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Bears Are Taking Over The Options Market

Bears Are Taking Over The Options Market

The bears are taking over the equity options market.

As Bloomberg markets live reporter and commentator,…

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Bears Are Taking Over The Options Market

The bears are taking over the equity options market.

As Bloomberg markets live reporter and commentator, Cormac Mullen, details, the 10-day moving average of put options traded in the US stock market - a gauge of speculative downside protection bets - has pushed above the equivalent for bullish calls for the first time since 2020, according to data compiled by Bloomberg.

The latter was a good measure of speculative individual investor demand for US equities, peaking with the meme-stock waves that bookended last year. That suggests retail traders are shifting to betting against the market, albeit at an intensity well below the peak of meme madness.

Interest in put options is higher than the worst of the coronavirus market fears in 2020, and has been a number of times already this year, the gauges show.

Of course, the jump in bearish retail sentiment can also be a contrarian signal for market direction. As Sundial Capital Research founder Jason Goepfert put it Tuesday -- “it’s rare for the smallest traders to bet against the stock market, and when they do, stocks have never failed to fail them.”

Tyler Durden Thu, 06/23/2022 - 07:20

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Spread & Containment

WTI Extends Gains After Unexpected Crude Draw

WTI Extends Gains After Unexpected Crude Draw

Oil prices are higher today following relatively positive news from China (easing some of its…

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WTI Extends Gains After Unexpected Crude Draw

Oil prices are higher today following relatively positive news from China (easing some of its COVID quarantine restrictions), Macron-inspired doubts over the ability of Saudi Arabia and the United Arab Emirates to significantly boost output, and unrest in Ecuador and Libya helped lift prices.

“We’re in the crunch period, it’s hard to see any meaningful price relief for crude,” said John Kilduff.

There’s a lot of strength with China relaxing its Covid restrictions and starting its independent refiners, “we’re going to have another chunk of demand for crude oil,” as China relaxes its Covid-19 restrictions.

With no EIA data released last week due to a "systems issue" (they have issued a statement confirming that the data - and the newest data - will both be released tomorrow), the only guidance we have for now on the past week's inventory changes is from API...

API (last week)

  • Crude +5.607mm

  • Cushing -390k

  • Gasoline +1.216mm - first build since March

  • Distillates -1.656mm

API (this week)

  • Crude -3.799mm

  • Cushing -650k

  • Gasoline +2.852mm

  • Distillates +2.613mm

Crude stocks unexpectedly fell last week, almost erasing the major build from the week before (according to API). Gasoline stocks rose for the second straight week

Source: Bloomberg

WTI was hovering around $111.75 and pushed up to $112 after the unexpected crude draw...

Finally, we note that the tight supply situation in oil (especially European) is revealing itself in the WTI-Brent spread, grew to $6.19, the widest in almost three months.

“European demand will remain robust, especially as natural gas supplies run out, while the North American demand for crude is weakening,” said Ed Moya, senior market analyst at Oanda.

This is not good news for President Biden as prices are rising...

And his ratings are hitting record lows.

Tyler Durden Tue, 06/28/2022 - 16:37

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Economics

Why REV Stock is Trending After Filing Chapter 11 Bankruptcy

Will Revlon end up getting bought out after filing for bankruptcy? And if so, how will it affect investors holding REV stock?
The post Why REV Stock is…

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Revlon (NYSE: REV), the iconic beauty brand, has filed for chapter 11 bankruptcy. Meanwhile, REV stock rallied on the news as traders promoted the idea of a buyout on social media.

After implementing a new strategy to drive growth, Revlon did see business pick up last year. But it wasn’t enough to overcome the massive debt Revlon piled on throughout the years. Nonetheless, the company has been losing money since 2015.

The bankruptcy filing will help the company “reorganize its capital structure” and “improve its long-term outlook.”

Will it be enough to turn the company around? Revlon still faces intense competition and rising costs. Not to mention an uphill battle with its supply chain.

Yet the company has a strong portfolio of brands. On top of this, Revlon already has a buyout offer, according to reports. Will Revlon end up getting bought out? And if so, how will it affect investors holding REV stock?

Keep reading to learn why Revlon stock is trending and what you can expect next.

Why Is REV Stock Trending

The news of Revlon’s bankruptcy broke about two weeks ago. As a result, retail traders piled into REV stock, promoting it as a short squeeze candidate.

The announcement caused REV shares to first crater. And then, after hitting an all-time low of $1.08, Revlon shares rallied on heavy volume. Revlon stock soared over 800% within a week, gaining meme stock status.

Traders on social media sites such as Reddit and StockTwits compared the situation to rental car company Hertz (NASDAQ: HTZ).

After the initial fallout, Hertz stock soared after announcing bankruptcy in 2020. As a result, HTZ stock gained over 900% as retail traders bid the price up.

