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1. Purchasing Some GE
2/20/2009 3:32 PM EST
have fallen to levels that are very attractive, and we are purchasing for our client accounts.
The company has a great many fundamental headwinds, to be sure, with the financial part of the business frightening everyone significantly.
There is a price for everything, however, and I believe that investors have over-reacted to the risks and are ignoring the fact that GE will come out of this crisis a much stronger company. Yes, the dividend will be cut, but there is nobody -- I mean nobody -- who doesn't expect that. They can take a hatchet to the dividend, cutting it from the current $1.24 to 36 cents a share, and the stock would still yield almost 4%!
2. Traders Buying VIX Calls
Jon "Dr. J" Najarian
2/20/2009 3:01 PM EST
In a direct reversal from yesterday, options traders are buying VIX calls in huge volume.
One large player put up a VIX March 55-65 bull call spread some 17,000 times for about $1.25 -- a $2.125 million bet. The March 55 calls were bought for $2.05 and the March 65 calls sold for 80 cents, according to OptionMonster's tracking systems.
This strategy is apparently either looking for a big pop in the volatility index or is hedging an over-the-counter trade. Either way, it is the opposite of yesterday's VIX activity, when traders were clearly betting against a rise in volatility. The index is up more than 4% today to $49.12.
3. Moody's Blues
2/20/2009 2:57 PM EST
earlier on the pounding that
is taking today. Below is a short-term daily chart, which shows quite a bit of damage.
Up until today, the stock had been continuing to recover after bottoming out in late November. In the eight weeks prior to the Nov. 20 low, Moody's had lost over 50% of its value. Since then, the stock had been working on its fourth consecutive higher monthly low, forming a solid base in the process.
The 10% loss today, which will likely attract triple the stock's average volume, has weakened the short-term technicals for the stock in a big way. Earlier in the session, the stock dipped below the January lows and now appears ready for a re-test of its lows from November. A low-volume drop down to $15.50 would be a low-risk buying opportunity.
4. Is This an All-You-Can-Eat Buffett? (Part Deux)
2/20/2009 9:51 AM EST
(BRK.A) investment debacle continues apace.
Berkshire has lost another $500 million in
in the first 15 minutes of trading today.
Moreover, the mark on Berkshire's $30 billion-plus derivative short put trade on the
probably now exceeds $10 billion.
A billion here a billion there. Soon it's real money, Jimmy!
5. Significant Put Buying in Applied Materials
2/20/2009 4:54 AM EST
Traders are buying large blocks of puts in
as the company's stock continues to slide since it reported weak earnings early last week.
The chip-equipment maker has fallen some 20% since reporting a 35% drop in year-over-year revenue and a quarterly loss of $133 million. It closed Thursday at $8.34. The options activity was focused on AMAT's July 7 and July 8 puts, bought in significant blocks for 75 cents and $1.20, respectively, according to OptionMonster's tracking systems.
A large cash balance and low debt are positives for Applied Materials, but the institutional put buying points to some negative pressure that may still exist on the battered stock, which is down about 62% from its 52-week high.
Applied Materials has jumped into solar energy but expects no orders for its SunFab panel technologies in 2009.
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This article was written by a staff member of RealMoney.com.