Takeover speculation not only sent shares of NVIDIA sharply higher by midday trading on Monday, but also stirred up an "awful lot" of options activity, according to options trader Jon Najarian.
In the first three hours of trading Monday, Najarian said 68,000 options traded hands, which is "crazy busy" for the Santa Clara, Calif.-based semiconductor . Much of the activity is in the Feb. 16 calls, noted the optionMONSTER.com co-founder.
The unusual options activity in NVDA is tied to talk of a leveraged buyout, but none of the other tech companies being mentioned as takeover candidates are seeing this kind of action. For that reason, Najarian said he's in NVDA right now.
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WITH STOCKS AT 2-YEAR RECORDS, TIME TO TAKE PROFITS?
Stocks surged to new two-year highs on the first trading day of the year in the wake of strong economic data and double-digit gains in 2010. But to "Fast Money" trader Brian Kelly, the move higher feels a little "overdone."
"When everything looks like it's going fantastic, that is absolutely the time to, at the very least, take some profits," said Kelly, founder of Kanundrum Capital. "Lock in some of those gains because it's never as good as it seems and it's never as bad as it looks."
Kelly said he will take profits when the S&P 500 index approaches the 1,280 level.
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OIL TO $100 A BARREL?
Oil could outperform and go above $100 a barrel, sending gasoline prices higher in 2011, said Stuart Frankel's Steve Grasso on Monday.
While Kelly said he'd guess higher gas prices would hurt the consumer, he doesn't think it has impacted the consumer thus far. Should it continue to climb, he wonders if it will really cause the consumer pain.
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POPS & DROPS
Pops (stocks that went higher)
Las Vegas Sands (LVS) popped 1.5%: Macau, the second largest gaming town in the world reports a revenue surge of 66 percent last month. As a result, shares of LVS have rallied, but Veracruz founder Steve Cortes continues to short this name. He would rather own MGM Resorts because it's "a more U.S. centered play."
Barnes & Noble (BKS) popped 5%: So long as renown investor Bill Ackman sniffs around this name, it's likely to continue to move higher, Grasso said. He doesn't like its business premise, however, and wouldn't buy shares of BKS.
Drops (stocks that went lower)
Clorox (CLX) dropped 3%: The maker of household cleaning supplies warned of weak earnings and slashed the top end of its revenue forecast for the year. That's surprising to Kelly given the economic environment, but he would stay away from this stock right now.
Inspire Pharma (ISPH) dropped 58%: Shares of this drug company fell sharply after negative cystic fibrosis phase III trial results were reported.
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CALL THE CLOSE
Cortes recommends buying Goldman Sachs and Morgan Stanley . Najarian agreed, adding he's long financials.
Grasso expects a pullback.
Kelly likes this market, but would buy protection with puts.
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Trader disclosure: On Jan. 3, 2011, 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 (BP), is short (BP) calls. Jon Najarian owns (GM), is short (GM) calls. Jon Najarian owns (AAPL), is short (AAPL) calls. Jon Najarian owns (AA), is short (AA) calls. Jon Najarian owns (NVDA), is short (NVDA) calls. Jon Najarian owns (DRYS), is short (DRYS) calls. Jon Najarian owns (V), is short (V) calls. Jon Najarian owns (MA), is short (MA) calls. Jon Najarian owns (CSCO), is short (CSCO) calls. Jon Najarian owns (WMT), is short (WMT) calls. Jon Najarian owns (GS), is short (GS) calls. Jon Najarian owns (BAC), is short (BAC) calls. Jon Najarian owns (C), is short (C) calls. Cortes owns (TSN) and (EXC). Cortes is short (XRT) vs. S&P. Cortes is short (XHB) vs. S&P. Cortes is short (LVS). Cortes is short (BCS). Cortes is short Gold. Cortes is short Corn. Cortes is long USD vs. JPY. Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (S) and (X).
BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (BBT)
Accounts Managed By Kanundrum Capital Own (DE)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDX)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (DRYS) calls
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (XLE)
Accounts Managed By Kanundrum Capital Own (OIH)
Accounts Managed By Kanundrum Capital Own USD
Accounts Managed By Kanundrum Capital Are Short The Euro
STEVE GRASSO
Stuart Frankel & Co and its partners own (AAPL)
Stuart Frankel & Co and its partners own (AMGN)
Stuart Frankel & Co and its partners own (BP)
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (GE)
Stuart Frankel & Co and its partners own (GERN)
Stuart Frankel & Co and its partners own (HPQ)
Stuart Frankel & Co and its partners own (HSPO)
Stuart Frankel & Co and its partners own (NWS.A)
Stuart Frankel & Co and its partners own (NYX)
Stuart Frankel & Co and its partners own (OPEN)
Stuart Frankel & Co and its partners own (PDE)
Stuart Frankel & Co and its partners own (PFE)
Stuart Frankel & Co and its partners own (PRST)
Stuart Frankel & Co and its partners own (RDC)
Stuart Frankel & Co and its partners own (TLM)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners own (UNM)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)
ABHEY LAMBA
Lamba has no disclosures
RICH GREENFIELD
Greenfield has no disclosures
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