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Newsletter

Daily Newsletter, Saturday, 08/19/2006

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Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews
  4. Trader's Corner

Market Wrap

Market Wrap


New Plays

New Option Plays

Call Options Plays
Put Options Plays
Strangle Options Plays
AZNNoneNone
CRS  
CYMI  
PJC  
PLCE  
RAIL  
VLO  

Editor's note: We are adding several new bullish candidates to the play list this weekend. However, we want to remind readers that August and September are historically two of the worst months for stocks. While this August has not followed traditional patterns we would not get married to your positions. Stay prepared to exit early!


New Calls

AstraZeneca - AZN - close: 62.99 change: +0.88 stop: 59.95

Company Description:
AstraZeneca is a major international healthcare business engaged in the research, development, manufacture and marketing of prescription pharmaceuticals and the supply of healthcare services. It is one of the world's leading pharmaceutical companies with healthcare sales of $23.95 billion and leading positions in sales of gastrointestinal, cardiovascular, neuroscience, respiratory, oncology and infection products. In the United States, AstraZeneca is a $10.77 billion healthcare business with more than 12,000 employees. (source: company press release or website)

Why We Like It:
We are adding AZN to the play list as a relative strength play. The stock has been marching higher to the beat of its own drum for a few months now. The last three weeks have seen AZN consolidate sideways in a $60-62 trading range. The last few days have seen AZN breakout above resistance at $62 to hit new all-time highs. One could argue that AZN is overbought. The stock has already hit its P&F chart bullish target at $54 but Friday's gain produced another P&F chart buy signal. We're going to set our stop loss under recent support at $60.00. Traders can choose to go long here over $62 or wait for a potential dip back towards $62 or even $60. We suspect that odds of a dip might be pretty good since the major averages look short-term overbought. Please note that AZN is not necessarily a very fast moving stock. Our target is the $68.00-69.00 range but our time frame is mid-October.

Suggested Options:
We are suggesting the October calls. We do not want to hold over the October earnings report.

BUY CALL OCT 60.00 AZN-JL open interest=1342 current ask $4.70
BUY CALL OCT 65.00 AZN-JM open interest=1924 current ask $1.75

Picked on August 20 at $ 62.99
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Carpenter Tech - CRS - close: 98.85 chg: +2.02 stop: 94.99

Company Description:
Carpenter Technology, based in Wyomissing, PA, produces and distributes specialty alloys, including stainless steels, titanium alloys and superalloys, and various engineered products. (source: company press release or website)

Why We Like It:
Iron and steel-related stocks have seen a pretty good rebound this past week. Two weeks ago the sector looked poised to breakdown and hit new relative lows. Now there are several stocks in the group that appear to have produced a short-term bottom and look ready to move higher. CRS is one such stock. Last week's low looks like the second half to a bullish double-bottom pattern, not to mention the bounce was near its rising 200-dma. CRS' rebound this past week has also produced a bullish breakout over its six-week trendline of resistance (lower highs). Short-term technical indicators have turned positive. However, we want to see more confirmation. We are suggesting a trigger to buy calls at $100.26. There is potential resistance at its August high near $103.50, which also happens to be near the 50-dma. Traders need to be defensive until CRS clears this level. Our target is the $109.00-110.00 range. It's worth noting that a move over $100 should reverse the P&F chart into a new buy signal.

Suggested Options:
We are suggesting the September calls but traders should note that September options only have four weeks left until expiration.

BUY CALL SEP 95.00 CRS-IS open interest=239 current ask $7.20
BUY CALL SEP 100.0 CRS-IT open interest=528 current ask $4.40
BUY CALL SEP 105.0 CRS-IA open interest=368 current ask $2.40

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 921 thousand

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Cymer Inc. - CYMI - close: 41.15 chg: -0.26 stop: 39.95

Company Description:
Cymer, Inc. is the world's leading supplier of deep ultraviolet (DUV) laser illumination sources, the essential light source for DUV photolithography systems. DUV lithography is a key enabling technology, which has allowed the semiconductor industry to meet the exacting specifications and manufacturing requirements for volume production of today's advanced semiconductor chips. (source: company press release or website)

