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- Unusual Options Activity: Chesapeake Energy (CHK)
- US-EU Trade Dispute Heats Up
- Insider Activity: Pitney Bowes (PBI)
- Nike Pulls Betsy Ross Flag Shoes
| Unusual Options Activity: Chesapeake Energy (CHK) Posted: 03 Jul 2019 03:00 AM PDT
Big bet on natural gas producer during summer slump. Shares of Chesapeake Energy (CHK) could move up to 34 percent higher between now and November. That's based on a surge in volume on the November $2.50 calls, and a current price around $1.86. On Tuesday, over 160,000 of these options traded, a 58-fold surge in volume. That's a relatively quick amount of time for such a move, but it's not unheard of in the commodity space. Plus, by November, a colder-than-expected winter could move natural gas prices higher, which would also benefit CHK shares. Action to take: With the option trading around $0.16, or $16 per contract, it's cheaper than buying shares. But under $2 per share, buying the stock is like buying an option that doesn't expire. Chesapeake should start to rally later in the year as part of a seasonal trend, but it may not hit $2.50 quickly enough and the entire option position would expire worthless. Chesapeake can be volatile, but could easily pop to $4 or $5 from current prices on sufficient news, like cold winter weather. However, that move tends to occur later in the winter, not as early as November. Summer is the slow season for natural gas, so it's the perfect time to build up a stake in the company with an eye towards booking a profit as soon as shares spike.  |
| Posted: 03 Jul 2019 03:00 AM PDT
Tensions rise on aircraft subsidies. With the United States and China declaring a truce on trade, focus has shifted to the European Union. On Tuesday, the U.S. announced that it may impose new tariffs on about $4 billion in goods from the EU. The news was enough to take the air out of Monday's rally, and stocks had a rough day trading around break-even as a result. The dispute comes over aircraft subsidies. The EU subsidizes large civil aircraft, largely Airbus, and the U.S. has gone to the World Trade Organization (WTO) to dispute the EU's policy. The U.S. and EU have frequently had conflict with aircraft, with the EU pointing out how the U.S. has policies to benefit its major commercial aviation company, Boeing. The new tariffs largely target agricultural products, including coffee, cheese, meats, pasta, olives, and whiskies. With the WTO involved, a hearing will be held on August 5th to discuss the proposal. The WTO will be able to hear both sides and recommend a level of tariffs that would be appropriate compensation. The new tariff proposal could impact trade between the United States and European Union, however, a larger proposed tariff was already made in April. The WTO has sided with both countries on the issue over the years, so the outcome of this latest claim is by no means certain.  |
| Insider Activity: Pitney Bowes (PBI) Posted: 03 Jul 2019 03:00 AM PDT
Insiders have never sold shares in the past three years. While names related to transportation and trade haven't looked attractive in the midst of slowing global trade and tariff fears, insiders see an opportunity in Pitney Bowes (PBI). On June 30th, Executive Vice President Jason Dies bought 1,500 shares, increasing his stake in the company by 25 percent. Insiders have been net buyers, with no insider sales at the company, for nearly three years. Pitney Bowes provides mail and shipping fulfillment products and services, including sortation services for companies that need to qualify and send large volumes of mail, to businesses large an small. The company has struggled in recent years despite the growth of shipping thanks to a surge in online retailing. Action to take: While shares look cheap at just five times earnings, as well as with a 4.7 percent dividend yield, shares are down over 50 percent in the past year and more than 80 percent over the past five years. While the company is clearly profitable right now, the market is still pricing it for bankruptcy due to its high levels of debt. It's an interesting turnaround and value play, and could provide a great return going forward, but profitability would slow in a recession. So, shares are a buy under $5, but should be sold on any sign of a slowdown in the underlying business.  |
| Nike Pulls Betsy Ross Flag Shoes Posted: 03 Jul 2019 03:00 AM PDT
Shoemaker pulls proposed design ahead of Independence Day launch. Shoe manufacturer Nike (NKE) pulled its Air Max 1 USA sneaker on Tuesday. The shoe was expected to go on sale in celebration of Independence Day on Thursday. The product was pulled after a complaint from paid endorser Colin Kaepernick. He reportedly told the company that the Betsy Ross flag was a symbol that he and others considered offensive due to its connection to an era of slavery. Kaepernick was hired last year for the 30th anniversary of Nike's "Just Do It" campaign. His controversial stance on kneeling for the national anthem during NFL games rather than standing led to some to boycott Nike upon his hiring. However, sales are up in key demographics as well as overseas in that time, and Nike sees no need to pick a less controversial celebrity endorser. Action to take: While controversy can be bad for a company, Nike has done its research. Kaepernick reaches a younger and more urban demographic that Nike wants to have. Any controversy is localized to the United States, and Nike is doing more and more business abroad. Investors can consider those factors and weigh the investment accordingly. Consequently, shares would make a solid long-term buy under $82.50, which it can easily reach on a pullback.  |
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