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Call Options Plays
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ARLPNone
FDG 
IR 
KLAC 
PCAR 

New Calls

Alliance Resource - ARLP - cls: 75.01 chg: +2.51 stop: 69.99

Company Description:
Alliance Resource Partners is the nation's only publicly traded master limited partnership involved in the production and marketing of coal. Alliance Resource Partners currently operates mining complexes in Illinois, Indiana, Kentucky and Maryland. (source: company website)

Why We Like It:
After three days of positive market gains the coal sector finally decided to join the rally. Most of the coal producers have already been winning plays for investors in 2004 and now they're breaking out to new all-time highs (look at ARLP, FDG and TXI). We like how ARLP has just broken out from a 2 1/2 month consolidation while maintaining its long-term up trend. The bounce from its rising trendline of support (near the 50-dma) and the move over resistance at $75.00 and its new MACD buy signal all sound like a recipe for success. If you look at ARLP's P&F chart you'll see a fresh triple-top breakout buy signal with an $86 price target. We want to go long/buy calls at current levels with a short-term target of $80 and a secondary target of $85.

Suggested Options:
We are going to suggest the April and June calls.

BUY CALL APR 70 AFV-DN OI= 3 current ask $6.50
BUY CALL APR 75 AFV-DO OI= 3 current ask $2.95

BUY CALL JUN 70 AFV-FN OI=112 current ask $8.00
BUY CALL JUN 75 AFV-FO OI=160 current ask $4.90
BUY CALL JUN 80 AFV-FP OI= 14 current ask $2.50


 

Picked on February 27 at $ 75.01
Change since picked: + 0.00
Earnings Date 01/27/05 (confirmed)
Average Daily Volume = 95 thousand

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Fording Candn Coal - FDG - cls: 90.43 chg: +3.13 stop: 84.99

Company Description:
Fording Canadian Coal Trust is an open-ended mutual fund trust. Through investments in metallurgical coal and industrial minerals mining and processing operations, the Trust makes quarterly cash distributions to unitholders. The Trust, through its wholly-owned subsidiary, Fording Inc., holds a 60% interest in the Elk Valley Coal Partnership and is the world's largest producer of the industrial mineral wollastonite. Elk Valley Coal Partnership, comprised of Canada's senior metallurgical coal mining properties, is the world's second largest exporter of metallurgical coal, currently supplying approximately 25 million tonnes of high-quality coal products annually to the international steel industry. (source: company website)

Why We Like It:
FDG is another stock in the coal sector that is breaking out to new highs after a month of consolidation. Like its peers shares of FDG have a strong up trend. Friday's breakout over resistance in the $88-90 region was fueled by volume almost twice the average suggesting more strength ahead. The P&F chart has a buy signal pointing to a $103 target. We're willing to go long at current levels but if FDG pulls back look for a bounce in the $87-88 range. Our target is the $96-98 region.

Suggested Options:
We suggest the April and June calls.

BUY CALL APR 85 FDG-DQ OI=108 current ask $7.20
BUY CALL APR 90 FDG-DR OI= 28 current ask $3.80
BUY CALL APR 95 FDG-DS OI= 0 current ask $2.15

BUY CALL JUN 90 FDG-FR OI=346 current ask $6.10
BUY CALL JUN 95 FDG-FS OI=140 current ask $3.90


 

Picked on February 27 at $ 90.43
Change since picked: + 0.00
Earnings Date 02/05/05 (confirmed)
Average Daily Volume = 326 thousand

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Ingersoll-Rand - IR - cls: 83.00 chg: +2.00 stop: 78.50

Company Description:
Ingersoll-Rand is a leading innovation and solutions provider for the major global markets of Climate Control, Industrial Solutions, Infrastructure, and Security and Safety. The company's diverse product portfolio encompasses such leading industrial and commercial brands as Schlage locks and security solutions; Thermo King transport temperature control equipment; Hussmann commercial and retail refrigeration equipment; Bobcat compact equipment; Club Car golf cars and utility vehicles; and Ingersoll-Rand industrial and construction equipment. In addition, IR offers products and services under many more premium brands for customers in industrial and commercial markets. (source: company website)

Why We Like It:
Some of the auto parts makers are also in breakout mode and IR is helping lead the way. After more than two weeks of consolidation between $79 and $82 shares of IR have broken out above resistance at its December high to close at new all-time highs. Volume on Friday was above average and its P&F chart points to a $106 target. Short-term technical oscillators are positive and IR looks poised to run higher next week. Our target is the $88-90 range.

