Option Investor
Newsletter

Daily Newsletter, Thursday, 4/29/2010

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Hope Springs Eternal

by Keene Little

Click here to email Keene Little
Market Stats

After a strong decline on Tuesday there has been a reduction in fear about what's happening in Europe. That has created a relief rally and a strong one at that. Too bad the volume has been tapering off as the rally has progressed this week. It would be better to see volume expanding on the buying instead of the selling but that's not what we're getting. But as we've seen for months on end, a lack of volume has not prevented the market from making new highs and that remains the potential into next week.

Greece, Portugal and Spain were all over the financial news this week. We've known for months that these countries are in trouble financially as they rush to restructure their debt, obtain new funding and strive to reduce their expenditures. The assurances we receive from the leaders of the countries, as well as the heads of the IMF and ECB (European Central Bank) sound eerily familiar to the assurances we received about the mortgage crisis and how it would be contained. The big question on everyone's mind is whether it will be truly contained or if instead we're at the early stages of a contagion with sovereign defaults starting.

Today there was news that Greece might be helped by the EU banks and IMF (no news until this weekend). Happy days may be here again and hope springs eternal. The Athens stock exchange, which banned those nasty short sellers from doing their diabolical trading for the next two months, rallied almost +8% (shorts running for cover?). The European markets were up on the hope that all is well with the sovereign debt problems. Hope is a wonderful thing; just not in the stock market.

As we all know by now, Greece's debt has now been rated as "junk" and the cost to borrow is at the highest ever seen for sovereign debt. It's also now the most expensive debt to insure. But as we also know by now, Greece is not the only European country to be in trouble. S&P also downgraded Portugal's and Spain's debt. The biggest question on everyone's mind is how much and how far this contagion will spread. After assurances that the subprime mortgage problem would be contained, which wasn't, we know we have more than one doubting Thomas out there.

Greece is in a pickle and the solution to their problem will involve either pain or more pain. Their budget deficit is running 8.7% of their GDP and it's getting more and more expensive to borrow to pay off that deficit. And Portugal is running the same budget deficit. But Spain's is even higher--they're running at about 10.4% of their GDP. But wait, that's nothing. The U.S. is running a budget deficit that's projected to be about 12%. How long do you think it will take S&P to downgrade U.S. Treasuries? Want to watch a mad scramble for the doors when (not if) that happens?

One of the ticking time bombs for the U.S. is our mortgage market (still). I've shown charts several times in the past that point to 2010 and 2011 as big "reset" years where a very large number of mortgages will reset their interest rates. Many borrowers took out these loans with the expectation that they'd be able to refinance them at higher housing values. As these loans are resetting and the borrowers are finding they can't afford the payments and can't refinance, many of the loans are ending up in default. It's why the default rate is expected to skyrocket over the next 2-3 years.

The U.S. government is now the primary mortgage lender since WE became the proud owners of Fannie Mae and Freddie Mac. WE will have to foot the bill for all of the defaulting loans. WE who did everything right will have to take care of those who did everything wrong. Gotta love socialism. After the Iceland volcano blew, and considering Iceland's financial woes, the following cartoon caught my eye:

FNM and FRE getting ready to blow

I love the way cartoonists can capture a situation in just one picture and this one is so appropriate. We look at Iceland, or Greece/Portugal/Spain and say "tch, tch, shame on you for letting your finances get away from you." We ain't seen nothing yet.

When you look at a chart of the expected growth in our debt, from an estimate made by the Office of Management and Budget (OMB), it looks as though it could double by 2015. Something is going to have to give and you can certainly bet that taxes are going up (which will only further depress economic activity). At the bottom of chart below you can see the tax brackets since 1913 (when the Federal Reserve banking system was also created). Hmm, let me guess which way they go from here.

OMB Debt Estimate through 2015

Things just aren't as healthy in our economy as the financial and mainstream media, and certainly government officials, would like us to believe. I've been saying for a while now that the market is one news event away from a disconnect to the downside. Bullish fever is so high and yet people are nervous, which makes the market more vulnerable to a bad-news event that acts as a catalyst for a strong market selloff. The news out of Europe is somewhat expected and is still causing sharp selloffs, albeit recovering each time. But each recovery now has less energy (waning momentum) and is taking more and more out of the market. What happens when the market gets truly surprised? We never know where the real shocker is going to come from (if we knew, it wouldn't be a shock). It's a big reason I'm now thinking the risk is too great to hold long positions overnight. We are a global market and while we might be getting our beauty rest there could be a butterfly flapping its wings in another country half way around the world (chaos theory event).