Doesn’t bankruptcy mean the company is going out of business? Why would someone want to own a bankrupt company?

For one thing, Chapter 11 bankruptcy doesn’t mean the company is going out of business. To illustrate, in Hertz’s case, the company sold over 200,000 vehicles. Not only that, but investors bet on the company’s turnaround.

An investment group gave Hertz $5.9B while the company managed debt. As a result, Hertz is back in business, with demand for rentals heating up.

At the same time, it may be a different situation with Revlon than Hertz.

How Did This Happen

Revlon has been losing market share for years. Newcomers enter the industry with attractive marketing campaigns, drawing in the younger crowd.

For example, a longtime rival, Coty Inc (NYSE: COTY), teamed up with Kim Kardashian and Kylie Jenner. Coty has a 20% stake in Kim’s beauty business and an over 50% in Kylie’s. With this in mind, the deals are part of Coty’s transition to an online, DTC business model.

Meanwhile, Revlon has failed to keep up in the digital age. That said, the company was started 90 years ago and has built strong ties with leading retailers.

But, as shoppers move online, especially younger crowds, Revlon has been slower to catch trends. Coty’s partnerships expand their reach online, particularly on social media. Celebrity influencers push products to their millions of followers.

Then, the pandemic hit. Revlon saw sales crater as a result. For one thing, with lockdowns in place, people wore less makeup. And on top of this, if they did buy makeup, it was online.

So, Revlon lost even more market share. And then higher raw material costs, shortages, and rising labor put the company over the edge. Below is a look at Revlon’s debt by year since 2012.

Revlon started missing payments as a result, and vendors had enough. The past due accounts piled up, and the company couldn’t keep up. So, Revlon filed for voluntary chapter 11 bankruptcy on June 16, 2022.

What’s Next for Revlon

As shown, chapter 11 doesn’t mean Revlon is going out of business. In fact, it will give the company a chance to restructure its debt, like Hertz. Here’s what we know so far.

  • Revlon expects to receive $575M in financing to support day-to-day operations.
  • The pre-trial hearings are ongoing, with another one today.
  • Revlon will have the chance to work with creditors to write off some debt.
  • Another option is the company gets bought out.

We could also see a potential sale of Revlon’s assets. Revlon’s CEO says demand remains solid, and “people love our brands” while adding the company’s strong market position.

But she added that the company’s debt situation has made it challenging to do business. In particular, rising costs and shortages.

Revlon will continue doing business for now while working with those they owe money to. If they come to a resolution, the company may reduce its debt to better position itself in the long term.

At the same time, investors holding REV stock may not get anything.

Is It Worth Buying REV Stock

The first thing to know about buying REV stock right now is that you can lose everything. If Revlon fails to turn a profit, it will continue losing money.

The bankruptcy filing will give the company a second chance to restructure its debt. But Revlon will still be operating with the challenging conditions from before.

Though raw material costs have dropped slightly in the past month, they are still well above pre-pandemic levels. Revlon will need to make significant changes behind the scenes to overcome the difficulties.

Can REV stock become the next GameStop (NYSE: GME) or Hertz? That’s what traders on social media are hoping for. But, with competition gaining market share, the situation seems different.

At the same time, Revlon is a massive brand in makeup. For instance, Revlon is the #3 global cosmetics brand. Not only that, but they are also the #1 for mass fragrance and nail brand for professionals.

Yet these facts don’t mean Revlon stock is worth buying. The company still faces rising costs. Furthermore, Revlon has a long list of creditors they will pay before investors. For this reason, it may be best to stay on the sidelines for this one.

The post Why REV Stock is Trending After Filing Chapter 11 Bankruptcy appeared first on Investment U.

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Spread & Containment

Best Stocks To Buy Today? 3 Travel Stocks in Focus

Check out these travel stocks as China loosens its lockdown restrictions.
The post Best Stocks To Buy Today? 3 Travel Stocks in Focus appeared first on…

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3 Travel Stocks For Your Watchlist Now

As we’re approaching Independence Day, travel stocks may seem attractive for investors today. Since parts of the world are already moving towards the endemic phase, consumers could be increasingly keen on traveling. Moreover, with summer vacations continuing, families are excited to enjoy a vacation somewhere in the world. According to an estimate by the American Automobile Association, 42 million Americans are likely to travel for the long weekend ahead. Therefore, it would make sense that investors are considering travel stocks now.

On top of that, China has just cut the quarantine period for international travelers. This would make for a milestone in its loosening of Covid restrictions in the past two years. According to the revised government protocol, international travelers only have to quarantine at centralized facilities for seven days, and an additional three days spent at home before venturing out. This decision is made as Chinese officials continue to get a hold of the pandemic locally.

