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New Option Plays

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Call Options Plays
Put Options Plays
ASH
PHM

New Calls

Ashland Inc - ASH - close: 69.36 chg: +0.66 stop: 66.99

Company Description:
Ashland Inc. is a Fortune 500 transportation, construction, chemicals and petroleum company providing products, services and customer solutions throughout the world. (source: company press release)

Why We Like It:
ASH is a diversified company that given the current economic environment should be firing on all cylinders considering which industries the company's five segments specialize in (see company description above). Technically, we like the stock's bullish angle and the share price looks ready to breakout over resistance at the $70.00 level. Currently the Point & Figure chart is bullish with a triple-top breakout buy signal that points to an $80.00 target. We are suggesting that readers use a trigger over resistance at the $70.00 level. Our entry point will be $70.05. If triggered our short-term target will be the $74.75-75.25 range. We do not plan on holding the play over ASH's late July earnings report. 

Suggested Options:
We are suggesting the July calls but we may end up holding the play past the July expiration so traders may want to consider the October strikes.

BUY CALL JUL 65.00 ASH-GM OI=3118 current ask $5.20
BUY CALL JUL 70.00 ASH-GN OI=3525 current ask $1.85
BUY CALL JUL 75.00 ASH-GO OI=2013 current ask $0.45

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 1.1 million 

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Pulte Homes - PHM - close: 79.35 chg: +1.66 stop: 75.95

Company Description:
Pulte Homes, Inc., based in Bloomfield Hills, Mich., is a FORTUNE 200 company with operations in 47 markets and 27 states. In 2004, the company closed 38,612 domestic home sales and generated total revenues of $11.7 billion. During its 55-year history, the company has constructed more than 408,000 homes. In 2004, J.D. Power and Associates named Pulte the inaugural recipient of its Platinum Award for Excellence in Customer Service among America's leading homebuilders. J.D. Power ranked Pulte No. 1 in 14 markets, and among the top three in 23 of 25 markets surveyed. (source: company press release)

Why We Like It:
The homebuilders have been a pocket of strength in this market and there appears to be no stopping them despite the ubiquitous talk over rising interest rates and potential housing bubbles. The DJUSHB home construction index appears to be on the verge of breaking out over resistance near 950, which would send it to a new all-time high. Likewise shares of PHM are consolidating under resistance at the $80.00 level and a breakout here would put PHM at a new high and likely scare a good number of bears into covering positions (again). We are suggesting that traders wait for PHM to breakout over resistance at the $80.00 level before initiating new bullish positions. We'll use a trigger at $80.25 to open the play. Our short-term target will be the $84.75-85.00 range but it would not surprise us one bit to see PHM surpass this level. We do not plan to hold this play open past PHM's late July earnings report.

Suggested Options:
We are suggesting the July calls but keep in mind that we might hold the play open past the July expiration so traders might consider the October strikes. 

BUY CALL JUL 75.00 PHM-GO OI=2631 current ask $6.20
BUY CALL JUL 80.00 PHM-GP OI=5091 current ask $2.80
BUY CALL JUL 85.00 PHM-GQ OI=1664 current ask $0.90

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = million 

New Puts

Quality Systems - QSII - cls: 49.39 chg: -3.94 stop: 51.51

Company Description:
Quality Systems, Inc. and its NextGen Healthcare Information Systems subsidiary develop and market computer-based practice management, patient records, and connectivity applications for medical and dental group practices. (source: company press release)

Why We Like It:
The company reported earnings on Monday and beat estimates by four cents but that wasn't enough for investors. The stock saw a "sell the news" reaction on Tuesday and lost 7.3 percent on volume almost seven times the norm. Yet this isn't the first sign of weakness. QSII unexpectedly dropped in early June after peaking near the $60.00 level. Currently QSII is trading precariously close to four and a half month trendline of support. A breakdown here could be bad news and spark a serious round of profit taking. If QSII trades under the $48.00 level it will produce a new P&F chart sell signal. That's why we're suggesting that traders use a trigger under the $48.00 mark to open the play. Our entry point will be $47.75. If we're triggered we will target a decline into the $41.00-40.00 range near the exponential 200-dma. It is worth noting that QSII's simple 100-dma near $46 is a potential obstacle for the bears. 

Suggested Options:
We are going to suggest the July puts but keep in mind there is less than five weeks to expiration. 

BUY PUT JUL 50.00 QCR-SJ OI=106 current ask $3.70
BUY PUT JUL 45.00 QCR-SI OI= 62 current ask $1.60

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/13/05 (confirmed)
Average Daily Volume = 330 thousand 

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Semiconductor Holders - SMH - cls: 34.18 chg: -0.36 stop: 35.05

Company Description:
-- Not available. --

Why We Like It:
It might seem like heresy to the tech bulls but the semiconductor stocks are starting to look tired. The group helped lead the rally through the month of May but now the SMH is butting up against resistance at the top of its eight-month channel. Texas Instruments (TXN) and Intel (INTC) both held their mid-quarter update and gave Wall Street positive news but it wasn't enough to push the sector past resistance. Now the SMH is showing multiple short-term sell signals. We're suggesting that readers use a trigger under the $34.00 level to open the play. We'll target a drop toward the $32.00 level near its 200-dma. We'll officially target a decline into the $32.25-31.75 range. Our entry point will be $33.95. 

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

BUY PUT AUG 35.00 SMH-TG OI=28510 current ask $1.75
BUY PUT AUG 32.50 SMH-TZ OI=56315 current ask $0.70

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 26.3 million 

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