STOCKS NEWS US-Goldman Sachs suggests Macy's call options

Stocks on the move Real-time Equity news U.S. stock market report 1322 ET 04Nov2009 Goldman Sachs suggests Macy's call options ------------------------------------------------------------------------------ Buy Macy's Inc November calls ahead of upcoming monthly retail sales on Thursday and Nov. 11 earnings, wrote Goldman Sachs derivative strategists in a note. They expect October same-store sales results and earnings to be positive catalysts due to cost-cutting efforts and revenue upside driven by cooler weather and pent-up apparel demand. Macy's option prices appear low vs. department store peers. The strategists estimate Macy's shares move on average plus/minus 3 percent on same-store sales reported in November over the past 10 years, however, the stock has moved on average more than 6 percent on retail sales in the last 12 months. With shares at $17.77, Goldman recommends investors purchase Macy's $19 calls for 55 cents. They estimate that investors closing out this trade following retail sales and earnings would only need a 5 percent move to break-even assuming volatility declines by its 8-quarter median of 8 percent. Reuters Messaging: [e-mail] 1300 ET 04Nov2009 Option bulls load up on Heinz calls ------------------------------------------------------------------------------ Some option players expect H.J. Heinz Co, which makes its namesake ketchup, Ore-Ida potatoes and Smart Ones frozen foods, to move higher. Its shares rose 1.65 percent to $40.63. Heavy buying was detected in the Nov $41 calls, which earlier traded 7,259 times against contracts outstanding of 1,693, said optionMonster analyst David Russell in comments on the Web site. Institutional-sized paper paid premiuims of 35- to 50-cents apiece. The stock is up 4.26 percent in the past month, outpacing the S&P 500's 3 percent gain over the same period. "Money is streaming into Heinz today after it found support at the old resistance level of $40, providing evidence its uptrend remains intact," he said. The stock needs to rise about 3 percent by expiration for the calls to break-even. Others bought the Dec $42 call strike for 50 to 60 cents apiece, although volume was below open interest at 1,404 lots, he added. According to Trade Alert, volume was above the norm, with 18,000 calls traded vs. 1,556 puts. Reuters Messaging: [e-mail] 1213 EST 04Nov2009-Call buying surges in dollar ETF-optionMonster ----------------------------------------------------------------------------- Options action surged in the UUP exchange-traded fund UUP.N as investors positioned for more strength in the U.S. dollar, said optionMonster analyst David Russell in comments on the Web site. A surge of buying in the November $23 calls was detected, and the volume in the calls ripped to 106,168 contracts, more than twice existing open interest, he said. Almost all the transactions were priced for 15 cents. The UUP, known as the PowerShares DB US Dollar Index Bullish ETF, tracks the U.S. dollar index. It fell 0.66 percent to $22.53 in morning trading. But Russell said the call buying is difficult to interpret in isolation as it represents a bullish bet on the dollar, but could also be used as a hedge by an investor who owns assets such as oil or foreign stocks, which will probably fall if the dollar rallies. The trade also occurred before the Federal Reserve issues its monetary policy decision. If the Fed alters the language to hint at the possibility of higher interest rates, that could also support the dollar, according to Russell. Overall options volume is triple the average level this morning, with the Nov $23 calls accounting for more than 90 percent of the activity. Reuters Messaging: [e-mail] 1136 ET 04Nov2009 Intel pares gains after news of lawsuit ------------------------------------------------------------------------------ Shares of Intel Corp pared gains after the New York attorney general's office filed an antitrust lawsuit against the company, alleging Intel used payoffs, coercion and retribution to maintain monopoly power in microprocessors. Shares were last up 1.8 percent at $18.69. For more please double click Reuters Messaging rm://[e-mail] 1119 ET 04Nov2009 Goldman Sachs suggests Gap calls ahead of retail sales,earns ------------------------------------------------------------------------------ Gap Inc call options look attractive to capture improving retail sales comps and Nov. 19 earnings, wrote Goldman Sachs derivative strategists in a note. They suggest buying calls given the high put skew and history of large stock moves on same-store sales data. Many top retail chains will report October sales results on Thursday. Goldman's retail analyst Michelle Tan believes sales comparisons in the report could be above consensus due to recent traffic-driving promotions. Option prices are attractive; Gap's one-month implied volatility is in its bottom quartile, below its one-year average versus the S&P 500, and relatively in-line with discretionary peers. Historically, Gap tends to move plus/minus 4 percent on sales data issued in November. Its options are implying a 7 percent swing on earnings. With shares at $21.94, Goldman recommends buying November $22 calls for 90 cents, a strategy that breaks-even if shares rise 4.3 percent. Reuters Messaging: [e-mail] 1109 EST 04Nov2009-American Capital rallies after credit agreement ------------------------------------------------------------------------------ Shares of American Capital advanced on Wednesday, a day after the company agreed with lenders to restructure its debt. The company will also pledge substantially all its assets as collateral. For details, see The stock gained 15 percent to $3.12. Reuters Messaging: [e-mail] 1039 EST 04Nov2009-S&P 500 usually ends higher on rate decision days-Birinyi ------------------------------------------------------------------------------ The S&P 500 usually closed higher during the Fed rate decision days in 2008 and 2009, as the index rose on the day 71 percent of the time for an average gain of 1.5 percent, market research firm Birinyi Associates Inc said in a note to clients. But the index usually exercised caution after the decision was announced, usually from between 2 p.m. and market close. The market fell 57 percent of the time after the announcement and most notably during the last four rate decision days, the note said. The Federal Open Market Committee statement is due at about 2:15 p.m. EST (1915 GMT) and marks the seventh this year. The last time rates were adjusted was on Dec. 18, 2008 when the FRB moved the fed funds rate to a range of 0 to 25 bps. As has been the case for the last six meetings, analysts expect the Fed to keep rates steady this time, while reaffirming that policies to support the economy will stay in place for some time, even as signs of recovery mount. Reuters Messaging: [e-mail] 1026 ET 04Nov2009 Players favor Aetna call options ------------------------------------------------------------------------------ A number of option players appear to be taking bullish positions on Aetna Inc by buying front-month November call options. Its shares jumped more than nearly 8 percent to $28.72 in morning trade. Players populated the November $29 call strikes, where 5,000 contracts earlier traded. It looked like speculative call buyers are opening positions, as 62 percent of the volume traded ask-side and contracts outstanding is 1,817, said WhatsTrading.com option strategist Frederic Ruffy. But Ruffy also noted that 50,000 January 2010 calls at the $40 line were sold for an average premium of 12.5 cents each. The strike's open interest is 55,000 and the action might be a closing position accumulated in early July when Aetna traded between $24 and $26 per share, he said. In all, about 68,000 calls crossed the tape compared to 1,748 puts, according to Trade Alert. There was no apparent catalyst to explain the call action. Reuters Messaging: [e-mail] Keywords: MARKETS STOCKSNEWS COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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