three Years
- Insider Activity: Century Bancorp (CNBKA)
- CSX Shares Decline
| Unusual Options Activity: Facebook (FB) Posted: 18 Jul 2019 03:00 AM PDT
Bet on surge in shares by September. Shares of Facebook (FB) may be heading higher—almost 50 percent higher, based on one unusual trade. On Wednesday, over 14,000 of the September 2019 $290 call options on the company traded. With shares at $202, shares would need to rise by 45 percent for them to trade in-the-money in the next 64 days before expiration. With a trade at $0.04, or a mere $4 per contract, any move higher in Facebook shares between now and September could lead to a huge percentage move in the contract. However, if shares fail to hit $290, the option will expire worthless. This is likely a shorter-term bet on the social media company's shares moving higher. Shares have been somewhat flat this week, as the company's Libra division has been facing congressional hearings on the prospect of launching its own cryptocurrency. Action to take: This is a potentially great speculation, as a $0.04 trade could easily triple and still look cheap at $0.12. Traders may want to follow this trade, as long as they don't get too greedy and look to take a quick profit here. This isn't an options trade that will reward investors waiting until expiration, so don't go overboard on the total number of contracts just because they're cheap!  |
| Building Permits See Biggest Decline in Three Years Posted: 18 Jul 2019 03:00 AM PDT
Data suggests economy starting to slow. On Wednesday, data released on building permits showed the largest decline in three years. Housing Starts dropped 0.9 percent month-over-month, worse than the 0.7 percent expected drop. Building permits, however, faced a huge 6.1 percent month-over-month drop, the worst since March 2016. This is the sixth month in a row with declining levels of building permits, and suggests economic trouble ahead. Building permits are a leading indicator on future real estate and construction activity, as permits are needed before any work can begin. It's a sign of a moderate-to-long-term commitment. While most economists expected a drop, the size of the drop exceeded expectations. And with interest rates on real estate loans already declining in anticipation of a future interest rate cut, there was some expectation that lower borrowing costs would lead to a surge in building activity. Permit data, like new housing starts, is an indicator of the creation of new buildings. It doesn't track existing buildings and their occupancy, and some real estate markets are still working off a glut of vacated existing properties. As such, the data is a bit mixed, but is another piece of evidence of a slowing economy that may continue in the back half of 2019.  |
| Insider Activity: Century Bancorp (CNBKA) Posted: 18 Jul 2019 03:00 AM PDT
Major owner increases stake in regional bank. On Tuesday, James Filler bought just over 2,500 shares of Century Bancorp (CNBKA). He already owns more than 10 percent of shares. The buy, with a total purchase price of $219,000, increases his total position to 702,919 shares, and represents a 0.36 percent increase in his total holdings. Like many other insiders in recent days, Filler sees solid opportunities in companies where he already has a large stake. Century Bancorp is a bank holding company for Century Bank and Trust Company, a provider of banking products and services. The bank offers traditional savings and checking accounts, residential and commercial loans, and other services including services to the municipal market and a securities brokerages service. The bank operates in 27 locations in Massachusetts, but provides services throughout New England. Action to take: Insiders, led by Filler, own 23 percent of the bank, meaning that shareholders are likely to be treated well. Although shares yield only 0.56 percent, smaller banks are often the target of bigger banks, and a profitable New England bank like Century could be an acquisition target within the next few years, offsetting many of the interest rate fears weighing on banks right now. With shares trading at 12 times earnings, they could be a reasonable buy up to $87 per share.  |
| Posted: 18 Jul 2019 03:00 AM PDT
Railroad reports lower earnings and revenue on reduced car loads. Shares of railroad company CSX (CSX) dropped around 10 percent on Wednesday, following earnings after the closing bell on Tuesday. CSX earned $1.08 per share in the second quarter, just missing the $1.11 per share expected by analysts. Revenue also came in at $3.06 billion, against an estimate of $3.14 billion. However, the real impact to the share price came from the company's forward outlook. CSX expects revenue to fall as much as 2 percent in 2019, well below the previous forecast, which indicated likely growth of 1 to 2 percent. CSX transports goods on its railroad network, operating a regional monopoly. CSX did lose a big customer in the second quarter after Philadelphia Energy Solutions shut down the largest refinery on the East Coast following an explosion in June. The refinery alone accounted for 1 percent of CSX's annual shipping volume. Action to take: While CSX may be sensitive to issues such as trade wars and a slowing economy, its role as a key piece of transportation infrastructure for shipping goods around makes it a worthwhile long-term holding. Given the size of the share pullback on Wednesday, investors may want to look at buying shares up to $72, and traders may want to bet on a bounce back by buying the January 2020 $80 call options as a leveraged way to play a short-term bounce.  |
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