Why We Like It:
The rally in tech stocks this past week was led by a huge surge in the semiconductor sector. The group broke out through multiple levels of resistance. It looks like the SOX is short-term overbought and due for a dip but the trend appears to have reversed higher. If that's true then we want some exposure to the semiconductor sector. The intraday bounce from CYMI's 10-dma near round-number support at $40.00 looks like a new bullish entry point to buy calls. However, since we're expecting a dip in the SOX we suggesting that traders wait for a breakout above CYMI's 50-dma, which should also be near the top of CYMI's bearish channel. We're going to suggest a trigger to buy calls at $42.55. If triggered our target is the $47.00-48.00 range. The P&F chart is bullish and points to a $59 target.

Suggested Options:
We are suggesting the September calls but please note September options will expire in four weeks.

BUY CALL SEP 40.00 CQG-IH open interest=1937 current ask $2.75
BUY CALL SEP 45.00 CQG-II open interest= 800 current ask $0.75

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 1.0 million

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Piper Jaffray - PJC - close: 55.70 change: +0.40 stop: 49.99

Company Description:
Piper Jaffray Companies is a leading middle-market investment bank and institutional securities firm, serving the needs of clients since 1895. Piper Jaffray & Co., the firm's principal operating subsidiary, provides a comprehensive set of products and services, including equity and public finance underwriting; mergers and acquisitions; equity and debt capital markets; high-yield and structured products; institutional equity, tax-exempt and taxable sales and trading; and equity and high-yield research. (source: company press release or website)

Why We Like It:
We are increasing our exposure to the broker-dealer sector. The XBD broker-dealer index recently broke out over technical resistance at its 100-dma. More importantly the XBD looks poised to breakout over more significant resistance at the 220 mark. More conservative traders might want to hesitate about opening new call positions in PJC or GS (another call play) until the XBD trades over the 220 level. We like shares of PJC as a bullish candidate for multiple reasons. The rally this past week has pushed PJC through resistance at the $53.00 level and through technical resistance at its 50-dma, which happens to be near the top of its bearish channel (and trendline of resistance). We also like PJC for its very clear bullish double-bottom pattern (see chart). The Point & Figure chart has produced a buy signal that points to a $75 target. We are suggesting new positions right here but our preferred entry point would be on a dip back into the $53.00-54.00 region. We could see both $54.00 and $53.00 acting as short-term support levels. A dip to either could be used as an entry point to buy calls. Our short-term target is the $59.90-60.00 range.

Suggested Options:
We would prefer to buy October calls but none are available yet. That leaves us with September strikes, which expire in about four weeks.

BUY CALL SEP 50.00 PJC-IJ open interest=631 current ask $6.70
BUY CALL SEP 55.00 PJC-IK open interest=331 current ask $3.20
BUY CALL SEP 60.00 PJC-IL open interest=424 current ask $1.15

Picked on August 20 at $ 55.70
Change since picked: + 0.00
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 300 thousand

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Children's Place - PLCE - cls: 59.59 chg: +0.26 stop: 56.95

Company Description:
The Children's Place Retail Stores, Inc. is a leading specialty retailer of children's merchandise. The Company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary "The Children's Place" and licensed "Disney Store" brand names. As of July 29, 2006, the Company owned and operated 822 The Children's Place stores and 320 Disney Stores in North America. (source: company press release or website)

Why We Like It:
PLCE's spike higher on Thursday was fueled by the company's better than expected earnings report. The rally pushed the stock past resistance at its 50-dma and its 100-dma. The move also cleared its three-month trendline of resistance (see chart). Thus far the consumer has refused to give up and traders might continue to look toward retail stocks as we head into the school year and start thinking about the holiday shopping season. More aggressive traders might want to consider call positions here or on a dip back towards $57.50-58.00. We're going to wait for a new relative high. Thus we're suggesting a trigger to buy calls at $60.35. If triggered our target is the $64.85-67.00 range. The P&F chart is bullish and points to a $73 target.

Suggested Options:
We would prefer to buy October calls but none are available yet. That leaves us with September strikes, which expire in about four weeks.

