27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Like an Olympic gymnast sticking a landing, Wal-Mart Stores, Inc. (NYSE: WMT) delivered on quarterly earnings early Thursday, beating expectations on top- and bottom-lines.
The better-than-expected WMT earnings came one day after another huge retailer, Target Corporation (NYSE: TGT), reported disappointing quarterly results and lowered guidance, citing “a difficult retail environment.” The contradictory nature of the two reports raises questions, including whether U.S. consumers are making more shopping trips to low-end rather than mid-price retailers, as they did back in 2008 and 2009 during the financial crisis, and whether TGT may be expecting the economy to slow down. We shall see.
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Things weren’t slowing down for WMT, which grew same-store sales 1.6% and raised its outlook, saying it’s “pleased at the positive momentum” of its business. The Arkansas-based company reported earnings of $1.07, beating expectations for $1.02 per share. Revenue came in at $120.9 billion, which was better than the $120.1 billion expected. WMT shares rose smartly early Thursday in pre-market trading after TGT stumbled 5% on Wednesday.
Though TGT results raise some questions about consumer health, the strong WMT results, which followed positive earnings from major department stores last week, may hint that some of the job growth seen this summer, along with higher wages and low gas prices, could be bolstering shoppers.
Beyond WMT, the market continues to digest Wednesday’s release of the Fed’s minutes from its July meeting. Judging from the minutes, it appears the Fed wants more data before it makes a move toward higher rates. Several Fed officials wanted to wait until they were more confident inflation would rise to the Fed’s 2% objective after running below target for four years, The Wall Street Journal reported. Others believed the U.S. is close to a fully recovered job market and a rate increase would soon be warranted. Though a few Fed officials are hawkish and want to raise rates as soon as possible, the dovish tone took the day.
What does this mean in regards to future rate hikes? The Fed minutes didn’t really shed a lot of new light. “Members judged it appropriate to continue to leave their policy options open and maintain the flexibility to adjust the stance of policy based on incoming information,” the minutes said.
That puts several coming data points in focus, including August jobs data, August inflation data and August retail sales data, all due in early September before the Fed meets. Housing and auto sales data may also work their way into the Fed’s view as it formulates a decision.
As of early Thursday, the futures market priced in an 18% chance of a September rate hike, above the level seen earlier this week; and a greater than 50% chance of a December hike. Futures have been telling the market for three months that a September rate hike is unlikely, and that doesn't appear to be changing. Remember, the U.S. election comes not long after the Fed’s September meeting, and though the Fed isn’t a political body, it’s possible Fed officials are taking the election into account.
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Several Fed officials are scheduled to speak Thursday, and their remarks could provide further insight into the Fed’s economic views. Fed speakers on Thursday include San Francisco Fed President John Williams, Dallas Fed President Robert Kaplan, and New York Fed President William Dudley.
Also on tap today: the government’s release of leading indicators data. Weekly jobless claims early Thursday came in at 262,000, below the 265,000 many analysts had expected.
Over in the oil patch, prices moved above $50 a barrel for Brent oil futures early Thursday for the first time in six weeks as a possible output freeze by major producers continued to grab headlines. U.S. crude prices rose above $47 to a seven-week high. The debate on oil is whether a production freeze at these current high output levels would really mean that much in terms of supply and demand. Saudi Arabia and other OPEC countries have been pumping out the black liquid at abundant rates lately, and U.S. producers have also moved to turn on the spigots, with drill counts rising most of the summer. U.S. crude has mainly occupied a range between $40 and $50 a barrel since April.
Though oil prices are rising, the major stock indices don’t seem to be taking their cue from crude. The corellation between oil and crude is still on the high side, but well below levels seen earlier this year.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.