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None PHS

New Calls

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New Puts

Pacificare Health - PHS - close: 59.04 chg: -2.45 stop: 62.01

Company Description:
PacifiCare Health Systems is one of the nation's largest consumer health organizations with more than 3 million health plan members and approximately 10 million specialty plan members nationwide. PacifiCare offers individuals, employers and Medicare beneficiaries a variety of consumer-driven health care and life insurance products. Currently, more than 99 percent of PacifiCare's commercial health plan members are enrolled in plans that have received Excellent Accreditation by the National Committee for Quality Assurance (NCQA). PacifiCare's specialty operations include behavioral health, dental and vision, and complete pharmacy benefit management through its wholly owned subsidiary, Prescription Solutions. (source: company website)

Why We Like It:
PHS has been a huge winner for the bulls for four out of the last five months but this past month has seen PHS' momentum stall. Now this severely overbought stock has broken its up trend. Friday's decline broke through technical support at the 50-dma and round-number support at the $60.00 level with volume surging to three times the average. The P&F chart shows a similar reversal with a new sell signal pointing to a $51 target. We want to suggest puts at current levels and target a move into the $54-55 range.

Suggested Options:
We are suggesting the May puts but we do not plan to hold over the late April earnings report.

BUY PUT MAY 65.00 PHS-QM OI=355 current ask $7.10
BUY PUT MAY 60.00 PHS-QL OI=440 current ask $3.80
BUY PUT MAY 55.00 PHS-QK OI=347 current ask $1.80

Picked on March 20 at $ 59.04
Change since picked: - 0.00
Earnings Date 04/28/05 (unconfirmed)
Average Daily Volume = 1.1 million
 

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