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BSC  

New Calls

BP Prudhoe Bay - BPT - close: 79.12 chg: +0.14 stop: 73.99

Company Description:
BP is a royalty trust paying dividends (currently about 7%) on production of oil from the northern slope of Alaska (Prudhoe Bay). (source: company press release or website)

Why We Like It:
This is one of the few stocks we'd consider owning. The future (high) price of oil and BPT's high dividend yield make it an attractive investment. We also think it looks alluring as a bullish candidate for calls. The stock has been consolidating sideways between $70 and $80 for the last three months and just now looks poised to breakout through resistance at $80.00. We're going to suggest a trigger to buy calls at $80.11. Our December 15th target will be the $89.50-90.00 range. After we confirm that BPT has broken out we'll adjust our stop loss higher.

Suggested Options:
November calls are available but we are suggesting the December strikes.

BUY CALL DEC 75.00 BPT-LO OI=323 current ask $6.40
BUY CALL DEC 80.00 BPT-LP OI=383 current ask $3.30
BUY CALL DEC 85.00 BPT-LQ OI=264 current ask $1.95
*the $85 strike is the highest one available as of today

Picked on October xx at $ xx.xx <-- see Trigger
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 175 thousand

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Bear Stearns - BSC - close: 109.75 chg: +0.90 stop: 102.49

Company Description:
Founded in 1923, Bear, Stearns & Co. Inc. is a leading investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. With approximately $52.1 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, securities research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers financing, securities lending, clearing and technology solutions to hedge funds, broker-dealers and investment advisors. Headquartered in New York City, the company has approximately 11,500 employees worldwide. (source: company press release or website)

Why We Like It:
This is both a momentum play and a technical play. The XBD broker-dealer index shows the sector charging to new all-time highs. Leading the way are stocks like LEH and BSC. BSC blew past earnings estimates a couple of weeks ago by reporting 30-cents above estimates. Recently the stock has broken through resistance at the $107.50 region and is currently testing what looks like the neckline to a big reverse (bullish) head-and-shoulders pattern. Helping fuel interest in the stock are growing rumors that BSC is a takeover candidate. We suggest the following two entry points. Readers can choose to buy calls on another new high over $110.20. Or readers can look for a pull back toward the $107.50 region, which should now act as support. Our ten-week target is going to be the $119.50-120.00 range. FYI: we are using a wide stop loss because we still have to weather October's volatility, which usually produces a strong market dip before an end of month rally.

Suggested Options:
We are suggesting the January calls since there are no December strikes yet available. Short-term players may want to buy the November strikes.

BUY CALL JAN 105.00 BSC-AA OI=1819 current ask $8.60
BUY CALL JAN 110.00 BSC-AB OI=5231 current ask $5.20
BUY CALL JAN 115.00 BSC-AC OI=2926 current ask $3.20
BUY CALL JAN 120.00 BSC-AD OI=2122 current ask $1.75

Picked on October 02 at $109.75
Change since picked: + 0.00
Earnings Date 09/15/05 (confirmed)
Average Daily Volume = 1.2 million
 

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