Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
KBH None
PCH  

New Calls

KB Home - KBH - close: 75.89 chg: +1.53 stop: 71.50

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. KB Home also offers complete mortgage services through Countrywide KB Home Loans, a joint venture with Countrywide Financial Corporation. (source: company press release or website)

Why We Like It:
We are going to increase our exposure to the homebuilders by adding KBH to the list. The stock has produced a convincing bounce from support near the $70.00 level and its rising 100-dma. Today's gain pushed the stock above round-number resistance at the $75.00 mark, which has held the stock back for the last month. Technicals are positive and its P&F chart points to an $86 price target. We also like KBH because the company does not appear to have any heavy investments or building operations in the hurricane damaged states of Alabama, Louisiana, or Mississippi. Plus, KBH is due to report earnings on the morning of September 22nd so there is an opportunity for an old-fashioned earnings run up. We're going to suggest bullish positions here over $75.00 but a bounce from $74.00 would also work well. More conservative traders may want to wait for KBH to breakout over technical resistance at its simple 50-dma still at 76.63 but keep in mind that our short-term target is the $80.00-82.00 range.

Suggested Options:
We are suggesting the October calls even through we plan to exit before its earnings report on September 22nd.

BUY CALL OCT 70.00 KBH-JN OI=1680 current ask $8.20
BUY CALL OCT 75.00 KBH-JO OI=2281 current ask $4.90
BUY CALL OCT 80.00 KBH-JP OI-4023 current ask $2.45

Picked on September 07 at $ 75.89
Change since picked: + 0.00
Earnings Date 09/22/05 (confirmed)
Average Daily Volume = 2.5 million

---

Potlatch - PCH - close: 54.45 chg: +0.01 stop: 51.99

Company Description:
Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota. (source: company press release or website)

Why We Like It:
This is a technical play following PCH's rebound from its 50% Fibonacci retracement level. The rebound just happened to coincide with a test of technical support near the 100-dma and its previous highs (resistance), which has now become new support near 51.50. Technicals have turned positive and its MACD indicator just produced a new buy signal about two days ago. We are going to suggest bullish positions here above the $54.00 level. More conservative traders may want to strongly consider waiting for PCH to breakout over the $55.00 mark and its simple 50-dma (also at $55.0). Our six-week target is the $58.50-59.00 range.

Suggested Options:
We are suggesting the November calls because they have more open interest than the Octobers.

BUY CALL NOV 50.00 PCH-KJ OI= 130 current ask $5.70
BUY CALL NOV 55.00 PCH-KK OI= 72 current ask $2.45
BUY CALL NOV 60.00 PCH-KL OI=1367 current ask $0.70

Picked on September 07 at $ 54.45
Change since picked: + 0.00
Earnings Date 10/17/05 (unconfirmed)
Average Daily Volume = 229 thousand
 

New Puts

None today.
 

New Play Archives