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Call Options Plays
Put Options Plays
AET None
CTX  
MDC  
NE  

New Calls

Aetna - AET - close: 79.67 change: +0.63 stop: 76.99

Company Description:
As one of the nation's leading providers of health care, dental, pharmacy, group life, disability and long-term care benefits, Aetna puts information and helpful resources to work for its approximately 14.435 million medical members, 12.976 million dental members, 9.117 million pharmacy members and 13.662 million group insurance members to help them make better informed decisions about their health care and protect their finances against health-related risks. Aetna provides easy access to cost-effective health care through a nationwide network of more than 684,000 health care professionals, including over 405,000 primary care and specialist doctors and 4,135 hospitals. (source: company press release or website)

Why We Like It:
Insurance stock AET has managed to weather the August weakness relatively well. The stock may have broken through support at $80.00 and its simple 100-dma but there has been no follow through to the downside. Instead the stock has been consolidating sideways all month. After producing a double-bottom pattern near $74.50 in late July and early August shares of AET narrowed its consolidation to $76.50-80.00. Now AET is breaking out over technical resistance at its simple 50-dma. Short-term oscillators are positive and we're seeing similar improvements on some of its weekly indicators. If AET can breakout over the $80.00 level it will produce a new buy signal on its Point & Figure chart. We want to suggest a trigger to buy puts at $80.25. Our target will be the $84.75-85.25 range. FYI: we're also bullish on Cigna (CI) and readers might want to watch that stock for a breakout over the $116.00 level.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 75.00 AET-JO OI= 652 current ask $6.30
BUY CALL OCT 80.00 AET-JP OI=2158 current ask $3.10
BUY CALL OCT 85.00 AET-JQ OI=1008 current ask $1.15

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/27/05 (unconfirmed)
Average Daily Volume = 2.0 million

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Centex - CTX - close: 67.75 chg: +2.37 stop: 63.99

Company Description:
Dallas, Texas-based Centex, through its subsidiaries, is one of the nation's premier companies in homebuilding, financial services, home services and commercial contracting. (source: company press release or website)

Why We Like It:
We think homebuilders are due for a bounce and it looks like that bounce has begun. The sector rebounded sharply today as bond yields tumbled for their second day in a row. Lower yields also drag down mortgage rates, which are a boon for the builders keeping home prices more affordable. The builders could also be getting a boost from the perceived benefit of the massive rebuilding that will take place across Louisiana and Mississippi following hurricane Katrina's damage. CTX doesn't just build homes but also has a construction services unit that builders schools, hospitals, office buildings, hotels, etc. We also like how shares of CTX are rebounding from close to technical support at its simple and exponential 200-dma. Today's rally pushed the stock through technical resistance at the 10-dma and the 100-dma, which also broke through its five-week trendline of resistance. However, just to be sure we want to use a trigger to confirm the breakout. We're suggesting a trigger at $68.25 to open the play. If triggered we'll target a move into the $73.00-75.00 range. We do anticipate some resistance near $70.00 so don't be surprised to see a test of the $70 level and a dip back toward $68.00 before it continues higher.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 65.00 CTX-JM OI=2117 current ask $5.30
BUY CALL OCT 70.00 CTX-JN OI=5907 current ask $2.45
BUY CALL OCT 75.00 CTX-JO OI=2001 current ask $0.90

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/25/05 (unconfirmed)
Average Daily Volume = 1.6 million

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MDC Holdings - MDC - close: 76.38 change: +2.23 stop: 71.99

Company Description:
MDC, whose subsidiaries build homes under the name "Richmond American Homes," is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's homebuyers, through its wholly owned subsidiary HomeAmerican Mortgage Corporation. MDC is a major regional homebuilder with a significant presence in some of the country's best housing markets. The Company is the largest homebuilder in Colorado; among the top five homebuilders in Northern Virginia, suburban Maryland, Jacksonville, Phoenix, Tucson, Las Vegas and Salt Lake City; and among the top ten homebuilders in Northern California and Southern California. MDC also has established operating divisions in Dallas/Fort Worth, Houston, West Florida, Philadelphia/Delaware Valley and Chicago. (source: company press release or website)

Why We Like It:
MCD is another play on the rebound in the homebuilders and any potential rebuilding from hurricane Katrina. We like the rebound from technical support at its simple and exponential 200-dma. Volume on today's rally was very strong but to confirm the move we want to use a trigger at $77.01. We do expect some resistance at $80.00 but will target a move into the $83.00-85.00 range.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 75.00 MDC-JO OI= 17 current ask $5.20
BUY CALL OCT 80.00 MDC-JP OI= 72 current ask $2.75
BUY CALL OCT 85.00 MDC-JQ OI= 97 current ask $1.30

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/13/05 (unconfirmed)
Average Daily Volume = 489 thousand

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Noble Corp - NE - close: 71.30 change: +2.54 stop: 67.25

Company Description:
Noble Corporation is a leading provider of diversified services for the oil and gas industry. Contract drilling services are performed with the Company's fleet of 60 mobile offshore drilling units located in key markets worldwide. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 41 jackups and three submersibles. Approximately 80 percent of the fleet is currently deployed in international markets, principally including the Middle East, Mexico, the North Sea, Brazil, West Africa, India, and the Mediterranean Sea. The Company provides technologically advanced drilling-related products and services designed to create value for our customers. The Company also provides labor contract drilling services, well site and project management services, and engineering services. (source: company press release or website)

Why We Like It:
Oil services companies are going to be in strong demand as our nation's energy sector tries to rebuild the damage caused by hurricane Katrina. This is pushing oil service stocks to new highs and shares of NE touched a new all-time high today near $72.00. Volume was very strong and NE looks poised to breakout from its recent $67-72 trading range over the past five weeks. The MACD on the daily chart is nearing a new buy signal and short-term oscillators are already bullish. The P&F chart points to a $94 target and just produced a new double-top breakout. We are suggesting bullish positions here above $70.00 but more conservative or momentum type traders can wait for a new high over $72.00. Our target is the $78.00-80.00 range.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 70.00 NE-JN OI=267 current ask $4.30
BUY CALL OCT 75.00 NE-JO OI= 73 current ask $1.95

Picked on August 31 at $ 71.30
Change since picked: + 0.00
Earnings Date 10/17/05 (unconfirmed)
Average Daily Volume = 1.8 million
 

New Puts

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