Opening Bell: 07.25.14

Sodastream trader makes 3,000% profit in two hours (CNBC)
Two minutes before 10 a.m. ET on Thursday, one options trader bought 500 weekly 30-strike calls in Sodastream for 15 cents each (or $15 per contract, given that each contract controls 100 shares) that expire Friday. It was by far the biggest Sodastream trade of the day in terms of the number of contracts. The purchase gives the trader the right to buy Sodastream shares for $30 at the close of Friday trading. The reason those options were so inexpensive is that the stock was trading at about $29.50 at the time, meaning the chance of the stock closing Friday above $30 was considered to be especially low. But then, shortly before noon, Bloomberg reported that the company is in talks with an investment firm about taking the company private. After a halt, the stock sailed as high as $36. The news created an instant windfall for the trader, as these options, which were bought for $7,500, became worth as much as $250,000.

RBS First-Half Profit Doubles, Sees 2014 Cost Cuts on Track (Bloomberg)
Royal Bank of Scotland Group Plc said pretax profit almost doubled in the first half and forecast that it will meet a target to cut costs by 1 billion pounds ($1.7 billion) in 2014. The shares soared. Pretax profit at Britain’s largest state-owned lender may have increased to 2.65 billion pounds from 1.37 billion pounds a year earlier, RBS said in a statement today. Operating profit probably jumped to 2.6 billion pounds from 708 million pounds, according to the results, which were released a week early. Chief Executive Officer Ross McEwan, 57, who took over from Stephen Hester in October, is setting up an internal bad bank, combining divisions and scaling back the investment bank as he strives to shore up earnings at RBS after the lender reported its biggest annual loss since the financial crisis last year. RBS said today that it’s still facing “significant conduct and litigation issues” that could hurt future profit.

Moody’s Profit, Revenue Rise (WSJ)
The firm posted earnings of $319.2 million, or $1.48 a share, up from $225.5 million, or $1 a share, a year earlier. Revenue improved 16% to $873.5 million. Analysts polled by Thomson Reuters had estimated earnings of $1.01 a share and revenue of $803 million. The company’s Moody’s Investors Service debt-rating operation—its biggest revenue contributor—posted a 16% increase in revenue to $621.7 million. Global corporate finance grew 22% to $320.9 million.

Goldman bankers to Babble on their own chatroom (FT)
Goldman Sachs is spearheading an effort among Wall Street’s leading banks to develop a chat tool called “Babble” that could replace the instant messaging service on Bloomberg’s ubiquitous terminals…The company’s internal messaging service, known as Instant Bloomberg, is one of the main ways for bankers and traders to keep in touch with their customers at pension funds, hedge funds and asset managers. Goldman’s chatroom project comes after tensions between big banks and Bloomberg were also heightened last year when senior executives at the bank confronted the company over its reporters allegedly using private terminal data to track bankers…The Babble project is said to be less about concerns over data privacy issues, and more about creating an alternative network which comes at a much lower cost and can also be plugged in to different systems and used by both banks and their clients.

A Divorce That Thrusts Ken Griffin and Anne Dias Griffin Into the Spotlight (Dealbook)
Divorces in Illinois play out in open court, though either party can request mediation or move to seal their file, according to James H. Feldman, the chairman of the family law practice at the law firm Jenner & Block. The split is unlikely to affect Citadel’s ownership structure, because Ms. Dias Griffin is neither an owner nor an investor in the firm’s funds. And the two signed a prenuptial agreement governing any split of their assets, according to the divorce petition. Under the agreement, Ms. Dias Griffin would be entitled to cash in the event of a split, but Mr. Griffin would retain the art and real estate, two people briefed on the matter said. But she could contest the terms.

Sniffing out a partner at a London pheromone party (AO)
In a bar in trendy east London, dozens of people mill about, sniffing from plastic bags. But there are no drugs inside – just slightly smelly T-shirts. These adventurous single men and women are at a “pheromone party”, an alternative dating trend based on the idea that smell plays a key role in the choice of a sexual partner. Each of them has agreed to wear the same cotton T-shirt for three nights in a row, with no deodorant or perfume, and to bring it to the party. The clothes, infused with the pure scent of the wearer’s body, are placed in transparent plastic bags with numbers on coloured labels – pink for women, blue for men. “Smell as many bags as you like, have fun!” encourages the organiser, Judy Nadel. There is some nervous laughter, then a sudden rush for the bags laid out on a big table in the middle of the room. Some people open the bags carefully, taking a timid sniff, while others plunge their noses right inside. “This one’s been worn for a few days,” quipped one young man, while his friend Steven Lucas, a 23-year-old law trainee, remarks that the clothes “all smell the same”. “It’s like sweat and a tiny bit of perfume, or just, like, clean,” he says. Those who get a sniff of their dream partner snap a picture of themselves with the bag. The images are then projected onto the wall, and the lucky owners of the chosen T-shirts have the chance to meet their admirers.

