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None LLL

New Calls

None today.
 

New Puts

L-3 Comm. - LLL - close: 68.01 chg: -1.93 stop: 70.55

Company Description:
Headquartered in New York City, L-3 Communications is a leading provider of Intelligence, Surveillance and Reconnaissance (ISR) systems and products, secure communications systems, aircraft modernization, training and government services, and is a merchant supplier of a broad array of high technology products. Its customers include the Department of Defense, Department of Homeland Security, selected U.S. government intelligence agencies and aerospace prime contractors. (source: company press release)

Why We Like It:
That's an interesting reaction. This morning LLL announced it has won a $50 million contract from the TSA and the stock sinks. The one-year contract is renewable and worth upwards of $250 million. Yet shares of LLL lose 2.75 percent on volume about three times the average. Furthermore LLL has broken down to a new four-month low and broken below technical support at its 200-dma. Technical oscillators are naturally bearish and its P&F chart points to a $63 target. Looking more closely chart readers will also see that LLL broke its almost two-year up trend a couple of weeks ago and the stock has arguably produced a double-top. We feel that today's decline makes a tempting entry point to buy puts. There is a chance that LLL will produce a short-term oversold bounce tomorrow but we'd expect the 69.50-70.00 range to act as overhead resistance. Readers can use a bounce towards this area as a new bearish entry point as well. Our target is the $63-62 range.

Suggested Options:
We are suggesting the July puts although June strikes are available.

BUY PUT JUL 70.00 LLL-SN OI=1964 current ask $3.80
BUY PUT JUL 65.00 LLL-SM OI=1069 current ask $1.55

Picked on May 10 at $ 68.01
Change since picked: + 0.00
Earnings Date 04/26/05 (confirmed)
Average Daily Volume = 855 thousand
 

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