iShares FTSE/Xinhua China 25 Index Fund (FXI) – The implementation of a large-volume iron condor on the FXI, an exchange-traded fund that corresponds to the performance of the FTSE/Xinhua China 25 Index – an index created to represent the performance of 25 of the largest and most liquid companies in the Chinese equity market, suggests one options strategist expects the price of the underlying fund to stagnate through August expiration. Shares of the FXI are currently down 0.90% on the day to stand at $40.80 just before 11:35 am ET. The investor essentially enacted a pair of credit spreads in order to reel in available premium, which he keeps in full if shares trade above $40.00 and below $43.00 through expiration day next month. To establish the iron condor the investor sold 15,600 calls at the August $43 strike for a premium of $0.30 each, and purchased the same number of calls at the higher August $45 strike for a premium of $0.06 apiece. On the put side, the trader shed 15,600 contracts at the August $40 strike for a premium of $0.57 each, and bought the same number of August $38 strike puts at a premium of $0.22 a-pop. The investor receives a net credit of $0.59 per contract on the transaction, which he keeps as long as shares remain range-bound between the $40.00 to $43.00 strike prices through August expiration day. The trader responsible for the iron condor faces substantial risk of loss should the price of the underlying fund move significantly in the next several weeks. Losses start to accumulate for the investor should shares rally above the upper breakeven price of $43.59, or if shares slip beneath the lower breakeven point at $39.41 by expiration. Maximum potential losses the investor could incur amount to $1.41 per contract should shares rally sharply to surpass $45.00, or if shares nosedive to trade below $38.00 by expiration in August.

Green Mountain Coffee Roasters, Inc. (GMCR) – Shares of the specialty coffee company rallied as much as 10.2% today to reach an intraday high of $31.60 after reporting better-than-expected third-quarter results on Wednesday. GMCR’s shares are currently up 8.20% to $31.02 as of 11:55 am ET. The firm posted third-quarter net income, excluding items, of $0.19 a share, which beat average analyst estimates of $0.18 a share. One options trader was well positioned for the current surge in the price of the underlying shares. It looks like this individual booked profits by selling a previously established long call position in the August contract, and subsequently initiated longer-term bullish stance on the stock by purchasing a fresh chunk of calls in the December contract. The investor appears to have originally purchased roughly 7,690 calls at the August $29 strike for an average premium of $1.90 each back on July 22. Today, with the August $29 calls currently in-the-money, the trader sold 7,690 lots at a premium of $2.40 per contract. Net profits on the sale amount to $0.50 per contract. Next, the options player looked to the December $30 strike to purchase 7,690 in-the-money calls for premium of $3.83 a-pop. Profits on the new position start to amass should Green Mountain Coffee’s shares rally another 9.05% over the current price of $31.02, exceed the current 52-week high of $33.20, to surpass the effective breakeven price of $33.83 by expiration day in December. As of 12:05 pm ET, the overall reading of options implied volatility on the stock is down 27.6% to 38.10% post-earnings.

Yesterday we highlighted the percentage of companies that have beaten earnings estimates this reporting period. Below we break down the beat rate by sector. Four sectors have a higher beat rate than the entire market, while six have a lower beat rate. The Consumer Discretionary sector has the highest beat rate this earnings season at 80.6%. Consumer Discretionary is followed closely by Industrials at 79.8%. Consumer Staples and Technology are both right around 76%. Energy, Telecom, and Financials are all tied at 60% for the lowest earnings beat rate. Materials is at 69.4%, and Health Care is at 70.3%.

click to enlarge

Research by the Bespoke Investment Group demonstrated that when the S&P 500 hit its 2010 peak in April, the utilities sector had seen its relative strength hit rock bottom. By itself, this fact may not be particularly exciting… since defensive segments tend to be weaker in strong bull market upswings. However, Utilities ETFs have since seen the largest improvement in relative strength since the April 23rd top.

And there’s more. Utilities represented the only major segment with expectations of profit declines for the Q2 earnings season. With such a dismal forecast, one might NOT have anticipated Utilities ETFs to be making a run at 52-week highs.