Another "indicator" of potential trouble for the market is the Shanghai Composite index which has now broken below its February low. This index has been consistently out ahead of our market and its breakdown is fair warning for us.

Shanghai Composite index, SSEC, Daily chart

Another sell signal came from the chart showing the percentage of stocks above their 50-dma, shown in the chart below. Each time the percentage has reached 85%-90% it has been associated with a market high and was followed by a sharp, even if short-lived, decline. The sharp move down this week has created a sell signal on the RSI after MACD left bearish divergences since mid March.

Percentage of stocks above their 50-dma, NYA50R, Daily chart

The problems in the financial markets have become worse, not better. After the sovereign banks bailed out the commercial banks who is left to bail out the sovereign banks? And the commercial banks are just as leveraged, if not more so, as they were in 2007 and have massive derivative exposure and continue to sit on bad assets that have not been marked down. They have next to nothing in reserves to handle their troubled loans. Expecting these banks to be saved again is not a likely outcome. So what's going to save the financial system from collapse the next time? I think most of us know the answer and it's going to be scary (and will likely take a few years to play out).

So I continue to look for a top to the market rather than an opportunity to buy the next pullback. The big question this week was whether Monday's high was THE high or if we have another one coming next week. We're probably very close to getting an answer to that question.

I want to take a look at the weekly as well as daily charts for some of the indexes tonight because they show potentially important setups. Starting with the usual SPX weekly chart, last week's and this week's highs have pressed up against the top of its rising wedge pattern, the top of which is the trend line along the highs starting from January 2009. So far it has stopped short of tough resistance between 1223 and 1229. A Fib relationship within the wave count for the rally from March 2009 shows 1223.37 to be important, and then the 200-week MA is at 1224.28 and then the 62% retracement of the 2007-2009 decline is just shy of 1229. That will be one tough nut to crack if it tries for it next week, especially as overbought as the market is. Notice too that RSI has found its broken uptrend line to be resistance, something you'll often see after the break and then price makes one more new high. It's a very good setup for a top to the market.

S&P 500, SPX, Weekly chart

The wave count for the move up from February is a little difficult to figure out but basically looks corrective due to a lot of overlapping moves and I've got it labeled as a double zigzag (a-b-c-x-a-b-c). Monday's high fits as THE high but if we do get another high next week then the wave count for the move up from March 31st (the end of the x-wave) would have two equal legs up at 1230, which of course lines up with the 62% retracement near 1229. Without seeing where the oscillators might be by then I'd bet we'll see continued bearish divergence and I think a new high would be a screaming short play setup for all the reasons I've outlined above and below (in a discussion about Gann levels). After the bounce off this week's low the key level for the bears to break is now 1181 since that would definitively tell us the high is in place and to start looking for bounces to short.

S&P 500, SPX, Daily chart

Key Levels for SPX:
- cautiously bullish above 1230
- bearish below 1181

The shorter-term charts leave a lot to be desired from an EW count perspective so that's one of the reasons it's not real clear whether or not we've got a completed wave count to the high. I can easily call the pullback pattern from the April 15th high as an a-b-c pullback pattern, which points to a new high next week. However, using some of the other technical tools such as oscillators, trend lines and Fibs, I could easily argue against the need for another new high. So we have to let price lead the way. With SPX hitting its broken uptrend line from February and stalling there today, it looks bearish. But I can see the possibility that SPX will push up underneath that broken uptrend line (something it has done often at previous highs) and push up to the 1230 area by the end of next week. A break below 1181 is what the bears need to see.

S&P 500, SPX, 120-min chart

Before getting to the DOW's charts I want to show another reason why the 1220 high on Monday could be an important one and why I'm looking for further evidence that we may have seen the final high for the market, or at least SPX. I've introduced the Gann Square of Nine chart in the past and basically it's a chart that starts with the number 1 in the center and then spirals out clockwise. I have mine on a spreadsheet and have it out far enough to accommodate the 1576 high in 2007. Dates for the year are then around the outside of the circle, starting with March 21st (typical day for spring equinox) at the 3:00 position and then running around the circle clockwise. Gann felt time and price relationships are very important in the stock market.

