Option Investor
New Plays

New Option Plays

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Call Options Plays
Put Options Plays
CB None

Editor's note:

We believe that the current (trading) trend in the markets is down. Yet many stocks have reached oversold conditions. Friday's rally looks like the beginning of a short-term oversold bounce. This is not a place where we want to add many new bullish or bearish plays. We will wait a day or two to see where the bounce begins to falter before listing new bearish plays.

New Calls

Chubb Corp - CB - close: 81.78 chg: +2.39 stop: 77.49

Company Description:
Founded in 1882, the Chubb Group of Insurance Companies provide property and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb's global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia. (source: company press release)

Why We Like It:
We like CB for its bullish technical breakout and relative strength. The stock has been pretty resistance to the market's intermediate down trend and somewhat resistance to the market's recent volatility. Overall CB has been able to maintain its bullish trend of higher lows and Friday's gain pushed the stock to a new four-year high over multiple levels of resistance. The next level of significant resistance looks like the $90.00 level. Currently the P&F chart has produced a triple-top breakout buy signal pointing to a $107 target. We are suggesting bullish positions with a target in the $88-90 range. More patient traders may want to see if CB pulls back again toward the $80.50-81.00 region and buy the dip.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 75 CB-FO OI=172 current ask $7.60
BUY CALL JUN 80 CB-FP OI=450 current ask $3.50
BUY CALL JUN 85 CB-FQ OI=172 current ask $1.00

Picked on May 01 at $ 81.78
Change since picked: + 0.00
Earnings Date 04/25/05 (confirmed)
Average Daily Volume = 1.2 million

New Puts

None today, see note.

New Play Archives