New Plays, Tuesday, 02/22/2005
New Option Plays
by OI Staff
HAVING TROUBLE PRINTING?
Call Options Plays
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Penn Natl Gaming - PENN - cls: 59.77 chg: -3.11 stop: 63.01
Penn National Gaming owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The Company presently operates eleven facilities in nine jurisdictions including West Virginia, Illinois, Louisiana, Mississippi, Pennsylvania, New Jersey, Colorado, Maine and Ontario. In aggregate, Penn National's facilities feature over 13,000 slot machines, 260 table games, 1,286 hotel rooms and 417,000 square feet of gaming floor space. The company is currently in the process of completing the disposition of the Shreveport, Louisiana Hollywood Casino. In November 2004, Penn National Gaming agreed to acquire all of the outstanding shares of Argosy Gaming Company, which it expects to complete in the second half of 2005. (source: company website)
Why We Like It:
PENN has actually been a big winner for investors over the last several months. The gambling sector in general has been pretty strong. But nothing goes up forever and with the market selling-off into what could be a new leg lower PENN looks like a big target for profit taking. Today's breakdown below the $62.50 level, technical support at the simple 50-dma and round-number support at the $60.00 mark on big volume looks like the sort of bearish signal we can buy puts on. The P&F chart agrees that PENN can trade lower since it's showing a sell signal with a $48 target. We're going to target an initial move to the $55 level and its 100-dma but we suspect that PENN could drop into the 51-52 range. Readers should be aware that PENN is due to split 2-for-1 on March 8th but we don't suspect it will have a bearing on PENN's performance at this time.
We are going to suggest the March or April puts. There does seem to be some pricing errors with the put strikes under $60. Double-check with your broker.
BUY PUT MAR 60 UQN-OL OI= 478 current ask $5.00
BUY PUT MAR 55 UQN-OK OI= 131 current ask $5.00 *probably a typo
BUY PUT APR 60 UQN-PL OI= 524 current ask $5.90
BUY PUT APR 55 UQN-PK OI= 574 current ask $5.00 *probably a typo
Picked on February 22 at $ 59.77
Change since picked: + 0.00
Earnings Date 02/03/05 (confirmed)
Average Daily Volume = 593 thousand
Research In Motion - RIMM - cls: 70.90 chg: -2.88 stop: 73.01
Research In Motion is a leading designer, manufacturer and marketer of innovative 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 email, phone, SMS messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. RIM's portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world and include the BlackBerry. wireless platform, the RIM Wireless Handheld(TM) product line, software development tools, radio-modems and software/hardware licensing agreements. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. (source: company website)
Why We Like It:
We like RIMM as a put candidate based on its technical picture but we are aware that it may be a bit too aggressive for some traders. Make sure you and your account can handle some volatility. First we want to draw your attention to the double-top RIMM formed with the peaks near $95 in November and December. Second we want you to see how the bounce from the $64 level stalled near the 50 percent retracement of the December-January pull back. After more than three weeks of consolidation under the $80 level and its 50-dma the stock is turning lower and its MACD has produced or is on the verge of producing a new sell signal. Meanwhile the P&F chart has produced a "bullish signal reversed" pattern and points to a $62 target. Yet it's worth nothing that RIMM still has some support with the 200-dma near round-number, psychological support at the $70 mark. We want to use a TRIGGER at $69.75 to catch a breakdown. Our initial target will be $64.00 but we suspect RIMM can trade lower.
We are going to suggest the March puts. RIMM is due to report earnings in late March and we do not want to hold over the event.
BUY PUT MAR 75 RUP-OO OI=9302 current ask $5.80
BUY PUT MAR 70 RUP-ON OI=7130 current ask $3.00
BUY PUT MAR 65 RUP-OM OI=7318 current ask $1.30
Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/22/05 (unconfirmed)
Average Daily Volume = 7.9 million