New Plays, Monday, 07/11/2005
New Option Plays
by OI Staff
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Call Options Plays
Put Options Plays
Lowes Corp. - LOW - close: 60.73 chg: 1.21 stop: 56.90
Lowe's is a proud supporter of the American Red Cross, Habitat for Humanity International, United Way of America, and the Home Safety Council, in addition to numerous non-profit organizations and programs that help communities across the country. Lowe's Charitable and Educational Foundation awards more than $3 million annually to diverse organizations across the United States. Lowe's also encourages volunteerism through its Lowe's Heroes program. Lowe's, a FORTUNE 50 company with fiscal year 2004 sales of $36.5 billion, serves more than 11 million customers a week at more than 1,100 stores in 48 states. (source: company press release or website)
Why We Like It:
Hurricane season always means big business for the home improvement chains like LOW and HD. While hurricane Dennis, that hit landfall this past weekend, may have been more bark than bite, the forecast is for a pretty heavy storm season this year. Maybe that's why shares of LOW have powered through resistance at the $60.00 level to hit new all-time highs today. A positive market environment doesn't hurt. Today's move helped confirm the MACD buy signal and we see that volume was almost double the norm, which suggests more strength ahead. Today's breakout also produced a new triple-top breakout buy signal on its P&F chart that now points to a $79 target. We will admit that with the major averages up strong three days in a row that odds of a market pull back are growing. Traders may want to wait before initiating bullish call positions in LOW. A dip to the $60.00 level would be an attractive entry point or a bounce from the $59 level would also work well. However, we are willing to buy calls right here. Our target is the $64.50-65.00 range before LOW reports earnings in mid-August.
We are suggesting the August calls although Octobers are also available.
BUY CALL AUG 55.00 LOW-HK OI= 266 current ask $6.20
BUY CALL AUG 60.00 LOW-HL OI=1639 current ask $2.20
BUY CALL AUG 65.00 LOW-HM OI=2019 current ask $0.40
Picked on July 11 at $ 60.73
Change since picked: 0.00
Earnings Date 08/15/05 (unconfirmed)
Average Daily Volume = 3.4 million
Pediatrix Med Group - PDX - cls: 76.10 chg: 1.47 stop: 72.34
Pediatrix was founded in 1979. Pediatrix physicians and advanced nurse practitioners are reshaping the delivery of maternal-fetal and newborn care, identifying best demonstrated processes and participating in clinical research to enhance patient outcomes and provide high-quality, cost-effective care. Its neonatal physicians provide services at more than 220 NICUs, and through Obstetrix, its perinatal physicians provide services in many markets where Pediatrix's neonatal physicians practice. Combined, Pediatrix and its affiliated professional corporations employ more than 790 physicians in 32 states and Puerto Rico. Pediatrix is also the nation's largest provider of newborn hearing screens and newborn metabolic screening. (source: company press release or website)
Why We Like It:
We normally don't like to play stocks that don't have an average volume of at least 300,000 shares a day or more. However, occasionally we'll make exceptions. PDX is one of those exceptions. The stock broke through major, multi-year resistance in the $70.00-72.50 region back in early May of this year. Since then the stock has been churning sideways in a trading range of $72.35-75.50 maybe $76.00. Today's market rally and news of PDX new expansion in the Tampa-St. Petersburg, Florida area helped push the stock to a new all-time high and a breakout through the top of its trading range. The move also produced a new triple-top breakout buy signal on its P&F chart, which now points to a $92.00 price target. We want to buy calls here and target a move into the $80.00-82.00 range. We do plan to exit before the company's early August earnings report. You may want to wait for confirmation that PDX is bouncing from the $76 level before initiating positions. If the markets dip tomorrow then we'd watch for support near the $75 level.
We are suggesting the August calls since we plan to be out before its August earnings report.
BUY CALL AUG 70.00 PDX-HN OI= 49 current ask $7.20
BUY CALL AUG 75.00 PDX-HO OI=174 current ask $3.40
BUY CALL AUG 80.00 PDX-HP OI=104 current ask $1.20
Picked on July 11 at $ 76.10
Change since picked: 0.00
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 158 thousand