The Cheesecake Factory Cheesecake Selected as the Official Dessert at the Hall of Famer

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NEW YORK (Market Intellisearch) -- Unusual volume of call and put contracts crossed the tape today. Total of 3,336 call contracts and 3,347 put contracts were traded in the marketplace. Today's traded Put/Call ratio is 1.00. There were 1.00 puts traded for each call contract.

NEW YORK (Market Intellisearch) -- Unusual volume of call contracts was traded today. There were 1,518 call contracts traded compared to the ten day average volume of 406 contracts. On the put side, 1,534 put contracts exchanged hands. Today's traded Put/Call ratio is 1.01. There were 1.01 puts traded for each call contract.

You may be surprised.

On Monday, Raymond James raised its outlook on The Cheesecake Factory Incorporated (CAKE) from "market perform" to "outperform." This bullish brokerage note is relatively rare for CAKE, as 18 of the 27 analysts currently following the company call it a "hold" or worse, according to Zacks...(Read More)

Today's tickers: CAKE, LVS, IYR, TEVA, EEM, S, CREE & EXPE[More...]

Today’s tickers: CAKE, LVS, IYR, TEVA, EEM, S, CREE & EXPE

CAKE - The Cheesecake Factory, Inc. – One premium-hungry options strategist sold a strangle on the full-service dining restaurants operator this afternoon in the expectation that its shares are set to trade within a narrow range through October expiration. Cheesecake Factory’s shares fell 1.45% late in the session to trade at $25.38 by 3:35 pm ET. The investor sold 3,000 puts at the October $25 strike for premium of $1.05 apiece and sold 3,000 calls at the October $26 strike at a premium of $1.05 each in order to pocket gross premium of $2.10 per contract. Full retention of the premium received today occurs as long as shares of the underlying stock trade between $25.00 and $26.00 through October expiration. Wayward shifts in the price of CAKE’s shares could give this strangle-player a severe stomachache as losses start to build should shares rally above the upper breakeven price of $28.10, or if shares dip under the lower breakeven point at $22.90, ahead of expiration day in October.

LVS - Las Vegas Sands Corp. – Shares in casino resort operator Las Vegas Sands commenced the session in the red but rallied in afternoon trading to stand 1.05% higher on the day at $31.32 as of 3:45 pm ET. Earlier in the day shares increased as much as 1.5% to secure a new 52-week high of $31.46. One long-term bullish investor hoping to see continued appreciation in the price of the underlying stock established a covered call in the March 2011 contract. The trader sold 10,000 calls at the March 2011 $40 strike for premium of $1.73 per contract. The transaction had a delta of .30 and was tied to the purchase of LVS shares at $31.20 each. Premium received on the sale of the calls effectively reduces the price paid by the investor to get long the stock. The bullish player is poised to accumulate maximum potential gains of 35.7% on the run up in LVS shares from an effective purchase price of $29.47 to $40.00 if the calls land in-the-money at expiration and the underlying position is called away from the trader at that time.

IYR - iShares Dow Jones U.S. Real Estate Index ETF – The construction of a debit put spread on the IYR, an exchange-traded fund that corresponds to the Dow Jones U.S. Real Estate Index – an index designed to measure…

Restaurant stocks have been soaring this week.  The recent rise got an exclamation jump yesterday, Wednesday, when BKC was rumored to be actively seeking a buyer.  BKC shares jumped +14.7% on nearly 15 times the average trading volume!  Well, this buyout rumor came out to be very true and it happened a day after!  This morning, BKC [...]

California-based Cheesecake Factory Inc. (NASDAQ:CAKE) announced that it had opened a Cheesecake Factory restaurant at the Bridgewater Commons in Bridgewater, New Jersey on August 23. The new 8,500 square feet Bridgewater restaurant can accommodate 225 guests. This is the third and last unit opening for this year.   In the first quarter of 2010, the company opened ...

Tom Dorsey and Tammy DeRosier - Self Dicipline and Charting Your Weight

Ruby Tuesday, Inc.  (Public, NYSE:RT) hit a new 52-week low today falling just under $15 a share.  Despite their latest efforts to lower lunch specials and other menu items investors are not amused and the selling continues.

In the last six months shares of Ruby have fallen 44% and after reporting Q1 income falling 49% last week, everyone is selling shares.  A year ago shares of Ruby traded in the high $20's and even peaked over $30, that's not case today.

Ruby Tuesday's Q1 net income declined to $11.1 million, or 21 cents per share, from $21.6 million, or 37 cents per share, in the year-ago period. The recent quarter's results included costs of 5 cents per share for the company's remodel initiative.

The company had about 52.4 million shares outstanding in the recent quarter, compared with 58.5 million in the year-ago quarter.

Revenue inched up 2% to $346.8 million from $338.7 million.  The Street expected earnings per share of 22 cents on revenue of $345.3 million.

Chief Executive and Founder Sandy Beall said, "We are disappointed with our performance ... Our immediate challenge is to respond to the current sales environment with a much stronger value and promotion strategy that we will start in the second week of October."

Well that's all fine and dandy but what you should do is apologize to the shareholders for taking their money and running.  Same-restaurant sales at Ruby Tuesday restaurants decreased 4.8% last quarter and with a lowered fiscal 2008 earnings guidance, what hope is there?

Not much, for now.  Most major restaurants chains are hurting the sector is down almost 5% in the last three months.  Despite how much you may hate Ruby's stock right now, this company will comeback, and with a P/E of 11.04 I would expect to see this stock bounce in the coming weeks.  Folks shares of Ruby's are now at $15 and with the sector slowing down we may even see $11 a share.

Besides, Ruby Tuesday is set to open six outlets in Egypt, that should lift sales if people their actually like their food otherwise, it's a bust.  Ruby's CEO gave specific reasons why their sales are soft on the last earnings call:

• Ruby Tuesday is the smallest of its competitors and is lower in top-of-mind recognition.
• The economy is driving lower income guests to fast food restaurants, to competitors with lower prices or to eat at home more often.
  Ruby Tuesday has not been competitive with value advertising like its contemporaries.
• Some customers may have been driven away by inconvenience caused during the remodel.

That last reason by the CEO is almost as bad when I was in 6th grade and told my teacher my dog ate my homework.  I swear he did.  The only thing that Ruby's has going for them right now is their P/E is getting lower thanks to their shrinking share price.  Take The Cheesecake Factory Incorporated  (NASDAQ:CAKE) its P/E is 22.32 with shares at $23.44 or the darling of the industry Chipotle Mexican Grill, Inc. (NYSE:CMG) its P/E is 74.51 and shares at $124.40 (thanks to Cramer for slamming them the other day).  We all know the restaurant business is very risky, but if the company has made it this far they can survive.  The Masters recommend letting Ruby's shares fall to $13 before you think about buying, there could be some nice dip action in the coming weeks. As much as everyone hates Ruby Tuesday's the market will forgive them a few months from now or they'll get bought out by a bigger player.  Or you could just put all your money in Chipotle and watch the short players ruin your 401(k). 

Article by Frank Lara Jr.

Co-Founder of TheStockMasters.com

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Joseph Hargett takes a look back at news that drove the major market indices today.

Ed Stenson takes a look back at the market activity today.

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