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New Option Plays

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Call Options Plays
Put Options Plays
OXY IVGN
OIH RTH
WYNN

New Calls

Occidental Petrol. - OXY - cls: 73.64 chg: +2.47 stop: 67.99

Company Description:
Occidental Petroleum Corp. a world leader in oil and natural gas exploration and production and a major North American chemical manufacturer. (source: company website)

Why We Like It:
Last week in the plays section of the OI Daily newsletter we added APC just as the oil-related indices and equities began to rebound from a month-long consolidation. Comments out of Goldman Sachs that crude could hit $100 a barrel in the next few years helped reignite the oil rally and now crude prices closed near all-time highs on Friday. We like OXY for multiple reasons. The daily chart pattern shows a bull-flag pattern and Friday's rally helped push shares up through the top border of the flag, which should herald the next leg higher. Short-term oscillators like the RSI and stochastics are also turning bullish. Meanwhile its MACD indicator is nearing a new buy signal. We are willing to go long at current levels but we plan to exit before the April 26th earnings report. The short time frame might make some traders uncomfortable. If that's you consider passing on to a different play or consider playing options on the OIH oil service holders or options on the IYE ishares. If you prefer readers could wait for a breakout over $74.00 before going long OXY. Or an alternative would be to hope for a dip and then buy a bounce in the $71.00-72.00 range. Our target is the $80.00 region.

Suggested Options:
We are suggesting the May calls even though we plan to exit before the April earnings report.

BUY CALL MAY 70.00 OXY-EN OI=4935 current ask $5.70
BUY CALL MAY 75.00 OXY-EO OI=4211 current ask $2.75
BUY CALL MAY 80.00 OXY-EP OI=1060 current ask $1.15

Picked on April 03 at $ 73.64
Change since picked: + 0.00
Earnings Date 04/26/05 (confirmed)
Average Daily Volume = 2.4 million

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Oil Service Holdrs - OIH - cls: 98.70 chg: +2.55 stop: 92.49

Company Description:
HOLDRS are trust-issued receipts that represent your beneficial ownership of a specified group of stocks. HOLDRS allow you to benefit from the ownership of the stocks in a particular industry, sector or group. (source: HOLDRS.com)

Why We Like It:
We like the OIH holdrs since the same forces pushing up shares of OXY and APC are going to be driving most of the group. We can trade the OIH holders with a lower risk of any one stock crashing due to news or a bad earnings report. Looking at the daily chart of the OIH we see that the month-long consolidation in March bottomed with a bounce from the $90.00 level. Now shares are breaking out from what looks like a bull-flag pattern. The MACD indicator just produced a new buy signal. We are willing to go long at current levels. More conservative traders may want to wait for a breakout over the $100 level. Or an alternative, more aggressive play, would be to look for a dip back toward the $95-96 range and buy a bounce. Our target is the $105 level.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 95.00 OIH-ES OI=1519 current ask $8.30
BUY CALL MAY 100.00 OIH-ET OI=2640 current ask $4.90
BUY CALL MAY 105.00 OIH-EA OI=2127 current ask $2.70

Picked on April 03 at $ 98.70
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 3.9 million

New Puts

Invitrogen - IVGN - close: 67.46 chg: -1.56 stop: 70.15

Company Description:
Invitrogen Corporation provides products and services that support academic and government research institutions and pharmaceutical and biotech companies worldwide in their efforts to improve the human condition. The company provides essential life science technologies for disease research, drug discovery and commercial bioproduction. Invitrogen's own research and development efforts are focused on breakthrough innovation in all major areas of biological discovery, including functional genomics, proteomics, bioinformatics and cell biology -- placing Invitrogen's products in nearly every major laboratory in the world. Founded in 1987, Invitrogen is headquartered in Carlsbad, and conducts business in more than 70 countries around the world. The company globally employs approximately 4,000 scientists and other professionals and had revenues of more than $1 billion in 2004. (source: company press release)

Why We Like It:
IVGN broke down through significant support at its 50-dma and the $70.00 mark on big volume three trading days ago. The decline also broke its seven-month rising channel. IVGN did manage to bounce from the $67 level and its 100-dma but both times the bounce failed under the $70.00 mark, which is normal as broken support tends to become new resistance. We only have about three weeks before IVGN is due to report earnings but we suspect the stock can trade towards price support near $62.50, which is also underpinned by technical support at the 200-dma. If you check the Point & Figure chart you'll see a fresh sell signal with a $60.00 target.

Suggested Options:
We are suggesting the May puts although we will exit before the April earnings report.

BUY PUT MAY 70.00 IUV-QN OI=474 current ask $4.60
BUY PUT MAY 65.00 IUV-QM OI=505 current ask $2.15

Picked on April 03 at $ 67.64
Change since picked: - 0.00
Earnings Date 04/21/05 (unconfirmed)
Average Daily Volume = 848 thousand

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Retail Holdrs - RTH - close: 94.13 chg: -1.66 stop: 96.51

Company Description:
HOLDRS are trust-issued receipts that represent your beneficial ownership of a specified group of stocks. HOLDRS allow you to benefit from the ownership of the stocks in a particular industry, sector or group. (source: HOLDRS.com)

Why We Like It:
The retail sector could be headed for big trouble with rising gas prices taking a bigger chunk out of consumers' wallets. Retail titan Wal-Mart (WMT) is a prime example and the stock is breaking down under significant, round-number, psychological support at the $50.00 level. This has lead the RTH to breakdown under support at the $95.00 level and its simple and exponential 200-dma's. After four months of consolidating sideways we suspect that this breakdown in the RTH will lead to a decline toward our short-term target in the $90 region.

Suggested Options:
We are suggesting the May puts.

BUY PUT MAY 95.00 RTH-QS OI=6819 current ask $5.30
BUY PUT MAY 90.00 RTH-QR OI= 507 current ask $2.40

Picked on April 03 at $ 94.13
Change since picked: - 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 1.6 million

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Wynn Resorts - WYNN - cls: 66.04 chg: -1.70 stop: 70.05

Company Description:
WYNN is soon to be the new kid on the block once its new resort opens on the strip in Las Vegas, Nevada. The company also owns and operates the Wynn Macau casino in Macau.
(source: company website)

Why We Like It:
High-flying casino stocks are all starting to look like targets for profit taking. Most of the stocks in the group have begun to breakdown after months of gains and WYNN is one of them. Shares recently broke down under the $70.00 level and its 50-dma. Now the stock is breaking down under the 100-dma with big volume on Friday's 2.5 percent decline. We suspect that investors have already priced in the opening of Wynn's new Las Vegas casino, which is expected to open its doors on April 28th. Technically the stock does look vulnerable. Its P&F chart sports a triple-bottom breakdown sell signal with a $55 target. We are targeting a short-term drop toward support a the $60.00 level. Actually we want to exit at $60.50. Keep in mind that we will plan to close the play before WYNN's late April earnings report.

Suggested Options:
We are suggesting the May puts but it's worth noting that the June strikes have more open interest.

BUY PUT MAY 70.00 UWY-QN OI= 477 current ask $6.40
BUY PUT MAY 65.00 UWY-QM OI=1266 current ask $3.80
BUY PUT MAY 60.00 UWY-QL OI= 592 current ask $2.05

Picked on April 03 at $ 66.04
Change since picked: - 0.00
Earnings Date 04/29/05 (unconfirmed)
Average Daily Volume = 1.1 million

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