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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
AVB CDWC
  LEH

New Calls

Avalonbay - AVB - close: 70.05 change: +1.53 stop: 67.49

Company Description:
As of March 31, 2005, AvalonBay owned or held an ownership interest in 148 apartment communities containing 42,850 apartment homes in ten states and the District of Columbia, of which eleven communities were under construction and four communities were under reconstruction. AvalonBay is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in high barrier-to-entry markets of the United States. (source: company press release)

Why We Like It:
Really strong bullish candidates are pretty scarce these days but AVB is showing some relative strength. The stock has ignored a lot of the market volatility lately and on Friday broke out above round-number resistance at $70.00 and its simple 100-dma. Looking at an intraday chart one can see that AVB has produced a short-term bear flag pattern. Friday's rally was fueled by investor reaction to its earnings report on Thursday. The numbers were inline and guidance was also inline but traders reacted positively. At least one brokerage upgraded the stock on the news. AVB's Friday rally also pushed the stock above its four-month trendline of resistance. We also like the P&F chart that shows a relatively new double-top breakout buy signal with an $81 target. We suggest that traders go long/buy calls at current levels. However, there are alternatives. If you suspect the markets will dip again next week then look for AVB to pull back toward the $69 level again and buy the dip. Or if you prefer more of a momentum entry then look for AVB to trade over $70.50. There is potential resistance in the $72 region so it would not surprise us to see AVB trade up towards $72 and then pull back to hit the $70 level again before trading higher. Our target is the $75-76 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 65.00 AVB-GM OI= 758 current ask $6.40
BUY CALL JUL 70.00 AVB-GN OI= 569 current ask $3.10
BUY CALL JUL 75.00 AVB-GO OI= 164 current ask $1.15

Picked on April 24 at $ 70.05
Change since picked: + 0.00
Earnings Date 04/21/05 (confirmed)
Average Daily Volume = 345 thousand
 

New Puts

CDW Corp - CDWC - close: 55.68 chg: -1.07 stop: 58.01

Company Description:
CDW was founded in 1984 and today employs approximately 4,000 coworkers. In 2004, the company generated sales of $5.7 billion. CDW's direct model offers one-on-one relationships with knowledgeable account managers; purchasing by telephone, fax, the company's award-winning CDW.com web site, customized CDW@work(TM) extranets, CDWG.com web site and macwarehouse.com web site; custom configured solutions and same day shipping; and pre- and post-sales technical support, with approximately 120 factory-trained and A+ certified technicians on staff. (source: company press release)

Why We Like It:
CDWC's yearly and short-term trends are bearish. The stock has not been able to mount any sort of rally for the last couple of months and the recent oversold bounce never made it past current resistance at its 50-dma. The bearish P&F chart currently points to a $43 target. While it is noteworthy that the P&F chart shows a low pole reversal (possible bullish turnaround) we suspect that with the NASDAQ showing weakness that CDWC will continue lower. Technical traders will also note that CDWC's short-term oscillators are near overbought levels and starting to fade. Now that CDWC is starting to roll over again under resistance we want to buy puts here and target a drop toward the $50.00 level. Once CDWC trades to $50.00 we may actually switch directions and suggest calls.

Suggested Options:
We are suggesting the July puts

BUY PUT JUL 60.00 DWQ-SL OI=1655 current ask $5.40
BUY PUT JUL 55.00 DWQ-SK OI= 585 current ask $2.40
BUY PUT JUL 50.00 DWQ-SJ OI= 697 current ask $0.90

Picked on April 24 at $ 55.68
Change since picked: - 0.00
Earnings Date 04/19/05 (confirmed)
Average Daily Volume = 920 thousand

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Lehman Brothers - LEH - close: 90.47 chg: -0.43 stop: 92.51

Company Description:
Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high-net-worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The Firm is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world. (source: company press release)

Why We Like It:
The XBD broker-dealer index broke down out of its three-month trading range several days ago and now the index is trading under its simple 200-dma. The broader market indices don't look healthy and investors are likely to do more profit taking from their winners as stock slide lower. LEH happens to be one of those "winners" with a multi-month bullish trend from August 2004 through March this year. Unfortunately for the bulls shares of LEH fell through the bottom of this rising channel over a week ago. Now LEH is flirting with a breakdown below the $90.00 mark and its 100-dma. The P&F chart already shows a sell signal pointing to an $81 target. We are suggesting that readers use a TRIGGER under Friday's low. Our entry point will be $89.45. Some traders may want to wait and use a move under Thursday's low as an alternative entry. Our target is the $85.00-84.00 level (and/or its simple 200-dma) as this region is likely to be support.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 90.00 LES-SR OI=2526 current ask $4.00
BUY PUT JUL 85.00 LES-SQ OI=3510 current ask $2.25

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 03/15/05 (confirmed)
Average Daily Volume = 2.3 million
 

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