STOCKS NEWS US-JPMorgan recommends First Solar Dec calls

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1116 ET 02Aug2010
JPMorgan suggests buy First Solar Dec calls

J.P. Morgan Securities derivative strategists recommend buying First Solar Inc December call options as an attractive stock replacement strategy. 'Investors who agree with the J.P. Morgan analyst and are long the stock may want to consider replacing their stock with FSLR call options,' said equity derivatives strategists Marko Kolanovic and Amyn Bharwani in a report. Using Friday's closing price of $125.45, they recommend buying the December $125 call options for a net debit of $13.60. The break-even for the trade is $138.60. The strategists cited three reasons for the trade idea. One was the bank's cautious fundamental outlooks for the sector and the solar power company. J.P. Morgan is underweight the stock and has a December 2010 price target of $99. In addition, the strategists said the stock has rallied 22 percent since June 2010, 'which makes it an opportune time to realize the gains over that period but continue to have upside exposure through call options.' Finally, the option implied volatility looks cheap on the stock, the report said.

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1042 ET 02Aug2010
Goldman: VIX recent decline consistent with shifts in July

The recent decline in the CBOE Volatility Index is consistent with cross assets shifts in July, said Goldman Sachs derivative strategists in a note. Given the 11 point decline in the VIX over the past month, the strategists used their cross-asset framework to quantify how risk factors across asset classes have transmitted through to shifts in the equity volatility market. 'In short, we can see if the VIX has 'overshot' to the downside relative to changes in other cross asset risk metrics. The strategists model changes in VIX relative to U.S. growth-sensitive equities; sovereign debt spreads, FX volatility and oil volatility. The results show the current VIX level of 23.5 is in-line with predicted levels of 22-25 over the last month, Goldman said. The model explains 91 percent, or 10 of the 11 point decline in VIX since quarter-end. The main driver for the predicted decline in VIX has been the drop in FX implied volatilities, followed by the strong performance in U.S. growth-sensitive equities and a moderation in sovereign debt spreads, Goldman said.

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1020 02Aug2010
Susquehanna revisits Bank of America January calls

With Bank of America Corp's option implied volatility still on the very low end relative to its financial peers, Susquehanna Financial Group continues to like BAC January $15 calls to position for upside through the second half 2010. SFG remains positive on BAC and maintains a 12-month, $26 price target. In recent trading, SFG noted several, large bullish trades were enacted in BofA. The investors were getting bullish exposure through various low-cost spread strategies that generally left them long deltas and short or flat volatility, while in many cases leaving them exposed in the event of a downside move. On July 21, opening investors bought calls and sold puts in the Sept $12 put/$15 call risk reversal, 20,000 times, paying 10 cents for the package. On July 22: An investor bought 20,000 Jan $15 calls vs. selling 40,000 Jan $17.5 calls through a 1x2 call spread, paying 30 cents. On July 23, an investor bought the Aug $12 puts vs. selling the Sept $11 puts, 45,000 times, likely rolling a short put position from August out to September. And on July
29, an investor enacted a bullish three
way spread in which they sold 10,000 Jan $12.5 puts vs. buying 10,000 Jan $14/$17.5 call spreads, SFG said.

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1010 ET 2Aug2010-Manufacturing sector expands in July
ISM

The U.S. manufacturing sector grew in July for the 12th straight month and at a rate that was slightly better than expected, according to an industry report released on Monday.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 55.5 in July from 56.2 in June. The median forecast of 60 economists surveyed by Reuters was for a reading of 54.1.

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1005 ET 1March2010
Construction spending up 0.1 pct in June

U.S. construction spending unexpectedly rose 0.1 percent in June as increased investment in public projects offset the 15th straight monthly decline in private nonresidential construction, a government report showed on Monday.

The Commerce Department said construction spending rose to an annual rate of $836.0 billion. May's construction outlays were revised to show a bigger 1 percent decline instead of the previously reported 0.2 percent slip.

Economists polled by Reuters forecast construction spending falling 0.5 percent in June.

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0948 ET 2Aug2010
Research in Motion ADRs fall after warning on service cuts

U.S.-listed shares of Research in Motion Ltd fell 2 percent to $56.36 in early trading on Monday, after a report that more than a million users of the company's BlackBerry smartphone could have key services in Saudi Arabia and the United Arab Emirates cut.

The services may be cut after authorities stepped up demands on RIM for access to encrypted messages sent over the Blackberry device.

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0943 ET 2Aug2010
Markets rally 1 pct on earnings optimism

U.S. stocks rose about 1 percent at the open on Monday, building on last month's solid gains as investors focused on encouraging corporate results, including strong bank earnings out of Europe.

Energy shares also boosted indexes as crude oil futures hit a near 3-month high, helped by U.S. dollar weakness.

The Dow Jones industrial average gained 118.53 points, or 1.13 percent, to 10,584.47. The Standard & Poor's 500 rose 12.71 points, or 1.15 percent, to 1,114.31. The Nasdaq Composite added 22.30 points, or 0.99 percent, to 2,277.

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0847 ET 2Aug2010
Humana shares rise after Q2 results

Shares of Humana Inc rose 4.8 percent to $49.28 in premarket trading on Monday after the company reported its second-quarter results.

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0844 ET 2Aug2010
Charles River down after results, outlook

Shares of Charles River Laboratories International Inc fell 5.7 percent to $29.30 in premarket trading on Monday after the company reported its second-quarter results and cut its full-year revenue outlook.

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0827 ET 2Aug2010
Administaff rallies after Q2 results

Shares of Administaff Inc jumped 7.6 percent to $28.05 before the bell on Monday after the company reported its second-quarter results.

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