WSJ : After Tesla Sets Record(s), Options Traders Don’t See More Big Moves

Shares of Tesla Motors Inc.TSLA -0.80% have rallied to yet another series of fresh records, but options traders aren’t betting on continued big moves in the day-trader favorite.

Tesla hit new record highs every day last week. Shares gained steam after Deutsche Bank upgraded the company, noting the electric-car maker’s prospects for stronger-than-expected growth in the next few years.

That rally ended Monday. Shares opened higher but fell throughout the day, closing down 0.8% to $259.94. Tesla shares have gained about 16% this month and have surged about 73% in 2014 through Monday’s close.

However, Tesla’s 30-day implied volatility on Monday was near its lowest level since March 2013, according to Livevol Pro data. Implied volatility is a gauge of future volatility that is derived from options prices, and the decline in the measure indicates options traders aren’t betting on as sharp a move in the underlying stock in the next 30 days as they have over the past few months.

The two most active options on Monday were weekly call options that would grant the holder the right to buy Tesla stock if shares rose above $265 and $270, respectively, through the end of the week.

The $265 and $270 call options were likely being unloaded Monday by traders who were unwinding earlier bets that the stock would reach those levels by Friday, said Andrew Wilkinson, chief market analyst at Interactive Brokers.

“They just don’t see the stock leaping that far that quickly,” he said.

Tesla shares have a history of big swings. Tesla’s shares jumped about 83% between January 13, which marked the 2014 low, and March 4, nearly doubling in less than two months.

>>> Elizabeth Arden misses by $0.66, misses on revs; expects modest improvement

Elizabeth Arden misses by $0.66, misses on revs; expects modest improvement in FY15 EPS; announces Rhone Capital have agreed to purchase $50 mln of redeemable preferred stock

Reports Q4 (Jun) loss of $1.04 per share, excluding non-recurring items, $0.66 worse than the Capital IQ Consensus Estimate of ($0.38); revenues fell 28.4% year/year to $191.7 mln vs the $241.64 mln consensus.
  • While the Company had expected weaker sales comparisons due to the lower level of fragrance launch activity in fiscal 2014 versus fiscal 2013, the decline in sales of celebrity fragrances, particularly the Justin Bieber and Taylor Swift fragrances, was steeper than anticipated. The inventory destocking at a number of non-prestige customers that impacted the Company's 2014 third fiscal quarter results continued through the fourth quarter of fiscal 2014 and led the Company's shipments to be below the rate of retail sales.
  • Outlook Details: Fiscal 2015 will be focused on stabilizing the business and will be the first year of a multi-year plan to rebuild profitability. The Company expects a modest improvement in adjusted earnings for fiscal 2015 (FY14 Actual: ($0.55)... FY15 Capital IQ consensus $0.93) over the prior year with continued improvement in fiscal 2016.
  • Strategic Investment by Rhone Capital: Rhone Capital agreed to purchase $50 million of redeemable preferred stock of the Company and also will receive warrants to purchase 2.5 million shares of the Company's common stock at an exercise price of $20.39 per share, representing approximately 7.6% of the Company's outstanding common stock on an as-exercised basis.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: RDEN -19.4%, BHP -3.4%, (also discloses plans for demerger of selection of assets to simplify portfolio) JMEI -2.7%, PWRD -1.6%.

Other news: ONTY -18.7% (disclosed that Phase 1/2 study of tecemotide in patients with lung cancer did not meet its primary endpoint, no treatment effect seen in secondary endpoints), RIO -1.6% (in sympathy with BHP), PCYC -1.5% (appointed Shawn Cline Tomasello as Chief Commercial Officer), CLR -0.8% (Board declared a 2:1 stock split to be issued in the form of a stock dividend),SLXP -0.8% (Announces Early Termination of HSR Waiting Period for Pending Transaction), S -0.7% (plans to introduce $100 family plan, according to reports).

Analyst comments: LOCO -5.2% (initiated with a Underweight at Morgan Stanley, also initiated with a Hold at Jefferies, initiated with a Neutral at Robert W. Baird), SCTY -1.7% (downgraded to Neutral from Outperform at Robert W. Baird), CEO -0.9% (downgraded to Hold from Buy at Jefferies).

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: CMCM +7.8%, PDLI +5.4%, DKS +4.8%, AMWD +3.9%, HD +3.8%, URBN +0.9%.

M&A news: SKH +37.2% ( to combine with Genesis HealthCare in 100% stock transaction).

Select alt energy related names showing strength: YGE +2.8%, FCEL +1.9%, JASO +1.4%, KNDI +1.3%, TSL +1.3%, CSIQ +1.3%, FSLR +0.6%.

Other news: TROV +5.9% (continued strength), JRJC +4.6% (extending yesterday's 75%+ move higher), RAX +3.4% (+3.6% Blue Harbour Group confirmed a 6.4% active stake in 13D filing), LOW +2.4% (in sympathy with HD earnings), TASR +2.2% (Petition on White House website for wearable camera by law enforcement gaining steam, according to reports), MPEL +2% (peer Galaxy Ent reported earnings), CTSH +1.6% (Lone Pine Capital disclosed a 5.3% passive stake in 13G filing), ACHN +1.5% (cont strength), WPX +1.2% (announced it has executed multiple agreements; to sell its remaining mature, coalbed methane holdings in the Powder River Basin for $155 mln in cash), RRC +1% (positive comments on Mad Money), AFG +0.9% (increased annual dividend 14% to $1.00 from $0.88 per share).