BUY CALL SEP 55.00 TUY-IK open interest= 337 current ask $5.80
BUY CALL SEP 60.00 TUY-IL open interest=2076 current ask $2.40
BUY CALL SEP 65.00 TUY-IM open interest= 915 current ask $0.70

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/17/06 (confirmed)
Average Daily Volume = 588 thousand

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FreightCar Amer. - RAIL - close: 59.13 chg: +1.42 stop: 53.99

Company Description:
FreightCar America, Inc. manufactures railroad freight cars, with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. (source: company press release or website)

Why We Like It:
We're going to hedge our bets on the railroad stocks. We currently have BNI listed as a put candidate but shares of BNI have rallied back toward overhead resistance. If the Dow Transportation average continues to rebound then BNI could be stopped out but we'll have RAIL as a bullish play to capture any strength in the group. Shares of RAIL have been showing relative strength against the transports and the railroads the last few weeks and this past week helped push shares past resistance at its 200-dma and its 100-dma. The daily chart also appears to have an inverse or bullish head-and-shoulders pattern. There is no such ambiguity on the P&F chart, which shows an ascending triple-top breakout buy signal with a $79 target. The stock's bounce from its simple 200-dma on Friday morning looks like a new entry point to buy calls. We're suggesting positions right now although more conservative traders may want to strongly consider waiting for a breakout past the $60.00 level first. Our short-term target is the $64.50-65.00 range.

Suggested Options:
We would prefer to buy October calls but none are available yet. That leaves us with September strikes, which expire in about four weeks.

BUY CALL SEP 55.00 RQN-IK open interest=854 current ask $5.90
BUY CALL SEP 60.00 RQN-IL open interest=296 current ask $2.80
BUY CALL SEP 65.00 RQN-IM open interest=343 current ask $1.00

Picked on August 20 at $ 59.13
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 475 thousand

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Ryland Group - RYL - close: 43.98 change: +0.80 stop: 39.95

Company Description:
With headquarters in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. The company currently operates in 28 markets across the country and has built more than 255,000 homes and financed more than 215,000 mortgages since its founding in 1967. (source: company press release or website)

Why We Like It:
We're switching directions on the homebuilders. Two weeks ago the sector looks poised to breakdown into a new leg lower. That weakness never materialized. Now that the markets believe the Fed might really be done raising rates for the rest of the year suddenly interest-rate sensitive homebuilders are seeing buyers again. The group looks very oversold and could see a big rebound rally. We're going to suggest a trigger to buy calls on RYL at $45.15, which is above the current August high and resistance near $45.00. Our short-term target is the $49.90-50.00 range, which might also see resistance at its descending 100-dma. Right now our biggest concern is Toll Brothers (TOL), who is a rival homebuilder and due to report earnings on the morning of August 22nd. TOL's results and their comments could undermine any rally in the builders.

Suggested Options:
We are suggesting the October calls but we do not want to hold over RYL's October earnings report. Remember, you decide which month and strike price best suits your trading style and risk.

BUY CALL OCT 40.00 RYL-JH open interest=1180 current ask $5.80
BUY CALL OCT 42.50 RYL-JV open interest=1311 current ask $4.20
BUY CALL OCT 45.00 RYL-JI open interest=1432 current ask $2.90
BUY CALL OCT 47.50 RYL-JW open interest= 235 current ask $1.90
BUY CALL OCT 50.00 RYL-JJ open interest=1918 current ask $1.20

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 1.7 million

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Valero - VLO - close: 61.84 change: +0.81 stop: 59.99

Company Description:
Valero Energy Corporation is a Fortune 500 company based in San Antonio, with approximately 22,000 employees and annual revenues of more than $80 billion. The company owns and operates 18 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America. Valero is also one of the nation's largest retail operators with more than 5,000 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names including Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon. (source: company press release or website)

Why We Like It:
We are well aware of Jim's comments in the market wrap that crude oil is probably headed lower. Inventories are high and the summer driving season is almost gone. That's just a couple of reasons why crude oil has slipped from $77 to almost $70 a barrel. We are willing to speculate that crude will bounce a little bit higher before sinking below the $70 level. Any bounce in crude should fuel a similar bounce in oil stocks like VLO. We like VLO as a bullish candidate because shares bounced from round-number support at $60 on Friday, which also happened to be a test of very long-term support (see chart). We're sticking a stop loss under $60 and our target is the $66.00-67.00 range. We suspect that the rhetoric will heat up this week between the West and Iran as we near the August 31st deadline for Iran to quit enriching uranium. This coming conflict could put a bid under oil futures for the time being.

