Monday and Tuesday will be the only normal trading days of the week; by midday Wednesday much of the crowd will be clearing out of lower Manhattan in preparation for Thursday’s overdose of tryptophan also known as Thanksgiving Day. Trading resumes on Friday – retailer Black Friday – but the day after Thanksgiving is traditionally among the slowest trading days of the year since the market is only open a half day.
Concerning this coming Friday and what it means for quick trading opportunities in the big retailers: Not a heck of a lot IMO. From what I’ve observed over the years, long lines at 5 a.m. on the Friday after Thanksgiving and big crowds at those stores on that day are routine and bad justification to run home and load on up options. The better retailer related trading opportunities come the following week and into the first week of December when the picture becomes clearer as to just how bad or good the season started off. It's all about comparable store sales, or COMPS and that data won't be out until more than a week after Black Friday. If anything, that bunch who lines up at 5 a.m. the morning after Thanksgiving to trample each other while scampering in to grab the $200 p-c, or the $99 36” t.v. are there for the dirt cheap, low margin bargains which run out of stock by noon on Black Friday.
With Wal Mart’s (WMT) back against the wall because of its weak same store sales growth in recent months, the retailing giant is taking a page from Mr. Sam's rules of selling and is already heavily discounting to pull more shoppers in; that has put everyone else on the defensive. WMT is determined to get as much of the 350-billion dollar holiday shopping sales pie as possible. In the options universe sentiment is biased toward the upside. In the December options, open interest totals about 87,000 puts vs 120,000 calls.
The economic calendar in the coming week is pretty quiet aside from LEI on Monday and jobless claims and Michigan sentiment on Wednesday. EIA will also be releasing its usual batch of inventory data.
Here are some potential options plays that I will be keeping an eye on:
Google (GOOG) at 500. The $64 question is will it not only cross $500, but can it make a decisive move past that high water mark? GOOG got within about half-dollar of touching $500, but just couldn't muster enough strength on expiration Friday to take out the strike. Open interest on the December 500 calls total 13,511 vs open interest of only 2600 contracts in the 500 puts. What I'm really waiting for is strong volume. In the surges past both 400 and 450 volume was exceedingly strong (6 mln+). If we come out of the gate with heavy volume and positive momentum on Monday, I will jump into the December 510 calls, BUT GOOG has been known to flirt with century marks in the past, and there's no assurance that next week will be the week to stock breaks through 500.
Amgen (AMGN) December 75 calls. There was interesting action there on Friday. Over 13-thousand traded vs previous day open interest of 8,909.