Suggested Options:
We are going to suggest the April and June calls.

BUY CALL APR 80 IR-DP OI=1880 current ask $5.00
BUY CALL APR 85 IR-DQ OI= 168 current ask $2.10

BUY CALL JUN 80 IR-FP OI= 871 current ask $6.00
BUY CALL JUN 85 IR-FQ OI= 746 current ask $3.40


 

Picked on February 27 at $ 83.00
Change since picked: + 0.00
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 1.1 million

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KLA-Tencor - KLAC - close: 50.81 chg: +1.96 stop: 47.75

Company Description:
About KLA-Tencor: KLA-Tencor is the world leader in yield management and process control solutions for semiconductor manufacturing and related industries. Headquartered in San Jose, Calif., the company has sales and service offices around the world. (source: company website)

Why We Like It:
The SOX semiconductor index is on the verge of a major breakout over its 200-week moving average. Technically the index has already done so but this moving average has been consistent resistance for months so confirmation of the move would be prudent before considering new bullish plays in the sector. We think it's noteworthy that KLAC is helping lead the charge. The company recently announced a cash dividend (for the first time ever) and doubled its stock buy back program. This has more fundamental players interested in the stock. Technically shares have closed above round-number resistance at the $50.00 level and its short-term technical oscillators are bullish. Plus, the P&F chart has broken through resistance and points to a $61 target. We also note that the daily chart shows an inverse or bullish head-and-shoulders pattern. We want to use a TRIGGER above the $51.00 level, which was resistance several days ago. Our entry point to go long will be $51.11. Our short-term target is the $55.00 level. Keep an eye on the SOX index. You may not want to initiate a play in KLAC if the SOX doesn't confirm the upward trend.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 47.50 KCQ-DT OI=243 current ask $4.70
BUY CALL APR 50.00 KCQ-DJ OI=487 current ask $3.10
BUY CALL APR 55.00 KCQ-DK OI=250 current ask $1.00


 

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/20/05 (confirmed)
Average Daily Volume = 5.1 million

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PACCAR - PCAR - close: 75.00 chg: +1.69 stop: 71.99

Company Description:
PACCAR is a global technology leader in the design, manufacture and customer support of high-quality light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt, DAF and Foden nameplates. It also provides financial services and distributes truck parts related to its principal business. In addition, the Bellevue, Washington-based company manufactures industrial winches under the Braden, Gearmatic and Carco nameplates. (source: company website)

Why We Like It:
Shares of PCAR are on the verge of a bullish breakout above resistance at the $75.00 level. This truckmaker recently reported earnings and the results came in above estimates on both the profits and the revenues. Technically we like how PCAR is poised to breakout from a two-month consolidation between $68 and $75. You'll notice on the chart that PCAR recently produced a higher high and Friday's rally pushed the stock above technical resistance at its 50-dma and 100-dma. The P&F chart has already produced a new buy signal with an $86 target. We want to use a TRIGGER over round-number resistance at $75.00 and target a run toward the $80-81 range. Our entry point to buy calls will be $75.25.

Suggested Options:
We are going to suggest the May calls although the April strikes should work well too.

BUY CALL MAY 70 PAQ-EN OI=2291 current ask $6.80
BUY CALL MAY 75 PAQ-EO OI=1773 current ask $3.50
BUY CALL MAY 80 PAQ-EP OI=5568 current ask $1.50


 

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 1.0 million

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