Numbers that are on the same radial are considered important relationships. Numbers that match up with dates are even more important. On my chart below, which is squished and unreadable, I've drawn a black radial from 1150 (the January high) at the top right of the chart through the center and it points to 1218 on the other side (making that a level of interest as the market rallied up to it). It's cut off at the top but that radial extended up and to the right crosses January 19th, which was the January high. It was one of the reasons at the time that I felt confident that it would be THE high for the year (not to be of course).

Gann Square of Nine chart for SPX

Next I placed a red radial from April 26 (bottom right), which was this week's high, up through the last week of October (November 2nd was the low last year which led to the leg up into January) and then took a square to that which points to 1220, which is where Monday's rally stopped. It's a potentially important Gann price/time relationship. A little closer view of the 1218 and 1220 numbers on the chart are shown below:

Gann Square of Nine chart for SPX, 1218 and 1220

Two other Gann numbers to keep on your radar are 1212 and 1178. The 1212 number relates to 666, the March 2009 low and 1178 relates to 1045, the February low. If SPX climbs back above 1212 (1209 was today's high), which is also the 78.6% retracement of this week's decline, it's very likely we'll see new highs into next week. If it drops below 1178 it will be a strong clue that we've seen THE high and will head for new lows below February's (and potentially much lower). The 1045/1178 relationship is shown on the chart below. They're one square, 360 degrees, from each other and that's a particularly strong relationship.

Gann Square of Nine chart for SPX, 1045/1178

Moving over to the DOW and its weekly chart, it reached potentially strong resistance in the 11246 area. This is its 62% retracement of its 2007-2009 decline. It made it a little higher than its 200-wma at 11134, which is bullish if it can close above it on a weekly basis. It's run into resistance at the line shown at the apex of a previous consolidation triangle in August-September 2008. These apexes are often support/resistance after price breaks out of the triangle patterns, which is near 11230. After the decline into yesterday's low it was looking like we would get a bearish engulfing candlestick pattern for an outside down week. Now it's looking like a hanging man at the top of its run at resistance. Either one is a bearish candle that needs a red candle next week to confirm it.

Dow Industrials, INDU, Weekly chart

The bounce off Wednesday's low has made it back up to the broken uptrend line from February so follow through to the upside will be important here. Otherwise a drop back down on Friday will leave a bearish kiss goodbye. If it can rally higher it should be able to press up to about 11300. A break below Wednesday's low near 10977 would confirm we've seen the high.

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- cautiously bullish above 11300
- bearish below 10977

The weekly chart of NDX looks like the others with price pressing right up against the top of its rising wedge pattern. At the same level it has closed its gap from June 6th by tagging the June 5th high near 2055. The July 2007 high near 2060 and the May/June highs of 2050/2055 could make a tough line of resistance. This week's candle, so far, is a hanging man at resistance. Bulls do not want to see a red candle next week.

Nasdaq-100, NDX, Weekly chart

As with the others, today's rally brought NDX up to its broken uptrend line from February so bulls don't want to see a down day on Friday, which would leave a bearish kiss goodbye. If the bulls can hold on a little longer there is the potential for new highs into next week. The upside target is a bit wide at the moment--about 2070-2090 so I split it down the middle. A break below Wednesday's low would now be a stronger sell signal.

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- cautiously bullish above 2080
- bearish below 1991

The RUT has achieved a couple of Fib targets, even the 78.6% retracement of its 2007-2009 decline at 743. The wave count is a little different on the RUT than I have on the others but the conclusion to it tells the same story--either Monday's high was it or it has one more minor new high to finish it. Trendline resistance will be near 750 next week and I suspect we'd see a continuation of the strong bearish divergence at any new price high (maybe with a retest of RSI's broken uptrend line).

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- cautiously bullish above 750
- bearish below 702

The banks topped out before the broader averages so it will be constructive if they can recapture at least Monday's highs. XLF has bounced back up to its broken uptrend line from March 2009 and is a setup for a bearish kiss goodbye if it drops back down from here. You can see how it retested its broken uptrend line from February at its April 21st high. Follow through to the upside on Friday will be important for the bulls.

