Muddled by inconsistent earnings and stock performances, one sector appears tougher and tougher to predict, CNBC's Jim Cramer says.» Read More
Are Apple shares cheap? Now that they've fallen over 10 percent on the back of Apple's recent product launch, it seems to be a fair question. But even though Apple now has a lower price-to-earnings ratio than do slow-growth companies like Microsoft, Intel, or IBM, Doug Kass says the stock still doesn't present an attractive value.
"Apple has become a value trap," the founder of Seabreeze Partners Management said. "This is a company with no growth, and profit margins that are way too high vis a vis the competition."
Indeed, at its latest media event, Apple disappointed many investors but not releasing a much cheaper iPhone, as some had been pining for. Instead, Apple released more high-end phones that will keep profit margins high, but threaten to do further damage to the company's already-declining market share.
(Read more: At a crossroads, Apple must make one huge decision)
"We remain disappointed with Apple's decision to remain a premium priced smartphone vendor," Credit Suisse analyst Kulbinder Garcha wrote in a note that downgraded the stock to "neutral" from "outperform" after the event. "On our new estimates, Apple's smartphone share will decline to 15.5 percent/13.1 percent this year and next from 18.1 percent last year."
But Kass says that there's a second issue at work: While Apple's prices have stayed high, the company has not delivered innovation to keep pace.
Many of the stocks most loved by the market may be troublesome for investors moving forward, CNBC's Jim Cramer said, and buying these names could be a dangerous proposition in the near term.
"I think a lot of people were short, because all you saw was the government could be shutting down, Summers comes in, you have the Fed meeting," Cramer said on "Squawk on the Street" Monday. "Suddenly you have this event, it was a lightening bolt for a lot of people. A lot of hedge funds had to cover exactly what they were shorting."
Housing stocks have been trying to rebound in the last week, and yesterday the bulls piled into home builder MDC Holdings.
OptionMonster's tracking systems detected upside option activity in the October 30 calls, where nearly 2,700 contracts traded for $1.15 to $1.75. The volume was well above the strike's previous open interest of 417 contracts, indicating that new positions were established.
These calls lock in the price where shares can be purchased, letting investors benefit from gains in MDC for much less capital than buying the stock directly. The options can also provide significant leverage in a rally, but they will expire worthless if shares remain below $30 through mid-October.
Options have been active in Newfield Exploration, and buyers were stepping in yesterday.
The September 25 calls lit up OptionMonster's trade scanners, with large blocks fetching $0.25 and then $0.30. More than 7,700 traded in volume well above the previous open interest of 3,100 contracts, so new money was definitely being put to work.
These calls lock in the price where the oil stock can be purchased, controlling moves to the upside at limited cost. They can also generate some extreme leverage if the shares move far enough.
Intel has been holding near its 200-day moving average, and yesterday the chip maker saw steady and impressive upside option action.
The November 24 calls lit up early, trading in size for $0.44 and followed by a large chunk that went for $0.62. About 19,500 contracts traded in volume well above the strike's previous open interest of 3,938, showing that new money was put to work.
These calls lock in the price where the semiconductor stock can be bought, letting investors cheaply position for a rally. They can also generate some nice leverage from even a small movement in the underlying share price.
The bulls piled into home builders and related stocks on Friday, triggering a flurry of upside option activity.
Mohawk Industries, a maker of flooring products, hit shortly after the open as investors snapped up the November 115 calls, most of which priced for $9.85. More than 2,400 of the options traded against previous open interest of just 195 contracts, indicating that new positions were initiated. Mohawk rose 3.58 percent to $121.38.
These calls lock in the price where shares can be purchased, letting investors cheaply position for upside and control the amount of money that can be lost to the downside. They can also generate significant leverage when a stock goes up.
Microsoft is an unwieldy business and should be broken up, CNBC's Jim Cramer said Friday, and the tech giant needs a savior like Ford's Alan Mulally to drive a corporate "miracle" and get the company back on track.
Although Cramer dismissed the rumor that Mulally would jump to Microsoft—because his job isn't yet complete at Ford—Cramer said that in theory, Mulally would be a good thing for the company.
"I still think Alan wants to get to $3 to $4 earnings power for Ford before he's done," Cramer explained on "Squawk on the Street" Friday. "He's worked miracles at Boeing, he's worked miracles at Ford—he could work miracles at Microsoft."
(Related: Ford CEO plays down reports of an early exit)
Cramer said that Mulally's strategy would be to find the right people who are "charged up" to bolster Microsoft's business and would simultaneously avoid troubled, high-cost acquisitions like those that have plagued the company in the past.
Cramer predicted that Microsoft would eventually be broken into three pieces, adding that "it is too big, too unwieldy and it's not getting anywhere. It's time to break up Microsoft."
Microsoft has to do "something wild," Cramer explained, like spinning off the Xbox business that is "buried within" the company, or turning Nokia back into a pure cellphone company and using the proceeds to buy a company like Sprint. "You could go buy Netflix with Xbox," he said, and run the Windows business like a utility company with reliable cash flows.
Cramer listed the big components as the Windows operating system business, an entertainment business—including Xbox—and the "other" business with the Nokia cellphone division as a cornerstone.
The bulls came back to Cheniere Energy after a long hiatus yesterday, and the move paid off almost instantly.
OptionMonster's tracking systems lit up with unusual activity in the October 34 calls late yesterday morning, with traders snapping up big chunks for $0.23. We immediately flagged the trades in our chat room and via email to our subscribers, and it was a good thing we hurried.
Barely 10 minutes later, buy orders started hitting the stock, driving it up $1 from its level when the calls appeared. Those October 34s more than doubled to $0.50 in the process.
Financials were on the move yesterday, and the fast money was targeting JPMorgan Chase.
OptionMonster's tracking systems detected heavy volume in the weekly 52.50 calls expiring this Friday, with big trades hitting early for $0.11 to $0.15. An even 16,000 traded in volume far above the strike's previous open interest of 2,685 contracts, indicating that new positions were established.
These calls lock in the price where shares can be purchased in the financial giant, letting investors cheaply position for a rally. These options also control the amount of money that can be lost if the stock falls.
NextEra Energy has pulled back to a key level, and momentum traders are piling in.
OptionMonster's tracking systems detected the purchase of more than 4,300 January 82.50 calls, most of which priced for $2.20. Volume was more than 16 times open interest at the strike, indicating that new money was put to work.
These calls lock in the price where shares can be purchased in the power-generation company, letting investors cheaply position for gains and enjoy major leverage if the stock rallies.