Option Investor
New Plays

New Option Plays

Printer friendly version
Call Options Plays
Put Options Plays

New Calls

Rockwell Collins - COL - close: 49.10 chg: +0.60 stop: 44.95

Company Description:
Rockwell Collins is a leader in the design, production and support of communications and aviation electronics solutions for commercial and government customers worldwide. (source: company press release)

Why We Like It:
We like COL for its relative strength. The stock and the defense sector are trading at or near all-time highs. Now that the major stock averages are in a new up trend we expect COL to continue its own bullish trend. However, the DJIA, the S&P 500 and especially the NASDAQ Composite are all short-term overbought and due for a small consolidation. We want to use any such pull back to our advantage. If you look closely at the daily chart for COL you'll notice that investors have bought the last five dips to its 100-dma. If the market pulls back then COL could pull back to this technical support. We'll suggest a trigger to buy calls on a pull back in COL toward the simple 100-dma. Since the 100-dma is a moving target we'll continue to adjust the entry as needed. However, for today's terms we would buy a dip (or a bounce depending on your style) if COL trades in the $45.50-46.25 range. We'll set a short-term target at $50.00 but we may end up adjusting this higher. The P&F chart is bullish and points to a $69 target. 

Suggested Options:
We're not suggesting plays at this time. Look for a dip toward the 100-dma. If we're triggered we are suggesting the July calls.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/27/05 (confirmed)
Average Daily Volume = 800 thousand 

New Puts

United Thera. - UTHR - close: 53.38 chg: -2.42 stop: 56.05

Company Description:
United Therapeutics is a biotechnology company focused on the development and commercialization of unique products for patients with chronic and life- threatening cardiovascular, cancer and infectious diseases. (source: company press release)

Why We Like It:
We like UTHR for its brand new MACD sell signal with the stock extended from its March-May run up. UTHR produced a MACD sell signal back in late April but this time volume on the sell signal is about three times normal. We do admit that this is a speculative play based on the technical sell signal and the fact that the major stock indices are short-term overbought and due for a pull back. We believe that if the major averages do decline that the profit taking in shares of UTHR will occur more quickly. The risk here is that the major indices just keep climbing and get more overbought. Yet we believe that with the NASDAQ up eight days in a row odds are in favor of a dip. One could easily argue for UTHR's relative strength compared to the rest of the market and we agree. Readers can actually watch UTHR for a bounce from support near $47.50, which would be a new bullish entry point. We're going to target a drop into the $48.25-47.50 range, just above technical support near the 100-dma.

Suggested Options:
July puts are available but currently have no open interest. Junes are also available but we're going to suggest the August puts.

BUY PUT AUG 55.00 FUH-TK OI= 826 current ask $5.00
BUY PUT AUG 50.00 FUH-TJ OI=1593 current ask $2.55

Picked on May 24 at $ 53.38
Change since picked: - 0.00
Earnings Date 05/03/05 (confirmed)
Average Daily Volume = 452 thousand 

New Play Archives