Financial sector ETF, XLF, Daily chart

The transports were strong today and the TRAN has come very close to matching Monday's high. I drew in a shallow rising wedge pattern as a possible ending pattern for its rally. It's just a guess at this time but it would achieve a good finish to its wave count and it would account for the bearish divergences that are showing up at its highs.

Transportation Index, TRAN, Daily chart

It's still not clear to me whether the U.S. dollar is ready to continue its rally to the $84 area, or higher, or if it first needs another leg down as part of a larger correction from its March high. If it's going to get another leg down it should do it from here (it got a quick shot higher after the European debt news but has given half of it back).

The same with oil--it's been chopping up and down for a month between 80-87 and I'm not sure yet which way it's going to resolve. It rallied back up to 85.50 today and there's potential trendline resistance near 86.70. If resistance holds I think we'll see a drop below 80, otherwise a rally up to 90 is clearly possible, especially if the dollar starts a stronger pullback.

Gold has disconnected somewhat from the dollar and looks to be reacting to debt concerns in Europe (and U.S.). There are inflation worries if more money keeps getting created to solve the problem. Even the TIPS bonds (Treasury Inflation-Protected Securities) have been in rally mode this month. Gold's pattern continues to suggest to me that a strong decline is coming once the current rally leg finishes. I've got an upside target for gold near 1186 where it would meet a price projection for its bounce pattern off the February low and a trend line across the two highs in March and April.

Gold continuous contract, GC, Daily chart

The gold miners index, GDX, could make it a little higher as well, especially if both gold and the stock market rally further next week. But GDX has reached the top of its parallel up-channel from February, which I believe is a bear flag pattern, and therefore is a setup for a reversal back down. If the bounce off the February low is a bear flag then we should see a fairly sharp drop from here back below the February low.

Gold Miners, GDX, Weekly chart

Tomorrow's economic reports shouldn't move the market much unless there's a big surprise, mainly a negative one. So much good is priced into the current rally that it would be difficult to surprise to the upside. After the open we'll get the Chicago PMI and Michigan Sentiment so watch for any market squiggles around those two.

Economic reports, summary and Key Trading Levels

Market volatility has definitely picked up since mid April. One could look at the daily charts and easily see small H&S patterns as the market has spiked down from mid March, back up to a new high, back down this week and now back up to a lower high. Volatility typically picks up like this at tops as both sides really start to duke it out. Bears start to become a little braver but scare easily and bulls start to get a little concerned about protecting their profits and consequently will often sell first and ask questions later. The rally from yesterday's low was from bullish traders thinking the trouble has passed. Bears will jump on any hint of weakness from here. Many see the waning momentum and that's like bear bait.

With the plethora of signals I'm getting from the charts, prices reaching resistance levels (Fib, trend line, Gann, etc.) and now that we're heading into May (sell and go away), I'm thinking the top has either been made or will be made next week, and not with a lot of added points if we do get new highs. Bullish sentiment is ripe for a reversal and the overbought indicators are rolling over, which is giving us sell signals.

Today's rally was stronger than I thought we'd see if it was to be just a correction before heading lower again. But it remains a bearish setup until Monday's highs are taken out. As I pointed out on several charts, a down day on Friday would leave many sell signals on the charts and therefore any weakness tomorrow will be an opportunity to try the short side. The best stops for short plays are above Monday's highs but if the market moves down on Friday you can use today's/tomorrow's high (if higher) as your stop.

Another way to play the short side is to simply wait for a better sell signal with a break below Wednesday's lows. The hard part in that case might be trying to sell it on the way down and this whippy market could easily tag your stop if it's not kept well above, which of course increases your risk (so trade a smaller size).

If the market continues to rally instead then day traders can certainly make some coin chasing it higher. I think the risk of holding long positions over night does not have enough upside potential to make it a good trade. I think downside potential is now much greater than upside potential and since this is a risk:reward game we play I think it's important to have a high enough upside goal, with a downside risk, before you enter a trade. Typically you should shoot for a 1:3 risk:reward otherwise find a different play.

It being Friday tomorrow there could be an effort to simply hold the market steady into the weekend. The scary drop has been mostly recovered and that's a good accomplishment by the bulls/manipulators. We don't want to scare the sheeple and need to keep them buying up the inventory that big money is I'm sure handing off during this topping process. That's another thing that creates these volatile and whippy tops.