Suggested Options:
We're suggesting the September calls.

BUY CALL SEP 60.00 VLO-IL open interest=18594 current ask $3.40
BUY CALL SEP 62.50 VLO-IZ open interest= 8192 current ask $2.05
BUY CALL SEP 65.00 VLO-IM open interest=23430 current ask $1.10

Picked on August 20 at $ 61.84
Change since picked: + 0.00
Earnings Date 10/31/06 (unconfirmed)
Average Daily Volume = 9.1 million
 

New Puts

None today.

 

New Strangles

None today.

 


Play Updates

In Play Updates and Reviews

Call Updates

Bucyrus - BUCY - close: 53.18 chg: +0.29 stop: 47.69

The markets posted a five-day winning streak and shares of BUCY followed with a four-day surge of its own. This past week saw BUCY breakout over significant resistance in the $50-51 region. Volume was strong on the breakout, which is usually a bullish sign. The move posted a new triple-top breakout buy signal on its Point & Figure chart that now points to a $68 target. Technicals on both the daily and weekly chart are already bullish or quickly moving toward bullish signals. We remain positive but would probably not consider new positions right here. The markets, and BUCY, look short-term overbought and due for a dip. So far BUCY has found short-term support at the $52 level. Traders can look for another dip to $52 or better yet a dip back towards $51 as a new entry point to buy calls. Our target is the $57.50-60.00 range.

Suggested Options:
We remain bullish on BUCY but we are not suggesting new calls at the moment. Look for a pull back. We like the September or October calls.

Picked on August 16 at $ 51.87
Change since picked: + 1.31
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume = 697 thousand

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Goldman Sachs - GS - close: 154.68 chg: +0.23 stop: 149.40

The three-month consolidation in the XBD broker-dealer index looks like it's nearing an end. The sector index has been testing resistance near the 220 level and its bullish pattern of higher lows suggests the next move is probably a breakout higher. That would be good news for GS, which has a similar pattern of higher lows and is already testing new three-month highs this past week. The trading in GS on Friday saw traders buy the dip near $153.00, which also happens to be relatively close to its simple 100-dma and its 10-dma. We remain optimistic and would consider new call plays here. However, traders should note that the major market indices all look a little short-term overbought after their five-day winning streak so the markets could be due for a dip. If you prefer consider waiting for a dip towards $152 before initiating positions. Our conservative target is $160.00. Our secondary target is the $164.50 level. Consider selling half your position at $160 and the rest at $164.50. We do not want to hold over the late September earnings report. FYI: The P&F chart points to a $190 target.

Suggested Options:
We are suggesting the September calls. Remember that we do not want to hold over the late September earnings report.

BUY CALL SEP 150.00 GPY-IJ open interest=1598 current ask $7.70
BUY CALL SEP 155.00 GPY-IK open interest=6919 current ask $4.60
BUY CALL SEP 160.00 GPY-IL open interest=4610 current ask $2.20

Picked on August 16 at $154.99
Change since picked: - 0.31
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 5.3 million

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MicroStrategy - MSTR - close: 93.18 chg: +1.88 stop: 85.99

Shares of software company MSTR produced another round of strength on Friday. Traders bought the dip on Friday morning around $89.60 and the stock broke out (again) over its 200-dma. The stock also closed over the August highs, which is bullish. Another positive sign was a new buy signal on the Point & Figure chart, which currently points to a $106 target. We have to be honest. The GSO software index produced a huge breakout last week and looks overbought and due for some consolidation. We like MSTR because shares look less extended and the breakout in MSTR is also a break through resistance at its descending bearish channel. However, a pull back in the GSO software index could hinder any advance in MSTR. More conservative traders might want to consider a tighter stop loss but remember that MSTR tends to be volatile and you might get stopped out on an intraday move. The move on Friday in MSTR looks like a new entry point to buy calls. Yet bear in mind that the 100-dma, directly overhead, might act as resistance. Our target is the $98.75-99.00 range.