The slash in quarantine times has benefited many companies, and Wynn Resorts (NASDAQ: WYNN) and Las Vegas Sands (NYSE: LVS) are some of them. Since both companies operate casinos in Macau, both companies are gaining in the stock market today. Evidently, both LVS stock and WYNN stock are now gaining by over 7% at the opening bell today. With a great weekend coming ahead, here are three more travel stocks for your watchlist today.

Travel Stocks To Watch Today

Trip.com Group Ltd.

First up on our list today we have an international online travel agency, Trip.com. In short, the company offers hotel reservations, flight tickets, package tours, corporate travel management, and train ticketing services. All of which are readily available to consumers via its one-stop mobile app. With hotel and transportation information given, leisure and business travelers can make reservations. Travel packages and guided tours are also offered for corporate clients to manage their travel needs. For independent leisure visitors, Trip.com also provides package trips, including those for tour groups, semi-tour groups, and private groups.

TCOM
Source: TD Ameritrade TOS

Yesterday, Trip.com released its first fiscal quarter financial results. Among its highlights, net revenue was $649 million, remaining stable year-over-year. The reason is because of the impact of the latest wave of Covid in China. However, staycation travels have been a major contributor to the recovery of the Chinese domestic market. In particular, local hotel bookings are up by over 20% year-over-year. At the same time, Trip.com’s air-ticket bookings on its global platforms are also up by 270% over the same period.

Despite China’s strict lockdown measures in most of the first half of 2022, Trip.com is maintaining its overall growth. According to CEO Jane Sun, the company’s “results demonstrated our resilience amidst a confluence of challenges and uncertainties.” Sun also adds, “While we may continue to see short-term fluctuations, demand for travel is still strong and shows a bright outlook in the long-term.” Pair all this with China loosening its restrictions and TCOM stock could be an attractive buy amongst its travel stock peers. Would you say the same?

[Read More] Stock Market Today: Dow Jones, S&P 500 Edge Higher; Trip.com Stock Surges From China Covid Easing

Spirit Airlines Incorporated

Next, we have Spirit Airlines, an ultra-low-cost carrier. The company operates across the U.S., Latin America, and the Caribbean. In fact, it is a leader in providing customizable travel options that start with an unbundled fare. Its Fit Fleet is one of the youngest and most fuel-efficient in the U.S. as well. In recent weeks, the company has been locked in a fierce battle as companies like JetBlue (NASDAQ: JBLU) and Frontier Group (NASDAQ: ULCC) have been trying to bid for Spirit.

The saga could be heading towards a climax this week as Spirit shareholders will vote on fellow budget airline Frontier’s acquisition offer on Thursday. However, JetBlue has been on the offensive, even boosting its offer price for Spirit on Monday evening. Diving in, JetBlue’s new offer raises the reverse break-up fee to $400 million from $350 million if regulators do not approve the deal. It also includes a dividend to Spirit shareholders of $2.50 a share, up from its previous offer of $1.50. On Frontier’s end, however, the company dismissed JetBlue’s claims that its acquisition of Spirit will lead to lower airfares.

Separately, TIG Advisors, an investment adviser that owns a stake of approximately 2 million Spirit Airlines shares, says that it has just sent a letter to the board of directors at Spirit regarding its intention to vote against the company’s proposed merger agreement with Frontier Group. It believes that its merger with JetBlue is the far superior outcome for Spirit shareholders due to its all-cash bid. This would also eliminate execution risk and maximize certainty of value. All things considered, should investors be looking at SAVE stock right now?

SAVE stock
Source: TD Ameritrade TOS

[Read More] 5 Top Leisure Stocks To Watch This Summer

Airbnb Inc.

Topping our list today, we have Airbnb, a travel company that offers an online marketplace for lodging and tourism activities. It mainly earns its income through commissions from each booking. Today, it has over 4 million hosts who have welcomed more than 1 billion guests across the globe.

Today, the company announced that it is officially codifying the ban of all parties and events in its listings as part of its policy. This follows a temporary ban that was initiated in August 2020 on all parties and events. In that time since the company says it saw a direct correlation between the implementation of its policy in August 2020 and a 44% year-over-year drop in the rate of party reports. The ban has also been well received by its host community and it has also received positive feedback from community leaders and elected officials.

On June 27, 2022, the company also reported that family travel and long-term stays will trend across the U.S. this Independence Day. For instance, from February 2022 to March 2022, searches for stays over July 4th have increased by nearly 50%. Also, hosts could stand to earn a lot during the holiday. After all, last year’s Independence Day yielded the biggest payout for U.S. hosts in 2021 compared to other holiday weekends, a major moment for hosts to earn. All things considered, is ABNB stock worth investing in right now?

ABNB stock
Source: TD Ameritrade TOS

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The post Best Stocks To Buy Today? 3 Travel Stocks in Focus appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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