So be careful during this volatile time and good luck. I'll be back with you next Thursday.

Key Levels for SPX:
- cautiously bullish above 1230
- bearish below 1181

Key Levels for DOW:
- cautiously bullish above 11300
- bearish below 10977

Key Levels for NDX:
- cautiously bullish above 2080
- bearish below 1991

Key Levels for RUT:
- cautiously bullish above 750
- bearish below 702

Keene H. Little, CMT


New Option Plays

Let's Add a Little RIMM

by Scott Hawes

Click here to email Scott Hawes


NEW DIRECTIONAL CALL PLAYS

Research In Motion, - RIMM - close 72.09 change +0.38 stop 68.30

Company Description:
Research In Motion Limited (RIM) is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information, including e-mail, phone, short message service (SMS), Internet and intranet-based applications. RIM’s portfolio of products, services and embedded technologies are used by organizations worldwide and include the BlackBerry wireless solution, the RIM Wireless Handheld product line, software development tools and other software and hardware. (source: company press release or website)

Why We Like It:
RIMM has been in an uptrend since November and has been consolidating between $68.00 and $76.00 since mid February. The stock trades at a low 16 PE ratio when compared to its peers. The company has also been on the rumor block as a potential takeover target. The buzz has been that MSFT needs to get into the smart phone space and considering that both companies are heavily involved in the corporate market it seems like a good fit. The price tag for RIMM may be a little high though unless there is stock involved. Regardless of whether this happens or not, I believe RIMM is poised to move higher. The stock has been coiling and it double bottomed on Wednesday and Thursday. I think it is poised to test its recent highs and I suggest readers buy calls at current levels or on a pullback to the $71.00 area. Our target is $74.80 and $76.40. I would like to place a wide initial stop at $68.30. Our time frame is a couple of weeks.

Suggested Position: Long JUNE $75.00 CALL, current ask $2.39

Annotated chart:

Entry on April xx at $xx.xx
Earnings Date June 18, 2010 (unconfirmed)
Average Daily Volume: 15.3 million
Listed on April 29, 2010



In Play Updates and Reviews

HANS Dropped, WFT Performs

by Scott Hawes

Click here to email Scott Hawes

Editor's Note:

Good evening traders. We took a shellacking on TOL today but we aren't too far in the hole. IYT gapped higher at the open which gave us a better entry price. A couple down days in the market will do us some good on these trades. WFT is performing well and we dropped HANS as it has run away from our trigger.

The market whipsaws continue in both directions. I have been saying for the last couple of weeks that often times this indicates that a market top may be forming right in front of our eyes. But these times are extraordinary which make it difficult to navigate the market. We have a good balance in the portfolio to take advantage of the swings. Stay on your toes and good trading to you all.

Current Portfolio:


CALL Play Updates

Gold Fields Ltd - GFI - close 13.26 change -0.02 stop 12.25

GFI consolidated today and closed relatively flat, down -2 cents. No harm done. GFI briefly broke out over its $13.36 resistance level today before pulling back. I expect Gold Miners and Gold to make another leg higher and I suggest readers take advantage of the momentum that is building. Readers who haven't initiated positions can at these levels. GFI has been trading in an upward channel since late February and appears ready to break out of resistance at $13.36. I believe the stock will quickly trade to the $13.95 over the next week. GFI reports earnings on May 6th so I plan to be out of this trade on that date. Our stop is below the 50-day SMA at $12.25 and our target is $13.95 which is just below the YTD highs. Our time frame is about one week or shorter. *NOTE: Please use small position size to limit risk as gold stocks tend to be volatile.*

Current Position: Long MAY $13.00 CALL, entry at $0.60

Entry on April 29 at $0.60
Earnings Date May 6, 2010 (unconfirmed)
Average Daily Volume: 5.3 million
Listed on April 28, 2010


