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Call Options Plays
Put Options Plays
None EMN
  KBH
  MSTR

New Calls

None today.
 

New Puts

Eastman Chemical - EMN - close: 54.15 chg: -1.00 stop: 56.01

Company Description:
Eastman manufactures and markets chemicals, fibers and plastics worldwide. It provides key differentiated coatings, adhesives and specialty plastics products; is the world's largest producer of PET polymers for packaging; and is a major supplier of cellulose acetate fibers. Eastman is leveraging its heritage of innovation and strength in polyester, acetyl and organic chemistry technologies to drive growth and meet increasing demand in four select markets: building and construction, packaging, health, and electronics. Founded in 1920 and headquartered in Kingsport, Tenn., Eastman is a FORTUNE 500 company with 2004 sales of $6.6 billion and approximately 12,000 employees. (source: company press release or website)

Why We Like It:
EMN has been slowly consolidating sideways the last three months but with a trend of lower highs. Technically all of its indicators point lower and the share price recently broke down below technical support at both its simple and exponential 200-dma's. We also see that its P&F chart is bearish and points to a $49.00 target but this could move lower as a decline under the $54.00 mark would produce a new double-bottom breakdown sell signal. We are going to suggest a trigger under support at the $54.00 level. Our suggested entry point to buy puts will be $53.90. We'll start with a stop loss at $56.01. Our target will be the $50.50-50.00 range.

Suggested Options:
We are going to suggest the September puts.

BUY PUT SEP 55.00 EMN-UK OI=680 current ask $3.20
BUY PUT SEP 50.00 EMN-UJ OI=668 current ask $0.45

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 07/28/05 (confirmed)
Average Daily Volume = 872 thousand

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KB Home - KBH - close: 78.36 chg: -0.87 stop: 82.01

Company Description:
Building homes for nearly half a century, KB Home is one of America's premier homebuilders with domestic operating divisions in some of the fastest-growing regions and states: West Coast-California; Southwest-Arizona, Nevada and New Mexico; Central-Colorado, Illinois, Indiana and Texas; and Southeast-Florida, Georgia, North Carolina and South Carolina. Kaufman & Broad S.A., the Company's publicly-traded French subsidiary, is one of the largest homebuilders in France. In fiscal 2004, the Company delivered homes to 31,646 families in the United States and France. (source: company press release or website)

Why We Like It:
Here we go again. The rally in the homebuilders has stalled. While we remain bullish on the group we are going to try and scalp a few points from KBH as it consolidates lower. The stock has broken its three-month trend of support and all of its daily technical indicators have turned south. This is an aggressive, high-risk play so treat it with caution. Traders may want to consider waiting for a bit before entering positions just to see if KBH bounces back toward the $80.00 level again before moving lower. However, it is worth noting that the DJUSHB home construction index has also broken its three-month trendline of support, suggesting a short-term change in direction. We are going to target the $71.50-70.00 range.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 80.00 KBH-UP OI= 981 current ask $4.60
BUY PUT SEP 75.00 KBH-UO OI=1268 current ask $2.35
BUY PUT SEP 70.00 KBH-UN OI= 383 current ask $1.15

Picked on August 04 at $ 78.36
Change since picked: 0.00
Earnings Date 09/15/05 (unconfirmed)
Average Daily Volume = 2.4 million

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MicroStrategy - MSTR - close: 75.37 chg: -1.08 stop: 77.51

Company Description:
Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. Companies choose MicroStrategy for its advanced technical capabilities, sophisticated analytics, and superior data and user scalability. (source: company press release or website)

Why We Like It:
MSTR is another candidate for aggressive players. The stock is prone to being volatile but we suspect the next move will be down. The stock got a big pop higher on July 29th after its better than expected earnings report. That rally stalled at the $80.00 level, which was resistance back in January 2005. After a week of trying to breakout over the $80 level shares are now testing the top of its gap near $75, which is acting as support. Given that the broader markets still look somewhat extended and overbought from their July lows and the fact that we're moving into the slow August-September time period for stocks we believe that odds are good MSTR will fill its gap before moving higher. We are suggesting a trigger at $74.95 to open the play. Our target will be the $70.50-70.00 range. We're not that happy with the stop loss because MSTR can be very volatile but we're not excited about putting a stop at $80.01, which is current resistance. Our readers should adjust the stop to best suit their needs.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 75.00 EOU-UO OI=271 current ask $4.70
BUY PUT SEP 70.00 EOU-UN OI=161 current ask $2.70

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 07/28/05 (confirmed)
Average Daily Volume = 570 thousand
 

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