British Prime Minister states about Trump …

LONDON (Reuters) – British Prime Minister Theresa May congratulated Donald Trump on winning the U.S. presidency on Wednesday, saying Britain and the United States would remain “strong and close partners on trade, security and defence”.  I would interpret this to wait for profit taking on LMT long position since Harrier fleet needs replacement.

Partners will stay put on Lockheed’s F-35 program but Lockheed’s F-16 could lose its front-runner status as India looks to buy more jets. Lockheed offered attractive incentives to New Delhi, like tech transfers and in August the company said it would move its F-16 manufacturing to India.

“But with an isolationist policy, you’re not going to give them more tech transfers,” Pettibone said.

Instead India could order more jets from France’s Dassault, Sweden’s Saab or offerings from Russian firms.

Double Down

For Speculative Accounts ONLY

on EA $67.50 3/17/17 puts selling for $1.36.

For more risk seeking accounts, EA $60.00 3/17/17 puts selling for $0.83.

North America accounts for 43.0% of its total revenue.

Revenue from EA’s international markets rose 17.0% YoY (year-over-year), from $434.0 million in fiscal 2Q16 to $509.0 million in fiscal 2Q17. Revenue from North America rose 2.0% YoY, from $381.0 million to $389.0 million in the same period.

See Due Diligence.

Confirm prior performance for ATVI puts.

ATVI a leading barometer down on above average 3M volume.

NOC is rallying on Global repair Contract in Wales

NOC (up $3.93 or 1.74%), BAE – BAESY(OTC) (up $.44 or 1.62%) and the contract administrator, LMT, are rallying as Wall Street is relatively more positive about the prospects of the F-35A’s success, despite GOP and budget deficit dimming the prospects for an entire fulfillment of an astonishing 2400 fighters.  Right now, delivery of 57 planes were delivered at a discount and could affect earnings, from $7B to $6.1B and haggling over the remainder 140 for imminent delivery may tax LMT as they have been paying out-of-pocket to support its suppliers.

2/17/2017 Option calls on NOC are 4X to 10X more active than the puts.

Protect Yourself from a Flash Crash – The Most Significant Straddles of the 21st Century

For Speculative Accounts ONLY

LMT Close 11/4/16 $236.28, down $2.42 or 1.01%

  • Super-Premium: LMT Calls 3/17/17 $240 at $8.00 – LMT Puts 3/17/17 $240 at $14.20.
  • Premium: LMT Calls 3/17/17 $250 at $4.20 – LMT Puts 3/17/17 $215 at $5.10
  • Unleaded – LMT Calls 3/17/17 $270 at $0.80 – LMT Puts 3/17/17 $165 at $0.65 (There was more activity in the $0.65 – 40 contracts than any other puts on Friday.)

Please see this due diligence.

LMT Beurre Redux.

LMT Part Deux – A more cost conscious and pertinent to the mission alternative to the F-35A

Pentagon’s Chief Weapons Tester calling F-35 a failure.

LMT not happy with $6.1B, expected $7B for delivery of 57 fighters.

The deal was a 3.7% price decrease from the last order of F-35s that the Pentagon purchased.

The Pentagon’s decision could depress Lockheed’s profits, as the F-35 makes up 23% of Bethesda, MD-based Lockheed’s revenue, the Journal noted.

 The F-35 is expected to account for as much as 25% of the company’s revenue by next year.

Please consider subscribing to the blog and receive a complimentary spreadsheet with ratio analysis of the of 8 largest Defense contractors and 5 publicly traded natural gas players.


If Trump is Elected …

Defense stocks will likely outperform broad benchmarks by a wide margin in a Trump administration (LMT, RTN), given the Republican Party’s traditional emphasis on strong military budgets, as well as controversial campaign statements about the use of American forces around the world. In turn, this favors a handful of blue-chip contractors who depend heavily on government spending.

Prepare for the Worst, Hope for the Best.

Trump’s Missing Emails and Blacklining

For Speculative Accounts ONLY,

LMT 3/17/17 $270 Calls at $0.95.

One of the Most Significant Straddles of the 21st Century.  You may want to extend the expirations to 3/17/17 because the Pentagon requested an additional $500M for the project.

Please consider subscribing to the blog and receive a complimentary spreadsheet with ratio analysis of the of 8 largest Defense contractors and 5 publicly traded natural gas players.

Activision raises full-year forecast, third quarter revenue tops estimates

Activision Blizzard Inc reported higher-than-expected revenue for the third quarter, boosted by the success of its “World of Warcraft: Legion” and “Overwatch” videogames as well as its acquisition of “Candy Crush” mobile game-maker King.

The company also raised its full-year adjusted profit and revenue forecasts.

Activision’s total adjusted revenue, which includes deferred revenue, rose to $1.63 billion in the third quarter ended Sept. 30 from $1.04 billion a year earlier.

Analysts on average had expected revenue of $1.57 billion, according to Thomson Reuters I/B/E/S.

Revenue from the company’s high-margin digital business more than doubled to $1.34 billion.

Activision raised its full-year adjusted revenue forecast to $6.53 billion from $6.48 billion, and its profit expectations to $2.02 per share from $1.90.

However, its forecasts for the key holiday-shopping quarter were slightly below analysts’ estimates, amid expectations of heavy competition from games launched by rivals.

After hours, the stock is volatile on the downside, as low as 5.46% and is now down 3.85%.

LMT not happy with Pentagon over ONLY $6.1B Contract

Lockheed Martin Corp. was awarded a $6.1 billion Pentagon contract for 57 of its F-35 fighter planes, but the world’s largest defense contractor was less than pleased to hear the news. It was “not a mutually agreed-upon” contract, Lockheed spokesman Michael Rein said in an e-mail soon after the Defense Department announced late Wednesday that it had awarded the ninth F-35 production contract, the biggest to date. “We are disappointed with the decision by the government to issue a unilateral contract action.” The public display of displeasure was a rare departure from the mutual praise that the Pentagon and its top contractors usually lavish on each other, even when they have differences, according to Bloomberg.