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1525 ET 25June2009-Health insurers rally as deal on healthcare bill nears
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Shares of healthcare insurers rallied on Thursday after news that U.S.
senators moved closer to an agreement on a $1 trillion U.S. healthcare
overhaul, down from earlier estimates of $1.6 trillion.
Among standouts:
- Cigna Corp (CI.N) up 5.4 pct at $25.
- Coventry Health Care (CVH.N) up 3.8 pct $19.04.
- Humana Inc (HUM.N) up 3.5 pct to $31.57.
- WellPoint Inc (WLP.N) up 2.5 pct to $50.55.
The Morgan Stanley Healthcare Payor index .HMO climbed 3.2 pct.
For more details, see [ID:nN25273492]
Reuters Messaging: ellis.mnyandu.reuters.com@reuters.net
1437 ET 25June2009 Palm attracts some hedging before earnings, analyst
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Palm Inc (PALM.O) shares rose 8 cents to $14.02 in the afternoon session
ahead of its quarterly earnings report late on Thursday. In the options arena,
Palm has a relatively high reading of implied volatility of 90 percent on
options on the stock. That makes hedging a little more expensive than it ought
to be and one investor appeared to have tried to do so by employing a put
spread using the August contract, said Andrew Wilkinson, market analyst at
Interactive Brokers Group. The trade involved 5,000 puts at the $12.50 strike
traded at a premium of $1.25 while another 5,000 contracts at the $9 strike
traded at 32 cents. Wilkinson believes the same investor may have used the
premium proceeds from the sale of the lower strike puts to help defray the cost
of the $12.50 strike. So instead of paying a raw $1.25 premium for protection
against a big share drop, the investor reduced his outlay to 93 cents, he said.
Potential profits from the spread are limited to $2.57 should the shares reach
the lower strike at August expiration.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1318 ET 25June2009-Force Protection option vols rise, calls busy
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Shares of defense contractor Force Protection (FRPT.O) jumped 8.42 percent
to $8.76 in afternoon trade. The stock's option implied volatility, a barometer
of anxiety conveyed by option prices, rose and was at elevated levels as the
company awaits a decision regarding an important U.S. military contract, said
WhatsTrading.com option strategist Frederic Ruffy. "Force Protection is up in
anticipation of good news and sentiment in the options market is bullish as
well," he said. In all, 4,974 calls and 644 puts traded and sentiment based on
order flow was 52 percent bullish, according to Trade Alert. Implied volatility
stood at 133 percent from 130 percent on Wednesday and about 80 percent one
month ago, Ruffy said.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
1252 ET 25June2009-Department stores up after JC Penney upgrade
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Shares of department stores rose on Thursday, after JPMorgan upgraded JC
Penney (JCP.N) to overweight from neutral.
The firm wrote that the retailer would benefit from lower apparel input
costs, stabilization in the high-margin home category sales, and strong
performance by its women's apparel business. For details see [ID:nBNG489288]
JC Penney was up 6.4 percent to $28.30 while the S&P Department Stores
Sub-Industry Index .GSPRETD added 3.4 percent to 116.39.
Among other companies in the index, Nordstrom (JWN.N) rose 2.9 percent to
$19.64, Macy's (M.N) climbed 3.3 percent to $11.76, Sears Holding (SHLD.O) was
up 2.8 percent to $65.36 and Kohl's (KSS.N) gained 2.3 percent to $44.43.
Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1231 ET 25June2009-VIX tests lower end of range, support
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The CBOE Volatility Index .VIX, the implied volatility measure of the S&P
500 index .SPX, fell 6.78 percent to $27.08 as U.S. stocks extend gains. The
VIX is challenging the June 11 lows of 26.81 on an intraday basis as well as
the lower Bollinger band line of 26.91, said Scott Fullman, director of
derivative investment strategy at WJB Capital Group. "We are at the lower end
of a two standard deviation move of the 20-day moving average which has acted
an oversold signal for VIX over the past two months."
Technically, this could potentially lead to an upward reversal and a test
of the 29.65 level in the near term, he added. Volatility expectations continue
to decline as realized volatility for the SPX remains relatively tame, said
Chris McKhann, analyst at optionMonster.com in comments on the firm's Web site.
The drop in the VIX is bringing it closer to the historical volatility for the
SPX which is down at 21 percent, he said. The two are "intimately tied, as
traders can sell higher volatility and will profit if the realized volatility
is lower when the trade is down, McKhann said.
Reuters Messaging: doris.frankel.reuters.com@reuters.net
