Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
AIG None

New Calls

Amer. Intl Grp - AIG - cls: 57.02 chg: +1.41 stop: 55.95

Company Description:
American International Group, Inc. (AIG) is the world's leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. (source: company press release)

Why We Like It:
Dow-component AIG gets a truckload of headlines on a daily basis with the on going investigation by the government into numerous transactions and its CEO Greenberg is coming under heavy fire. We think the stock is ready to bounce purely on a technical basis but the play is not without risk. Just today UBS stated they believe AIG could still see more weakness as the government probes even deeper. Yet the WSJ stated that the AIG could be close to cutting Greenberg lose as the company's chairman and if that occurs the stock could see a knee-jerk reaction whether it's warranted or not. On a purely technical basis AIG is very oversold falling for almost two months from $73 to under $55 this morning. More importantly the stock bounced from support dating back to the October lows. Plus, today's bounce produced a bullish engulfing candlestick reversal pattern on very big volume about three times the average. However, these reversal patterns need to see follow through to make them worthwhile and AIG has a small gap down from March 22nd that could be overhead resistance. We want to capture any oversold bounce but we plan to use a TRIGGER at $58.01 to open the play. AIG could see some resistance in the $60.00 region and its 10-dma near $59.00 but we suspect that any oversold bounce could make it to the $61.50 level, which would be a 38.2 percent Fibonacci retracement of its February-March decline. Please note that this is a higher-risk play due to the short time frame. We do not plan to hold over the April earnings report.

Suggested Options:
We do not plan to hold over its April earnings report so we are suggesting the April calls.

BUY CALL APR 55.00 AIG-DJ OI= 923 current ask $3.20
BUY CALL APR 60.00 AIG-DL OI=12820 current ask $0.60

Picked on March n/a @ $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/21/05 (unconfirmed)
Average Daily Volume = 9.2 million
 

New Puts

None today.

New Play Archives