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New Plays
Long Plays
Short Plays
None BIG
  IBN
  UBS

New Long Plays

None today.
 

New Short Plays

Big Lots - BIG - close: 30.08 change: -1.10 stop: 32.15

Company Description:
Headquartered in Columbus, Ohio, Big Lots (NYSE: BIG) is a Fortune 500 company with more than 1,300 stores in 47 states. As the nations largest broadline closeout retailer, Big Lots offers consumers a wide range of bargain-priced merchandise, including brandname closeouts, seasonal products, consumables, furniture, housewares, toys, and
gifts. (source: company press release or website)

Why We Like It:
The bullish up trend in BIG has been struggling the past couple of weeks and the stock finally broke down under support near $30.00 and its 50-dma on Friday. Shares managed to just squeak back above the $30.00 mark by the closing bell but the action was bearish. We are suggesting shorts right here with a stop loss at $32.15. A failed rally under $31.00 would also be an attractive entry point. If you prefer to open positions with a little more momentum then wait for BIG to trade under $29.00 before opening bearish plays. Our target is $26.35, which would be a 38.2% Fibonacci retracement of its January-June rally. More aggressive traders may want to aim for the $24 region. The bullish trend may look broken but there are still investors willing to buy the dip and we would expect them to show up around $26.00.

Our biggest concern is the short interest in BIG, which is huge. The latest data listed short interest at 44% of the 80.6 million-share float. That significantly raises the risk of a short squeeze. To combat this issue we have a suggestion. Normally you could just tighten your stop and hope for the best in a "fast market" where your stop may or not fill you where you want. I'm going to suggest you protect yourself and buy a call option just in case BIG rallies on us.

So we're shorting the stock and buying a call option. It's the same strategy as buying a stock and buying a put to protect you on a sudden drop. If you really want to try and keep your expenses down then consider buying a July $30.00 or $35.00 call. These are going to expire in five days and will quickly deteriorate to nothing ($0.00) if BIG does trade lower. Think of them as expensive five-day insurance on your short trade. The July $30 call is $1.20 and the July $35 call is $0.10. The other option, and the one I suggest, would be an August $35 call currently going for $0.65. The August $30s are too much. We're only aiming for $26.35 on the stock. This way we're partially protected from a sudden surge higher. We would still play with the stop loss at $32.15 and if you get stopped out let the call run. If BIG makes it to $35 the call should be enough to cover our loss.

Picked on July 13 at $30.08
Change since picked: + 0.00
Earnings Date 08/28/08 (unconfirmed)
Average Daily Volume: 2.6 million

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ICICI Bank - IBN - close: 26.61 chg: -2.12 stop: 30.15

Company Description:
ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95 billion (US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the year ended March 31, 2008. ICICI Bank is second amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalisation*. The Bank has a network of about 1,308 branches and 3,950 ATMs in India and presence in 18 countries. (source: company press release or website)

Why We Like It:
The U.S. banking sector is sinking fast and many of their peers across the globe still have room to "catch up". IBN is in a bearish trend and looks poised to hit new lows. However, just opening a short seems very aggressive given that the market is so oversold. We're going to suggest a similar strategy like the one in the BIG play. Short IBN but buy an out of the money call to protect us from a sudden, explosive move higher. We're suggesting shorts right here at $26.61. Alternative entry points would be another failed rally near $29.00 or a new relative low under $26.00. Our target on the stock is $21.50. The Point & Figure chart is suggesting a $19.00 target. We are still playing with a stop loss at $30.15 on the stock. Yet we're also suggesting readers buy an August $30 calls currently going for $1.20. If IBN hits our target ($26.61-21.50 = $5.11 - $1.20 call = $3.91 gain) we can still make more than 10% on the trade after buying the call. Your results will differ depending where you open the trade. FYI: You might want to adjust your stop loss on the stock to $29.25 instead. It is up to you when you sell the call if IBN rallies. You could sell it when the value covers our loss on the stock or let it run and potentially make a profit if IBN breaks out over $30.00.

Picked on July 13 at $26.61
Change since picked: + 0.00
Earnings Date 07/20/08 (unconfirmed)
Average Daily Volume: 3.6 million

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UBS Ag - UBS - close: 19.49 change: -0.41 stop: 20.75

Company Description:
UBS is a global money-center bank based in Switzerland.

Why We Like It:
UBS is another foreign bank that has a steady trend lower. Shares have developed consistent overhead resistance at the 10-dma. We're suggesting shorts with a stop loss at $20.75. Our target is the $16.50 mark. You may want to consider the protective call option strategy we suggested with BIG and IBN. If you do the July options would offer potential insurance for cheap but they expire in five days. The July $22.50 call is only $0.15 ($15.00/contract). I would suggest the August $22.50 call currently at $0.80. Keep the stop on the stock at $20.75. This way if UBS surprises us with a breakout higher we'll be stopped out at $20.75 and the call will appreciate in value. We can choose to exit when the call covers a good chunk or all of our loss on the stock or you could choose to let it run and potentially make a profit on the call. Remember, the $0.80 call is just insurance and we're giving up part of our potential profit on the short to $16.50.

Picked on July 13 at $19.49
Change since picked: + 0.00
Earnings Date 08/12/08 (unconfirmed)
Average Daily Volume: 7.3 million
 

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