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1. Busy Day for Morgan Stanley Puts
2/12/2009 2:11 PM EST
has more than doubled in value since its lows of November, but the rally may be stalling out.
As MS headed south toward $22 earlier today, the February 22 puts were hitting hard. By midmorning more than 10,000 contracts had been bought in large blocks across multiple exchanges, many going for $1.05 to $1.15. This action is against open interest of 4,028, and the puts are now trading at $1.40, according to OptionMonster's tracking systems.
This is a short-term play, which could just be protective in nature, though that would be expensive insurance with a very short time frame until the options expire. MS is already trading right at $22 this afternoon, down 4% on the day.
2. Time Warner Split Fully Approved
2/12/2009 3:17 PM EST
is out with a press release noting that today's IRS ruling is the last hurdle required for the split from
Time Warner Cable
. All required approvals have been granted. The split should occur by the end of the quarter.
I still see this as a positive catalyst for the new content-only TWX.
3. Buffalo Wild Wings Breaks Out
2/12/2009 11:48 AM EST
In the words of
Buffalo Wild Wings
President and CEO Sally Smith, "2009 is off to a great start." This morning, the company reported fourth-quarter EPS of 43 cents, topping estimates of 39 cents. Revenue grew 32% year over year, also above estimates. The company also said that 25% revenue growth and 20% to 25% EPS growth are achievable in 2009. As a result, Buffalo Wild Wings began the day with a huge gap higher open and is now up 28%. Volume on this breakout is already six times the daily average, helping power the stock above its January highs.
Buffalo Wild Wings has now doubled since it bottomed in late November and is closing in on some heavy resistance near $30.00. I expect the stock to run into a bit of trouble here, which may lead to a healthy pullback. A 30% one-day gain is a bit excessive, but I do believe the breakout today is legit and that Buffalo Wild Wings will work its way higher in the next few months. I will be waiting for a pullback before jumping in.
4. Options Traders Get Bullish on Homebuilders
Jon "Dr. J" Najarian
2/12/2009 7:49 AM EST
Two midsized homebuilders are drawing bullish options trades in heavy volume.
are both rallying this year and seeing puts sold on the bids in large numbers. Normal put activity over the past 30 days has been 3,000 contracts for MTH and 5,300 for RYL. As of late yesterday, however, the two companies had 33,000 and 49,600 puts trade, respectively.
The action involved selling at various February and March strikes in huge blocks ranging from 10,000 to 19,000 puts each, according to OptionMonster's tracking systems. Meritage is up some 48% since Jan. 20 and closed yesterday up 4% to $17.27. Ryland is up about 15% in the same period and finished the session 1.5% higher at $18.04.
5. Geron Update
2/12/2009 7:29 AM EST
Getting back to stock ideas, I wanted to update my bearish outlook on stem cell stock
. I'm still bearish, and continue to short the stock in the Biotech Select model portfolio.
The company got some buzz on Jan. 23 for announcing the start of its first human stem cell study in patients with complete spinal cord injury, but the details of that study, discussed by Geron at an investor meeting this week, leave much to be desired from an investor standpoint.
As I told my newsletter subscribers this week, Geron won't even begin enrolling patients in this small phase 1 safety study until this summer. About 10 patients will be enrolled but Geron has to wait one month between patients for safety reasons. Assuming Geron can enroll one patient per month (and I wouldn't necessarily make that assumption), the company won't have this study fully enrolled until the middle of 2010 at the earliest.
Then, Geron has to complete one year of treatment for all patients, which means there won't be data from this study until the end of 2010, more likely 2011.
That's a long time to wait for results from a phase 1 safety study.
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This article was written by a staff member of RealMoney.com.