Option Investor
New Plays

New Option Plays

Printer friendly version
Call Options Plays
Put Options Plays

New Calls

Apollo Group - APOL - close: 66.09 chg: +0.69 stop: 64.65

Company Description:
Apollo Group, Inc. has been providing higher education programs to working adults for over 25 years. Apollo Group, Inc., operates through its subsidiaries: The University of Phoenix, Inc., Institute for Professional Development, The College for Financial Planning Institutes Corporation, and Western International University, Inc. The consolidated enrollment in its educational programs makes it the largest private institution of higher education in the United States. It offers educational programs and services at 90 campuses and 150 learning centers in 39 states, Puerto Rico, Calgary, and Vancouver. (source: company press release or website)

Why We Like It:
We are actually bearish on shares of APOL but the stock is very short-term oversold and due for a bounce. The company issued an earnings warning on September 19th that sparked s very sharp, high volume sell-off. The selling pressure has stalled as APOL tries to find support near the $65.00 level. This is purely a speculative play. Given the odds that the market might produce a hurricane relief rally on Monday we think APOL might join in and push higher. We expect to be in and out in less than two weeks and probably a lot quicker. We will not hold over the October 4th earnings report. We'll use a stop loss under Friday's low. Our target is the $69.00-70.00 range.

Suggested Options:
This should be a quick play so we're suggesting the October calls.

BUY CALL OCT 65.00 OAQ-JM OI=259 current ask $2.65

Picked on September 25 at $ 66.09
Change since picked: + 0.00
Earnings Date 10/04/05 (confirmed)
Average Daily Volume = 1.8 million


Broadcom - BRCM - close: 45.05 chg: +0.84 stop: 42.85

Company Description:
Broadcom Corporation is a global leader in wired and wireless broadband communications semiconductors. Our products enable the convergence of high-speed data, high definition video, voice and audio at home, in the office and on the go. Broadcom provides manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices with the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions. These solutions support our core mission: Connecting everything. Broadcom is one of the world's largest fabless semiconductor companies, with annual revenue of more than $2 billion. The company is headquartered in Irvine, Calif., with offices and research facilities in North America, Asia and Europe. (source: company press release or website)

Why We Like It:
BRCM has turned into a momentum play. The stock is ignoring weakness in the NASDAQ and the SOX semiconductor index. Instead shares just keep climbing with rising support near its 40 and 50-dma's (see chart and trendline). Bulls were quick to buy the dip on Thursday at its simple 50-dma and the follow through bounce on Friday suggests this is a new bullish entry point. It is true that our bias is somewhat bearish for the markets over the next couple of weeks but early next week could be bullish as investors heave a sigh of relief that hurricane Rita wasn't worse (besides BRCM has pretty much ignored the markets anyway). We'll put a stop loss at Thursday's low and target a move into the $49.00-50.00 range. We will not hold over the late October earnings report. FYI: if you check the weekly chart you will see that BRCM does have resistance at the $47 level. That is the next hurdle.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 40.00 RCQ-KH OI=10317 current ask $6.20
BUY CALL NOV 42.50 RCQ-KS OI= 6655 current ask $4.30
BUY CALL NOV 45.00 RCQ-KI OI= 8126 current ask $2.70
BUY CALL NOV 47.50 RCQ-KR OI= 2169 current ask $1.60

Picked on September 25 at $ 45.05
Change since picked: + 0.00
Earnings Date 10/21/05 (unconfirmed)
Average Daily Volume = 7.0 million


Cardinal Health - CAH - close: 61.95 chg: +0.63 stop: 59.85

Company Description:
Headquartered in Dublin, Ohio, Cardinal Health, Inc. is a $75 billion, global company serving the health-care industry with a broad portfolio of products and services. It manufactures and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Through this diverse offering, Cardinal Health delivers integrated health-care solutions that help customers reduce their costs, improve efficiency and deliver better care to patients. Ranked No. 16 on the Fortune 500, Cardinal Health employs more than 55,000 people on six continents. (source: company press release or website)

Why We Like It:
CAH is another relative strength play. Shares broke through significant resistance in the $60-61 range a couple of weeks ago, which also coincided with resistance on its P&F chart. Volume was pretty heavy on the rally. We see the recent pull back toward broken resistance (now new support) as an entry point for bullish positions. The P&F chart points to a $78 target. We're going to target a move into the $66.00-67.00 range. We will not hold over the early November earnings report.

Suggested Options:
We are suggesting the November calls.

BUY CALL NOV 60.00 CAH-KL OI= 249 current ask $3.50
BUY CALL NOV 65.00 CAH-KM OI=1059 current ask $1.05

Picked on September 25 at $ 61.95
Change since picked: + 0.00
Earnings Date 11/04/05 (unconfirmed)
Average Daily Volume = 2.0 million

New Puts

None today.

New Play Archives