Herbalife hires ex-Biden chief to fend off regulators (NYP)
Herbalife is tapping an ex-Obama administration honcho to beat back hedge fund nemesis Bill Ackman, who upped the stakes this week when he called the nutritional supplements company a “criminal enterprise.” As part of the knock-down, drag-out battle between the two sides, Herbalife, which is under investigation by the Federal Trade Commission among others, is hiring Vice President Joe Biden’s former chief of staff, Alan Hoffman, to fend off regulators, The Post has learned. Hoffman left the White House in 2012 to head up lobbying at PepsiCo. “He is being brought in to fight back against Bill Ackman’s multi-front efforts — both here on Capitol Hill, with federal regulators, and now state AGs all across the states,” said a Washington insider.

Russian Central Bank Raises Key Interest Rate (WSJ)
The Bank of Russia raised its key interest rate on Friday for the third time in five months in a surprise move, and warned there may be more to come if political shocks prevent high inflation from coming down. The central bank had been expected to keep the rate steady after raising it twice since early March, when Russia’s annexation of Crimea led local and overseas investors to flee for safer markets, causing the ruble to tumble to a record low. The weaker currency pushed up the price of imports, leading to a jump in inflation. Instead, Friday, the central bank bumped up its main rate by half a percentage point to 8%.

BNP Paribas to pay $80 million for defrauding U.S. Agriculture Department (Reuters)
The U.S. Justice Department announced on Thursday that a Federal court entered judgment against French bank BNP Paribas for $80 million for defrauding a program designed to encourage American exports. The program, run by the U.S. Department of Agriculture, covered losses for American commodities exporters in cases where their import partner failed to make a payment…From 1998 to 2005, BNP Paribas knowingly guaranteed such a credit for companies known to be operating both the export and import side of a trade and, in some cases, never making a payment or shipment, according to a statement from the Justice Department. Beginning in April 2005, BNP Paribas submitted claims to the Agriculture Department for losses resulting from a Mexican importer owned by the same company as the American exporter.

Naked thieves take burgers from SW Florida eatery (AP)
Waitress Nancy Sansevieri was still laughing after police released surveillance video Wednesday showing the college-aged men — two naked and one clad in underwear — stealing 60 hamburgers from Doc’s Beach House in Bonita Beach. Police say the men broke in early Sunday and left a trail of red peppers on the beach. Doc’s general manager Lou Bangert told the News-Press of Fort Myers that he’s never witnessed such a crime in the restaurant’s 27-year history. Thieves have broken in and taken money from the cash register, but he says no one has ever slammed through a door completely naked looking for beef.

30 comments (hidden to protect delicate sensibilities)
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Comments (30)

  1. Posted by HotKarl | July 25, 2014 at 8:53 AM

    Overheard at the pheromone party….

    This plastic bag smells like the semen of 10 men + Chanel No 5….Lynn Tilton, where are you at?

  2. Posted by HotKarl | July 25, 2014 at 8:58 AM

    This bag smells like bad picks and no shame…Meredith Whitney, where are you at?

  3. Posted by Lamar | July 25, 2014 at 9:19 AM

    I make my own bubbles in the bath tub. For free.

  4. Posted by London Banker | July 25, 2014 at 9:31 AM

    Pheromone dating?! Smells fishy to me.

  5. Posted by Guest | July 25, 2014 at 9:31 AM

    So, how long before the SEC charges this mysterious Sodastream trader with insider trading? I say the o/u is next Tuesday, any takers?

  6. Posted by Jewwy Maguey | July 25, 2014 at 9:34 AM

    "Shall we say 'hi', or 'woof woof'?" jokes one man in passing, before disappearing into the crowd.

    am i the only one who wants to see this guy boiled in oil?

