Healthcare Takes The Lead Again

Healthcare was once again one of the strongest sectors for the second day in a row. While I hold a diversified position in the sector my largest holding by far is Gilead. They issued convertible debt that has weighed on the stock but the effect should wear off in the next few days. They now sit with about $3 billion in cash available for buybacks. If management is to be taken at its word they will be aggressively using that pile to buy back shares. Have a good night.


Anonymous said...

Sold PCBC @ 1.26 today

from .72 4 weeks ago


ol dawg

Anonymous said...

Maybe not Tsachy...

Anonymous said...

link didnt work..

NEW YORK—For one big options trader, the takeover chatter on Genzyme Corp. could be just that—chatter.

The Cambridge, Mass., biotechnology company has been the subject of buyout rumors recently, with French drug maker Sanofi-Aventis SA one oft-mentioned potential buyer. The stock has responded warmly, rising 30% from its July 16 close, touching a new 52-week high on Tuesday. Genzyme officials couldn't be reached for comment on the rumors. The stock gained 13 cents on the day, or 0.2%, to $67.51.

Options trading on Genzyme has been elevated the last few sessions and it surged to nearly eight times the normal volume on Tuesday after one big trader prepared for the stock's potential return to levels last seen before the takeover speculation.

Specifically, the trader sold about 7,000 October $75 Genzyme call options while buying a "put spread" in the company's $50 and $65 bearish puts that expire in January, according to OptionMonster.

A call conveys the right to buy shares and typically signals bullish sentiment, while puts convey the right to sell. An investor who sells the call and buys the put spread doubts the stock can hit $75, is protected against moves under $65 and reaps maximum profits in the event that the stock drops beneath $50 by January expiration.

"This trader is positioning for the possibility that the takeover may not go through," OptionMonster analyst Chris McKhann said.

The move works well for long stockholders seeking to lock in the shares' recent gains, and options analysts said it could be the work of such an investor. But a trader who is skeptical of the Genzyme takeover rumors and is speculating against its chances could also take this approach.

By focusing on longer-dated contracts, the investor has allowed time for the Genzyme story (or non-story) to play out. Wall Street is mooting the chances that other suitors could appear, with Sanford C. Bernstein & Co. analysts among those speculating recently that GlaxoSmithKline PLC could enter the fray. Bernstein's analysts wrote last week they see any Genzyme takeover as "more likely to be a slow than fast process."

Options traders elsewhere continued to prepare for the remainder of earnings season, with some of the day's notable trading crossing in companies soon to report results, such as Pitney Bowes Inc. and Akamai Technologies Inc.

In mail- and business-solutions company Pitney Bowes, which reports on Aug. 3, options traders focused on near-term August $24 puts, sending volume to more than ten times normal levels, according to Trade Alert.

In this case, some of the activity appeared to be purchases of the contracts, according to analyst Frederic Ruffy, potentially by shareholders seeking to lock in recent gains. At closing prices, buyers of protective options pay 60 cents and make money on drops in the shares below $23.40. Pitney Bowes shares lost 8 cents, or 0.3%, to $24.64.

Some of the trading in $24 Pitney Bowes puts may also have been the work of sellers, in which case these investors suggest confidence the stock can remain above $24 by mid-August expiration.

In Internet company Akamai, due to report on Wednesday, trading leaned heavily to call options, with investors picking up more than 23,000, compared to fewer than 6,000 puts, according to Track Data. Notably, one trader appeared to "roll" out of a moderately bearish position into one that affords the shares more room to rise, according to The stock lost $1.04, or 2.3%, to $44.33.

Anonymous said...

I get the feeling people are afraid to miss the coming rally.

They all know once the economy starts showing significant improvement the market will already be much higher.

By significantly I mean 50%. And it will happen very quickly, but when will it start?
We are already very late in the recession game.