Suggested Options:
We are suggesting the September or October calls. You choose which month and strike price best suits your trading style.

BUY CALL SEP 90.00 EOU-IR open interest=405 current ask $6.10
BUY CALL SEP 95.00 EOU-IS open interest=687 current ask $3.30

BUY CALL OCT 90.00 EOU-JR open interest=462 current ask $8.50
BUY CALL OCT 95.00 EOU-JS open interest=602 current ask $5.70

Picked on August 16 at $ 92.05
Change since picked: + 1.13
Earnings Date 10/27/06 (unconfirmed)
Average Daily Volume = 431 thousand
 

Put Updates

Boeing - BA - close: 77.62 change: -0.97 stop: 80.45

There were a lot of headlines for BA on Friday. The earliest news was a deal that BA would buy C-map, a producer of digital maritime cartography. No financials were disclosed on the acquisition. Another headline was news that Monarch Airlines had ordered six of BA's new 787 dreamliner jets. Plus, there was a lot of commentary and articles on the potential end of the C17 military cargo planes that we reported on Thursday night. None of the news helped BA's share price. The stock lost 1.2% in a display of relative weakness. The three-day candlestick pattern looks like a bearish reversal for BA. We remain bearish given the stock's pattern of lower highs. Aggressive traders may want to open positions here while conservative traders might still want to wait for a breakdown under support at $75.00 first. Our target is the $70.50-70.00 range. The P&F chart currently points to a $70 target.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 80.00 BA-UP open interest=3073 current ask $3.20
BUY PUT SEP 75.00 BA-UO open interest=5806 current ask $0.90

Picked on August 10 at $ 75.75
Change since picked: + 1.87
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 4.2 million

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Burlington Nor.SantaFe - BNI - cls: 68.45 chg: -0.43 stop: 70.25

The oversold bounce in the Dow transportation index has stalled under its simple 200-dma. Meanwhile the rebound in the Dow Jones Railroad index was stopped at its exponential 200-dma. In a similar manner shares of BNI saw its rally stop cold at round-number resistance near $70, which also happened to be near the top of its bearish channel. This is a tough spot for traders. The transportation index and BNI could really go either way. It could see a bullish breakout over resistance and a potential change in trend or it could see the bounce fade and resume the bearish pattern. We're going to have to stick with the old market maxim that the trend is your friend - so we remain bearish. However, we would hesitate to open new put plays right here. Our target remains the $62.50-60.00 range. The P&F chart currently points to a $49 target. FYI: We would keep an eye on crude oil, which might see more of an oversold bounce from the $70 level and that would put negative pressure on the transports.

Suggested Options:
We're not suggesting new put plays in BNI at this time.

Picked on August 08 at $ 68.06
Change since picked: + 0.39
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Chipotle Mex Grill - CMG - close: 51.81 chg: -1.27 stop: 54.01

The rally is fading in shares of CMG and the weakness on Friday looks like a new entry point to buy puts. Last week we told readers to expect a bounce into the $52-53 region. The stock shot past our bounce expectations and traded near $54 on the strength in the broader market. Fortunately, CMG failed to breakout past its trendline of lower highs. CMG appears to have moved from its initial bullish channel into a bearish channel over the last couple of months. The Point & Figure chart points to a $39 target. We are targeting a decline into the $45.50-45.00 range.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 55.00 CMG-UK open interest=305 current ask $4.30
BUY PUT SEP 50.00 CMG-UJ open interest=427 current ask $1.55

Picked on August 09 at $ 50.28
Change since picked: + 1.53
Earnings Date 10/30/06 (unconfirmed)
Average Daily Volume = 414 thousand