Weatherford International - WFT - close 18.48 change +0.25 stop 15.90

WFT gapped higher this morning but immediately sold off giving readers a second chance to enter at $17.85. The stock immediately rebounded and closed +1.37% higher, near its highs of the day. This $17.80 area is becoming quite an interesting support level. WFT continues to look bullish and on track to hit our target of $18.75. Our $1.58 calls are now worth about $2.00 for an unrealized gain of +26%. If our target of $18.75 is hit the calls should be worth about $2.20 which would be a +39% gain. I suggest traders sell half of their position if the $18.75 level is reached. A second more aggressive target is $20.45. If the $20.45 target is reached our calls would be worth about $2.90 for a +85% gain. Longer term I think WFT will easily test $20.45 but I do not suggest hanging on to call options waiting for this target as time decay could end up hurting you. Obviously if WFT and the market are ripping higher we could get lucky and hit the higher target, but more often than not when traders become complacent by waiting they end up getting bitten in the a**. A strategy readers may consider is to take profits if the first target is hit and then buy further dated options. The August $19.00 calls are going for about $1.45 as of the close today. Earning two +40% gains is the same as one +80% gain so keep that in mind. Readers who haven't initiated positions can do so on weakness in the stock.

Current Position: JUNE $17.00 CALL, entry at $1.58

Entry on April 28 at $ 1.58
Earnings Date Over 2 months
Average Daily Volume = 14.9 million
Listed on April 24 2010


PUT Play Updates

iShares Dow Transports - IYT - close 85.83 change +1.81 stop 87.10

IYT gapped open higher this morning which gave us a better entry price on our put position. We are long puts in the portfolio at $2.00. This also gives us room to adjust our targets and make a quick profit if IYT reverses from here. I am expecting a quick move down to its 20-day SMA which is increasing (currently $82.87). I suggest traders tighten stops at this level or simply exit to take profits. A second more aggressive target is $81.50. IYT is still below its recent highs which should act as resistance. The ETF is at the top of an upward channel that started in July 2009. All of the technical indicators have remained overbought for sometime and I think it is unsustainable. I expect a pullback to at least the 20-day SMA soon. However, if the market continues to rip higher we will honor our stop at $87.10. Our time frame is 1 to 2 weeks but will have no issues exiting sooner if there is a correction to the aforementioned targets or if our stop takes us out. Readers who haven't initiated positions may do so at current levels. *NOTE: Some of the strike prices in IYT have wider than normal bid/ask spreads. Use a limit order in the middle of the spread and you should get filled.

Current Position: JUNE $83.00 PUT, entry at $2.00

Entry on April 29 at $2.00
Earnings Date N/A
Average Daily Volume = 1.0 million
Listed on April 28, 2010


Toll Brothers - TOL - close 22.89 change +0.65 stop 24.25

Not many stocks were held back in the rally today, including TOL which closed +2.92% higher. We are down about -6% in the position but I still like the trade set-up. Today's bounce may turn out to be a lower high but we'll need to see follow though to the downside. TOL found support at $22.76 today, with the next level of support around $22.20. I am looking for TOL to break these levels which should get the selling started. The stock created more hair on top of its candlestick which is now 5 consecutive days. I am still eying the $21.80 level as a key level to take profits as this was TOL's intraday high On November 11 and could act as support. However, considering the strength of the move in the last two days I suggest readers take a hard look at $22.25 to either tighten stops or exit the position. This is just above the lows of the last few days and will probably act as strong support. Aggressive traders can enter the position at this time. Our stop remains at $24.25 and our time frame is a 1 to 5 days.

Current Position: JUNE $23.00 PUT, entry @ $1.40

Entry on April 27 at $ 1.40
Earnings Date Over 2 months
Average Daily Volume = 3.2 million
Listed on April 26, 2010


CLOSED BULLISH PLAYS

Hanson Natural Corp. - HANS - close 44.41 change +1.59 stop *DROPPED*

HANS has still not hit our target and has now run away from us higher, closing +3.71% today. I can't chase the stock at these levels so I am suggesting readers drop the trade. We were close to getting triggered twice and making a very nice profit on this trade but it just never happened. I am sticking to my rules and need to step aside here. Congratulations to any readers who may have opened positions ahead of our trigger. I suggest protecting profits with a tight stop.

Trigger to buy calls if HANS trades to $42.60 *DROPPED*

Suggested Position: Buy MAY $43.00 CALL, current ask $1.65, estimated ask at entry $1.50 *DROPPED*

Entry on April xx at $ xx.xx
Earnings Date 5/06/10
Average Daily Volume = 854,000
Listed on April 21, 2010