Herbalife Trending Well

Herbalife has moved since our recommendation and since the close of December Options which is where the short trade happened in the Puts.  This could make for a textbook straddle at the 30 strike given the outcome of Herbalife's talks scheduled later next month.

Happy Trading...

Herbalife Ltd. (HLF)

Lots going on here after the short play all over the news.  Is this hype, to make a buck, in which case SEC needs to investigate or is there truth?

Herbalife is supposed to counter the pyramid-scheme accusations in January, at this level any good news should propel this forward.

Take a look and watch.

Happy trading...

Playing 2013 Volatility

Take the unknowns of the fiscal cliff off the table and 2013 is analysed to be a bull year.  If you believe this buy long into VXX puts as a calender spread as the news causes more fear and market drops.  Take the volatility that is sure to be around over the next month and buy the puts in the front months...

I am currently still holding Jan 13 28 PUTS starting on the day plan-B was taken off the table.  I am only playing with 10% of 2012s profits, so I absolutely view this as a speculative play but I still find it hard to believe that even this government would allow us to head full speed into another recession over entitlements and taxes.

Let's face it we have become an entitlement nation, time to cut the cord and fix the defense budget.  Especially since we now want to being "training" in Africa and focus more on a southeast Asia curtain.  Terrorists aren't going away anytime soon.

Happy Trading...

SODA Stream

Recently there has been much hype over Sodastream (SODA) in the news and on TV, to include an anticipated Super Bowl commercial.  Add to this my recent purchase of a Sodastream Genesis as a birthday gift and revelation that the profit margins on this product must be outrageous given what I paid for it and the discovery that it didn't even have to be plugged it.  Having followed SODA in the days when it was strongly correlated and following Green Mountain's (NASDAQ: GMCR) every move, riding high into the 70's before falling humbly to earth, I figured it was time to take a look, again.

The commercials and print products are revealing the companies push to show conservation as a key theme.  Don't contribute to the waste of resources to produce bottles and cans of soda when you can reuse the same container and make a steadily increasing choice of beverages when you desire.

I put Sodastream (NASDAQ: SODA) back on my radar screen a few weeks ago when it was in the mid-30's and began talking about it with fellow traders to see what they were thinking.  It recently rose above 40 and has made a mild pull-back even in an up market.  Investor's Business Daily has it highly ranked and the fundamentals are great except for the 49.5% short interest showing up last month, which was a slight increase over the previous month.

Pulling the data on the fundamentals reveals consistent quarterly earnings and even some positive surprises. Quarter's one and two were in-line while quarter three with raised expectations beat by $.07.  Fourth quarter results are due to be released on Feb. 27, 2013 before the bell.  Expectations are for $.37 per share.  It is possible the Christmas season, desire for conservation and re-use and the ever growing variety of available flavors and name-brands could push sales high enough to surprise again. 

More fundamental information shows a consistent growth in cash and short term investments strengthening the balance sheet by increasing revenues, low price-to-earnings and price/earnings-to-growth of 19.8 and .66 respectively, as well as two times the net profit margin (10.67%) of the industry average (closest related industry not necessarily the home made soda industry)  

Actual industry comparison is rather difficult for Sodastream as there are no publically traded direct competitors.  Most analyst reports utilize the household durables industry group for comparison.  This includes the home furnishing, household appliances, house-wares and specialties and consumer electronics. Major players include IRobot (NASDAQ: IRBT),Panasonic (NYSE: PC), Sony (NYSE: SNE), Garmin (NASDAQ: GRMN), Whirlpool (NYSE:WHR) and Newell Rubbermaid (NYSE: NWL) among others.  Obviously none of these companies compete directly, but they do make up a large portion of products that gadget lovers want to own.  Sodastream has that gadget appeal but also has a recurring revenue stream through the need for CO2 cartridges and soda flavors.

The big concern is the almost 50% short interest, especially since it is 80% institutionally owned.  I would only be speculating why a company that looks this strong and has increased consumer and product exposure is shorted this much.  My speculation, with no significant depth of thought is that this is remnants of "is this purely a hype product" thinking when the product came out.

After owning one of these and the 12-pack sample soda flavoring for about a month now, I have personally seen the value of having a multitude of soda flavors readily available without storing multiple cans/bottles of soda in the pantry.  The question that remains is, can this product start to take significant share of the home beverage market, become an enduring ecco product and continue its licensing with other name-brand beverages?  If so then SODA could reach back to its 2011 highs and possible fairly quickly, especially if short-covering is factored in.

This stock is fairly volatile and shows through in the options premiums, which make this a good prospect for a bull call spread (buy 40 and sell 50 strikes July or further out).  Covered calls are an option here as well given the strong premiums available.  If you are not experienced with options, I recommend buying the stock outright incrementally, a third or fourth at a time since the price fluctuates strongly.

If nothing else, owning a Sodastream machine makes stocking stuffers easy, just pick up a five-buck flavoring bottle, wrap, and put in the stocking! 

DECK Again

So, Decker shoes is what made a lot of millionaires in the past.  Pulled way back to the high 20's now in the 40's.  Today up 10% after a lot of talk about where they could be.  I'd wait to a low 40's and buy half and wait and see where it is going.

Happy Trading...

NFLX & Redbox

Everyone loves Redbox, get ready for Redbox Instant when Coinstar teams with Verizon...  More info from the Motley Fool :

http://www.fool.com/investing/general/2012/11/30/is-this-a-netflix-killer.aspx

Play at-the-money calls on CSTR and ride the underlying to 60-62...

Happy Trading...

Off-line, Sorry... New Ideas

Have been watching RIMM since the BB10 information started flowing.  Great article on the web-browser here and how it may make an impact:

http://www.techvibes.com/blog/blackberry-best-mobile-browser-2012-11-09

RIMM went from 20% to 5% market share and has never had a good browsing experience but is still the corporate tool of choice, this could be what is needed to get some market share back and any indication it will be well received will shoot this equity up fairly rapidly.  Looking at some 6-month bull call spreads...

SODA is the next on my list to watch.  SODA has continued to trade "correlated" to GMCR.  GMCR exploded after earnings which has drove SODA a bit.  SODA is now less than 50% shorted however it is not much below 50%.  Good marketing and earnings beats have piqued interest in some near-mid term moves.

SIRI has pulled back from approaching 3 but consolidated well.  2.50 calls for 14 are our play.

Happy Trading...