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Intuitive Surgical - ISRG - cls: 96.76 chg: -0.24 stop: 101.55

The normally volatile shares of ISRG have been strangely trading in a very non-volatile fashion. The stock has been churning in a relatively narrow range the last few sessions. You may recall the stock plunged lower in late July after reporting its second quarter earnings. We thought the oversold bounce's failed rally near $100 looked like a new entry point to buy puts but we wanted to see confirmation so we suggested a trigger to buy puts at $94.90, under short-term support at $95.00. We were quickly triggered but then the market rallied higher on the tame inflation data. We were surprised to see ISRG fail to truly participate in the market's broad-based rally last week. At this time we're suggesting that traders wait for another decline under $95.00 before considering new put plays. This remains an aggressive, higher-risk play due to ISRG's volatility. Our target is the $87.75-87.50 range. The P&F chart currently points to a $60 target but a move over $101-102 would produce a new buy signal.

Suggested Options:
Wait for a decline under $95 before considering new plays. We like the September puts.

BUY PUT SEP 100.0 AXQ-UT open interest=493 current ask $6.30
BUY PUT SEP 95.00 AXQ-US open interest=665 current ask $3.60
BUY PUT SEP 90.00 AXQ-UR open interest=677 current ask $2.00

Picked on August 10 at $ 94.90
Change since picked: + 1.86
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 1.1 million

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NII Holdings - NIHD - close: 51.20 chg: -0.60 stop: 52.51

There was no bullish follow through for NIHD on Friday but the stock remains above round-number support at the $50.00 level. More conservative traders may want to consider an early exit since the major indices have appeared to reverse course into a new bullish trend and this may lead to a breakout higher in NIHD. We're going to keep NIHD as a bearish candidate since the markets do look a little overbought and in need of a pull back. We would not consider new put positions in NIHD until shares traded back under $49.90 again. The P&F chart is still bearish and points to a $41 target. Our target is the $45.50-45.00 range.

Suggested Options:
We are not suggesting new put positions in NIHD at this time.

Picked on August 07 at $ 49.90
Change since picked: + 1.30
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 2.2 million

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Transocean Inc. - RIG - cls: 68.03 chg: +0.95 stop: 70.25

A bounce in crude oil futures from round-number support near $70 a barrel helped fuel a decent rebound in the oil stocks. RIG actually spiked higher on Friday morning only to pull back and then see traders buy the dip again. The overall pattern is bearish but we've been warning readers to expect a bounce back towards the $70 level, which as broken support should now act as new resistance. We're not suggesting new put plays at this time. The stock has already hit our conservative target at $65.25. Our secondary, aggressive target is the $61 level. Currently the P&F chart points to a $49 target.

Suggested Options:
We are not suggesting new plays in RIG at this time.

Picked on August 07 at $ 69.49
Change since picked: - 1.46
Earnings Date 08/03/06 (confirmed)
Average Daily Volume = 6.4 million
 

Strangle Updates

None
 

Dropped Calls

None
 

Dropped Puts

Autozone Inc. - AZO - close: 89.35 chg: +1.16 stop: 90.05

We are just not having any luck with our put plays this past week. Shares of AZO gapped open higher on Friday morning to open at $89.50 and then rally to $90.20 before paring its gains. The move was fueled by some analyst talk that Sears might be looking for an acquisition in the auto parts market and AZO could be a prime candidate. The move on Friday stopped us out at $90.05. Traders might want to keep an eye on AZO. A move over $91 or its 100-dma, currently at 91.17, could be used as a new bullish entry point to buy calls. Alternatively a drop under $88 (87.75) could be used as a new entry point to buy puts.

Picked on August 08 at $ 87.73
Change since picked: + 1.62
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 700 thousand
 

Dropped Strangles

Bausch Lomb - BOL - close: 46.39 change: -0.35 stop: n/a

Our strangle on BOL, using August options, has expired. The stock failed to produce any decisive breakouts and the company never announced any second quarter earnings results. Our estimated cost for the strangle was $2.15.