  7. Posted by Texashedge | July 25, 2014 at 10:08 AM

    "The reason those options were so inexpensive is that the stock was trading at about $29.50 at the time, meaning the chance of the stock closing Friday above $30 was considered to be especially low."
    I'm ain't Robert Merton, but this doesn't strike me as that unlikely.

  8. Posted by Richard Longman | July 25, 2014 at 10:16 AM

    You see Rachel Channing the parent suing chick is back in court ? The dude she was bangin choked er out and she wants cash.

    Looks like Laxman mite uh got one rite this time.

  9. Posted by IDF | July 25, 2014 at 10:24 AM

    If you carbonate Palestians long enough, they explode nicely.

  10. Posted by Captain Oblivious | July 25, 2014 at 10:44 AM

    Where are the Sodastream insider trading calls trading today??

    Buh bye scumbag. Will be in cuffs before Monday opening bell

  11. Posted by Chaz | July 25, 2014 at 10:53 AM

    I will now start collecting my alpha farts in a bag to leave for my secretary.

  12. Posted by Rebecca M. | July 25, 2014 at 11:25 AM

    "he says no one has ever slammed through a door completely naked looking for beef."

    Clearly he never worked here.

    -Patriarch Partners Analyst/Dildo stand in

  13. Posted by Guest | July 25, 2014 at 11:26 AM

    the bags contained t-shirts, not underpants.

  14. Posted by guest | July 25, 2014 at 11:31 AM

    would not want our IT dept showing up with their tshirts in bags.

  15. Posted by Guest | July 25, 2014 at 11:32 AM

    "Shall we say 'No', or shall we punch him right in the snout?" jokes one woman in passing, before disappearing into the crowd.

  16. Posted by Guest Babbler | July 25, 2014 at 11:37 AM

    do they think they can throw the scent off monitoring regulators by calling it, "babble?" like if there was some suspicious trading exchange, they would say it was actually meaningless because it was "babble?"

  17. Posted by Guest | July 25, 2014 at 11:41 AM

    RBS made money?!

  18. Posted by Guest | July 25, 2014 at 11:42 AM

    good on Russia. feel the economic pain. if it hurts enough oligarchs, they can get rid of putin.

  19. Posted by Guest | July 25, 2014 at 11:45 AM

    smart money….

  20. Posted by Guest | July 25, 2014 at 12:51 PM

    so he can start fundraising for the 2016 elections?

  21. Posted by Jamie D. | July 25, 2014 at 1:32 PM

    No Ace Greenberg story?

    You're slipping

  22. Posted by Preet | July 25, 2014 at 1:56 PM

    I'll take the under.

  23. Posted by R.I.P. | July 25, 2014 at 2:19 PM

    these punks have no respect.

  24. Posted by J. Cayne | July 25, 2014 at 2:49 PM

    You hear the one about Ace and the Bear Stearns risk Cmtte.

  25. Posted by Captain Oblivious | July 25, 2014 at 2:53 PM

    Hell of a magic trick Ace. Better than the one where you made that investment bank disappear.

  26. Posted by guest | July 25, 2014 at 3:21 PM

    Don't comment again. Thanks in advance.

  27. Posted by Guest | July 25, 2014 at 4:03 PM

    No, but the maximum gain at the (unlikely) $30 would be $0.35, or 3x. Pretty good, but more like 2x after ST cap gains taxes, fees, and a bid ask spread. And downside is 100% loss of principal on expiration, which was only 14 trading hours away.

    Someone who actually knows something about options, feel free to comment…

  28. Posted by Guest | July 25, 2014 at 7:25 PM

    No no. If what u were saying were true the buyer of the calls would only realize a profit of .35 from the stock closing above $30. .35 is the max loss. The potential gain is share price at close on option expiration date less $30 less .15 cost of option. Essentially limitless.

  29. Posted by Guest | July 25, 2014 at 7:31 PM

    Oh wait, u said the max gain AT $30. So u are correct. But there's no magic in the $30 price. If the price is above $30 the gain would of course be bigger.

    The market is efficient, with the price of .15 reflecting the strike price, time left to expiration and what little volatility can occur in a few hours. It clearly does not reflect the soaring volatility that resulted from the announcement.

  30. Posted by Flashlight Club | July 27, 2014 at 10:55 AM

    You guys sound like you passed a psychometric test to get your jobs. At which peep-show do you mop floors?