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New Option Plays

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Call Options Plays
Put Options Plays
None ADBE
  INFY
  PCAR

New Calls

None today.
 

New Puts

Adobe Systems - ADBE - close: 59.12 chg: -0.92 stop: 61.51

Company Description:
Adobe is the world's leading provider of software solutions to create, manage and deliver high-impact, reliable digital content. (source: company press release)

Why We Like It:
The oversold bounce has filled the gap and now shares are rolling over under resistance. ADBE was already falling fast in mid April but the stock gapped lower on April 18th after announcing a $3.5 billion deal to buy Macromedia. Since the announcement there have been a number of upgrades for ADBE and the stock has slowly rebounded higher but only enough to "fill the gap". Today's failed rally reversal is a tempting bearish entry point. Combine ADBE's weakness with weakness in the NASDAQ and the GSO software sector and it looks like we could have a winner. The short-term technical oscillators on ADBE are turning lower or about to turn over into bearish signals. The P&F chart currently points to a $39 target. We are suggesting bearish positions here at current levels with a short-term target of $55.00. More conservative traders can exit early at the 200-dma (currently near $56). It is worth noting that ADBE has a stock split set for May 24th but we do not believe it will have an affect on this play.

Suggested Options:
We are suggesting the June puts.

BUY PUT JUN 65.00 AEQ-RM OI= 14 current ask $7.00
BUY PUT JUN 60.00 AEQ-RL OI=569 current ask $3.50
BUY PUT JUN 55.00 AEQ-RK OI=274 current ask $1.50

Picked on April 26 at $ 59.12
Change since picked: - 0.00
Earnings Date 06/16/05 (unconfirmed)
Average Daily Volume = 3.3 million

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Infosys Tech. - INFY - close: 58.24 chg: -3.36 stop: 62.51

Company Description:
Infosys is a leading global technology services firm founded in 1981. Infosys provides end-to-end business solutions that leverage technology for our clients across the entire software life cycle: consulting, design, development, re-engineering, maintenance, system integration, package evaluation and implementation. In addition, Infosys offers software products to the banking industry, as well as business process management services through its majority-owned subsidiary, Progeon. (source: company press release)

Why We Like It:
We like INFY for its relative weakness. The stock was already in a technical breakdown when the company reported earnings on April 14th. Results were inline but the company warned for fiscal year 2006. Investors were obviously not happy to hear that and sent the stock even lower still. The recent oversold bounce in the market helped propel INFY back toward the $65.00 level but shares couldn't break past this round-number level. In the last two sessions INFY has fallen back under its 200-dma and the $60.00 level and dropped to new six-month lows. Furthermore today's decline was on volume more than three times the average and that suggests even more weakness ahead. The P&F chart shows a bull trap and a triple-bottom breakdown sell signal with a $51 target. We agree that the $51.00-50.00 range is a good area to target. Our time frame is six-to-eight weeks.

Suggested Options:
We are suggesting the June puts although at this time the July puts have more open interest. You may want to use July's.

BUY PUT JUN 65.00 IUN-RM OI= 25 current ask $9.70
BUY PUT JUN 60.00 IUN-RL OI= 14 current ask $5.90
BUY PUT JUN 55.00 IUN-RK OI= 22 current ask $3.10

Picked on April 26 at $ 58.24
Change since picked: - 0.00
Earnings Date 04/14/05 (confirmed)
Average Daily Volume = 504 thousand

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PACCAR Inc - PCAR - close: 67.18 change: -1.35 stop: 70.01

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 winches under the Braden, Gearmatic and Carco nameplates. (source: company press release)

Why We Like It:
We like PCAR for its bearish technical pattern. The company actually reported earnings this morning and beat Wall Street estimates by 7 cents a share. Yet this wasn't enough to inspire a lasting rally. Instead PCAR spiked toward resistance at the $70.00 level, which is reinforced by technical resistance at the 200-dma. The rally failed and PCAR close down almost two percent. Some of the technical indicators are mixed but its P&F chart shows a bearish pattern pointing to a $54 target. Plus, we see what looks like a bear-flag pattern on the daily chart. Combine the bear flag pattern, the failed rally, the weak market environment and it sounds like a recipe for a put play. However, we want to see confirmation of the bear-flag pattern. We're going to use a TRIGGER at $66.45 to open the play. Our target is the $62.50-62.00 range.

Suggested Options:
We are suggesting the June puts. You might want to consider using May or August options if you want more open interest.

BUY PUT JUN 70.00 PAQ-RN OI= 10 current ask $4.80
BUY PUT JUN 65.00 PAQ-RM OI= 48 current ask $2.05

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 04/26/05 (confirmed)
Average Daily Volume = 1.0 million
 

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