Picked on July 23 at $ 47.40
Change since picked: - 1.01
Earnings Date 00/00/06 (unconfirmed)
Average Daily Volume = 2.2 million

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3M Co. - MMM - close: 71.21 change: +0.01 stop: n/a

Our strangle on MMM, using August options, has expired. In spite of being poised for a big move either direction shares of MMM never traded farther than $2.00 from the $70.00 level except for a brief two-day drop after its earnings report. Our estimated cost was $0.75.

Picked on July 23 at $ 70.72
Change since picked: + 0.49
Earnings Date 07/25/06 (confirmed)
Average Daily Volume = 3.7 million
 


Trader's Corner

Into the Future

In the day trading heyday of 2000, a television advertisement featured a trader sitting in the main square of a European capital. Pigeons flew up around him as he gazed into glasses displaying a charting screen. I found the idea especially appealing. Just as the cornerstones of the bullish momentum was crumbling in March 2000, I had traveled to Spain. I'd had to call my trading partner several times a day to get an update on my open positions. Those glasses would have been nice.

While I haven't seen such glasses appearing on the market, RaySat hopes to launch a new product this summer or fall that could be nearly as appealing for some traders on the go. The company's SpeedRay 3000 (TM) awaits final FCC approval, but will be a handy, if expensive, vehicle-based, low-profile satellite antenna. The company claimed in a January 3, 2006 press release that the SpeedRay 3000 (TM) will provide a continuous signal whether the vehicle is parked or in motion. That signal is maintained, the company claims, as long as there is line of sight to the antenna. The signal could be lost if traveling through a large city, for example, where buildings would block that line of sight. The SpeedRay 3000 (TM) works with recreational, personal, specialty and commercial vehicles, and provides live satellite TV and two-way, high-speed Internet access.

The "low profile" part of the apparatus' description comes from the diminutive 5.7-inch height of this round antenna. That height was kept minimal even though the Wi-Fi transceiver is incorporated inside the weather-resistant housing of the system. One source likens the shape to that of a UFO and another to a giant toilet seat, so not all are thrilled with its size and shape, despite its acclaimed "low profile."

No extra installation or connections are needed for that Wi-Fi transceiver, making the SpeedRay 3000 (TM) suitable for mounting on the vehicle's roof. The SpeedRay 3000's panels rotate back and forth inside the housing and tilt up and down as it tracks and maintains its satellite signal. All users inside the vehicle could share the access.

The company's press release states that it has no competition among the wireless carriers, since they cannot yet also provide the SpeedRay 3000's (TM) combined national coverage and high speed. The Consumer Electronics Association liked the SpeedRay 3000 (TM) so much that it awarded the apparatus its "Best of Show" award at its January convention. RaySat has experience since 1997 in building phased-array satellite antennas, and it expects that in addition to recreational and personal users, some public entities will find the SpeedRay 3000 (TM) useful since it is not susceptible to local service outages or sabotage.

I wondered if its mounting might make it susceptible to theft, however, a particular worry for such a pricey gadget. Acura's STYLE magazine lists a possible initial selling price of $7,000, with the monthly subscription fee anticipated to be a more manageable $50.00-100.00, although www.wiredathomeblog.com lists the initial cost at a more manageable $3,495.00. One source noted that the antenna can be mounted to the cross bars of a vehicle roof rack if RaySat's special brackets for truck or RV installations aren't used.

You get TV signals for the money, too, and RaySat believes that the Wi-Fi Internet connection may be gravy for those RV owners who want television reception in remote areas. RaySat advises that the antenna is compatible with DISH Network and other global direct-to-home broadcast satellite providers. Those of us who are active traders would probably argue with RaySat and say that the TV reception is gravy to those who need to watch those charts, no matter how isolated the vacation spot, rather than the other way around.

While this price might be too steep for most traders, some of the well-heeled among our subscribers might be interested. In the way of our technology world, prices might lower as the company sells more units, too, or as more competitors enter the market. If you're interested in checking it out so that you can travel and maintain your Wi-Fi connection, go to www.raysat.com.
 

Today's Newsletter Notes: Market Wrap by Jim Brown, Trader's Corner by Linda Piazza, and all other plays and content by the Option Investor staff.

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