Anticipation of further mergers and acquisitions in the energy sector prompted increased options activity in several names on Wednesday, including Petrohawk Energy.
In midday trading, shares of the Houston-based company were up against a few big technical levels, said optionMONSTER.com co-founder Jon Najarian, including the 50- and 200-day moving averages. There has been aggressive buying of the Dec. 19 and Mar. 19 calls.
"Obviously, people are making a bet that there's going to be more consolidation in this space and that this one could be one of the names that gets accumulated by a bigger energy player," said Najarian.
Although the stock hadn't moved as much as the options, Najarian said the leveraged options are "a tell" that suggest a possible takeover is to come.
TOP ANALYST'S TRADES ON AGRICULTURE IN 2011
As hot as the crop trade was in 2010, agriculture will continue to be a big sector in 2011, said Consilliagra analyst Emily French on Wednesday.
For investors that are looking at agriculture or foods, French recommends looking at these five key components:
- China, India demand: The trade will be in soybean and vegetable oil, French said. If China steps into the import market, it would be a "game changer" for corn. She thinks corn could go to $6.50 a bushel.
- Dietary shift and the emerging middle class: Veg oil is again the trade here, French noted.
- Inelastic demand profile: Look at protein wheat, French said, especially Minneapolis wheat futures.
- Lack of substitution: The trade here is in soybeans and soybean meal.
- Curve structure: French recommends looking at soy, corn meal and bean oil.
If Argentina remains dry, French said soy complex is the one crop that has the most upside from current levels.
POPS & DROPS
Stocks gained after a handful of positive economic reports on Wednesday, including a slightly better-than-expected gain in industrial production and a slightly better-than-expected report on consumer price inflation. The following stocks caught the traders' eye:
Pops (stocks that went higher)
Hertz (HTZ) popped 4%: Shares of the car rental company rallied after Barclays boosted the stock to ‘overweight’ from ‘overweight.’ When you get off an airplane, said Kanundrum Capital's Brian Kelly, you've got to go somewhere. He thinks people are using Hertz.
Boston Beer (SAM) popped 12%: This is a new, all-time high for SAM, said Veracruz founder Steve Cortes. He's long this name.
Newell Rubbermaid (NWL) popped 2%: The Calphalon cookware maker's stock surged after being raised to ‘overweight’ at Morgan Stanley. Todd Gordon, co-head of research at Aspen Trading, thinks this stock could go to $18.20 a share.
Drops (stocks that fell)
Broadcom (BRCM) dropped 2%: The TV set chipmaker saw its 2011 profit estimate reduced by Deutsche Bank, which cited rising operating expenses. Najarian doesn't understand why people are selling.
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Trader disclosure: On Dec. 15, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian owns (YHOO), is short (YHOO) calls; Jon Najarian owns (IBM), is short (IBM) calls; Jon Najarian owns (C), is short (C) calls; Jon Najarian owns (CSCO), is short (CSCO) calls; Jon Najarian owns (AMZN), is short (AMZN) calls; Jon Najarian owns (F), is short (F) calls; Jon Najarian owns (MSFT), is short (MSFT) calls; Jon Najarian owns (HK) call spreads; Jon Najarian owns (JOE) call spreads; Cortes owns (TSN); Cortes owns (SFD); Cortes owns (TM); Cortes is short (LVS); Cortes is short (MOS); Cortes is short (XRT) vs. S&P; Cortes is long USD vs. Mexican Peso; Cortes is long U.S. Treasuries; Cortes is short Corn; Cortes is short Nat Gas; Cortes is short Gold; Cortes is short (BAC)
For Brian Kelly
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (WMT)
Accounts Managed By Kanundrum Capital Own (JJC)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (DE)
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own USD
Accounts Managed By Kanundrum Capital Own (FXY) puts
For Todd Gordon
Accounts Managed by Aspen Trading Group are short the Euro against the Swiss Franc
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