Analyst comments: JAZZ +1.6% (initiated with a Overweight at JP Morgan)

NY Post : Cohen fund boss Conheeney makes surprise exit

The changing of the guard at Steve Cohen’s hedge fund-cum-$11 billion family office neared completion Monday with the unexpected announcement of the departure of President Tom Conheeney.
Conheeney’s exit comes as his boss, Cohen, still faces federal civil charges related to insider trading at his former corrupt hedge fund, SAC Capital.
The ex-hedge-fund mogul is fighting the Securities and Exchange Commission’s efforts to bar him from the industry for life over failure to supervise his staff.
Eight employees have been convicted of insider trading.
A stay on the SEC’s case expires on Aug. 26.
This past spring, as the Stamford, Conn., investment firm was changing its name from SAC to Point72 Asset Management, Conheeney, who helped run Cohen’s massively successful investment funds for 15 years, talked to employees about “a sense of continuity” at the company.
“We anticipate it will be our home for many years to come,” he said at the time.
Cohen, who is the firm’s CEO, said that Conheeney will stay on until the end of the year to oversee the transition.
Douglas Haynes, a former McKinsey director, took over as president on Monday.
With Conheeney’s departure, all three top Cohen lieutenants have left the building. The others are Sol Kumin, SAC’s former chief operating officer, who left in November to form his own hedge fund, and Steven Kessler, SAC’s former chief compliance officer, who quit in February.
“It looks like Cohen’s cleaning house and wants to show the SEC he has all new people,” said one lawyer familiar with the matter.
Conheeney was the voice of the firm over the past year as it dealt with charges and convictions of insider trading by former employees.
Although Conheeney did not testify in the insider- trading trials of former portfolio managers Mathew Martoma and Michael Steinberg, his name came up several times in the proceedings as the key individual overseeing the business.
The change of firm designation was part of a plea agreement between SAC and US Attorney Preet Bharara on criminal insider-trading charges. The firm paid $1.8 billion to settle with both the US Attorney and the SEC.
This year, Point72 also beefed up compliance, as was required by the plea deal.
Bart Schwartz, a former federal prosecutor who has served as an independent monitor in other cases, was named as the independent monitor of trading at Cohen’s new firm.
Cohen also created a new position, “chief surveillance officer,” hiring Vincent Tortorella, a former federal prosecutor for that job.

>>> YouTube Music’s Secret Weapon: Music You Can�™t Get Anywhere Else

You Tube has already said, on the record, that it is launching a music subscription service. And YouTube has explained, on the record, why it is launching a music subscription service.

And now we know why YouTube thinks you might pay for its music subscription service: It will have stuff you can’t get from other music subscription services.

This revelation comes from images published by Android Police, which purport to show leaked screenshots of the upcoming service’s pitch.

YouTube isn’t commenting on the report, but based on everything I’ve heard about the service — which has been in the works for more than a year, and delayed several times — it appears to be the real deal.

The screenshots also don’t show much that’s surprising. Like almost every other music subscription service — and there many other music subscription services* — “Google Play Music Key” will offer ad-free, portable music, which you can listen to on and offline, for $10 a month.

And, of course, it lets you watch videos, which you can already do for free.

But YouTube’s service will have one thing that all the other paid services won’t have, at least for now: The ability to listen to many of the songs users have uploaded, via videos, that aren’t part of music acts’ official catalogs, like concert recordings or remixes.

We’ll have to see how this plays out in the real world, but my hunch is that the idea is to give subscribers access to a large “grey zone” of music that’s been on YouTube for a long time, often with copyright owners’ permission, but unavailable most other places.

That could include everything from dance mixes to fans covering famous artists to famous artists covering famous artists. It’s a really, really long tail, and it seems impossible to imagine it existing anywhere but YouTube. Spotify gives me on-demand access to all of Wilco’s albums, and all of Radiohead’s albums, but it won’t let me hear Wilco’s Jeff Tweedy covering Radiohead.

Music licensing is convoluted and frequently nonsensical. So I wouldn’t expect every cover, concert recording or remix you find on YouTube to be available on YouTube’s subscription service.

But no matter how much of that stuff is ultimately available, I wonder how much difference this will make to YouTube’s prospective audience. YouTube may have the same ambivalence, which is why it doesn’t seem to be playing up the feature that heavily in the promotional slides — it’s just one of many features it is pitching, most of which you can get somewhere else.

Which is probably the real reason YouTube thinks it will succeed: It won’t really be competing with other subscription music services at all, because most people aren’t using subscription music services. Instead it will be competing with free — that is, with itself.

So when YouTube converts some of its billion-plus users into subscribers, YouTube wins. And when the rest keep using YouTube for free, YouTube wins. Good odds.

*Partial roll call of paid subscription services available in the U.S.: Spotify, Rhapsody, Rdio, Beats, Xbox and Google Play Music.