Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
New Option Plays
Call Options Plays
Put Options Plays
IVGNNKE

New Calls

Invitrogen - IVGN - close: 69.10 chg: +1.67 stop: 66.00

Company Description:
We provide products and services that support academic and government research institutions and pharmaceutical and biotech companies worldwide in their efforts to improve the human condition. Our life science technologies improve and accelerate all areas of research, drug discovery, and commercial bioproduction. (source: company website)

Why We Like It:
IVGN has been a frequent guest on our watch lists over the past few weeks as the stock consolidates the December breakout over resistance at $65.00 and the top of the gap down from July. Now after about six weeks of consolidating sideways shares of IVGN look ready to breakout over the $70.00 mark. The stock has already been out performing its peers in the biotech sector for the last few months and one can see a rising channel on its daily chart. The P&F chart also shows a breakout over resistance in its trend of lower highs and points to an $81 target. We want to use a TRIGGER at $70.05 to capture a breakout over resistance and target a move to the $75.00 level, which happens to coincide with the median analyst target for IVGN. The one big challenge with this play is that IVGN is due to report earnings sometime between February 17th and February 23rd. Thus far the exact details have not been provided.

Suggested Options:
We plan to close this play ahead of IVGN's mid to late February earnings report so we're only suggesting the February or March calls.

BUY CALL FEB 70 IUV-BN OI= 1478 current ask $1.95
BUY CALL FEB 75 IUV-BO OI= 823 current ask $0.60

BUY CALL MAR 70 IUV-CN OI= 11 current ask $3.10
BUY CALL MAR 75 IUV-CO OI= 10 current ask $1.75


Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/17/05 (unconfirmed)
Average Daily Volume = 800 thousand

New Puts

Nike Inc - NKE - close: 85.15 chg: -0.74 stop: 87.01

Company Description:
Nike, Inc. based in Beaverton, Oregon is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly owned Nike subsidiaries include Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Bauer NIKE Hockey Inc., a leading designer and distributor of hockey equipment; Cole Haan, which designs, markets, and distributes fine dress and casual shoes and accessories; and Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories.
(source: company press release)

Why We Like It:
We like NKE as a bearish candidate because the stock is breaking down. Shares climbed consistently from August through mid-December in what looks like a rising channel. Yet the rally peaked in December after NKE turned in a strong earnings report. Since then the stock has been suffering under a trend of lower highs as investors rotate out of shares. There breakdown under $90 in early January and the failed rally at the same level two weeks ago combined with the drop under its rising 50-dma all spell out that the trend appears to have changed for NKE. Shares tested round-number support at the $85 level today and NKE has not participated in the two-day market bounce. We want to use a trigger at $84.65 to open the play. We'll target a drop to round-number support and the 200-dma near $80.00.

Suggested Options:
We're going to suggest the March and April puts.

BUY PUT MAR 85 NKE-OQ OI= 124 current ask $2.65
BUY PUT MAR 80 NKE-OP OI= 105 current ask $1.00

BUY PUT APR 85 NKE-PQ OI= 991 current ask $3.20
BUY PUT APR 80 NKE-PP OI= 837 current ask $1.40


Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 1.1 million

Black & Decker - BDK - close: 79.47 chg: -3.89 stop: 82.49

Company Description:
Black & Decker is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology- based fastening systems.
(source: company press release)

Why We Like It:
"Sell the news". Traders have heard that maxim before. It's a common occurrence when investors sell a stock on a news event even if the result is positive. BDK reported earnings this morning that was better thane expected by beating estimates by four cents. Unfortunately, it looks like investors are taking profits after a very strong Q3 and Q4 run up sparked by disappointing gross margins in the latest earnings report. Technically BDK looks long-term overbought and today's drop under the 100-dma and round-number support at $80.00 on five times the normal volume looks like an entry point to short it. If you look at the weekly chart (provided below) you can see the big red candlestick at the top of the pattern. This is a bearish engulfing candle and at the top of the pattern represents a bearish reversal. The Point & Figure chart has reversed its bullish pattern into a sell signal pointing to $68. We're only going to target the $75 level as the exponential 200-dma rises up to meet BDK.

Suggested Options:
We are going to suggest the February and March puts.

BUY PUT FEB 80 BDK-NP OI= 1472 current ask $2.75
BUY PUT FEB 75 BDK-NO OI= 820 current ask $1.20

BUY PUT MAR 80 BDK-OP OI= 33 current ask $3.40


Picked on January 26 at $ 79.47
Change since picked: + 0.00
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 659 thousand

New Play Archives