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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
BTU CECO LEA
INTC    
SHLD    

New Calls

Peabody Energy - BTU - close: 81.36 chg: -1.24 stop: 76.99

Company Description:
Peabody Energy is the world's largest private-sector coal company, with 2004 sales of 227 million tons of coal and $3.6 billion in revenues. Its coal products fuel more than 10 percent of all U.S. electricity and 3 percent of worldwide electricity. (source: company press release or website)

Why We Like It:
Many of the energy stocks took a beating on Friday but we see the pull back in coal-producer BTU as a potential entry point. The stock didn't see the same sharp sell-off that many of the oil companies did. The recent rally on Wednesday looks like a breakout from its month-long consolidation pattern. Technically BTU's MACD indicator is in a new buy signal and its Point & Figure chart points to a $105 target. We would use the bounce from $80.00 on Friday as a new bullish entry point. If you're feeling cautious look for signs of confirmation (like a move over $82) before going long any calls. Or tighten your stop. Our seven-week target is the $89.50-90.00 range.

Suggested Options:
We are suggesting the December calls.

BUY CALL DEC 80.00 BTU-LP open interest= 6404 current ask $6.30
BUY CALL DEC 85.00 BTU-LQ open interest= 1369 current ask $3.90

Picked on November 06 at $ 81.36
Change since picked: + 0.00
Earnings Date 10/18/05 (confirmed)
Average Daily Volume = 2.6 million

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Intel Corp. - INTC - close: 23.99 chg: +0.10 stop: 22.75

Company Description:
Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. (source: company press release or website)

Why We Like It:
Intel has broken out from its three-month bearish channel. This looks like an entry point for call positions but we need to play January strikes since the stock doesn't move very quickly. Readers have a choice to look for another dip back toward $23.50 as their entry point or wait for a move over short-term resistance at $24.00 or its 50-dma (24.21). Our target is the $26.00-26.50 range. The P&F chart points to a $41 target.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 22.50 NQ-AX open interest= 69887 current ask $2.15
BUY CALL JAN 25.00 INQ-AE open interest=167608 current ask $0.70

Picked on November 06 at $ 23.99
Change since picked: + 0.00
Earnings Date 10/18/05 (confirmed)
Average Daily Volume = 51.6 million

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Sears Holding - SHLD - cls: 124.00 chg: +1.19 stop: 121.99

Company Description:
Sears, Roebuck and Co., a wholly owned subsidiary of Sears Holdings Corporation, is a leading broadline retailer providing merchandise and related services. Sears, Roebuck offers its wide range of home merchandise, apparel and automotive products and services through more than 2,400 Sears-branded and affiliated stores in the United States and Canada, which includes approximately 870 full-line and 1,100 specialty stores in the U.S. Sears, Roebuck also offers a variety of merchandise and services through sears.com, landsend.com, and specialty catalogs. Sears, Roebuck offers consumers leading proprietary brands including Kenmore, Craftsman, DieHard and Lands' End -- among the most trusted and preferred brands in the U.S. The company is the nation's largest provider of home services, with more than 14 million service calls made annually. (source: company press release or website)

Why We Like It:
Fears that high gasoline prices and high heating bills will dampen America's Christmas spirit and holiday shopping are easing. While SHLD has not enjoyed the same sort of strength the rest of the retail sector has had the past week or so shares of SHLD do appear to have built a new base or bottom with its $114-128 trading range. We are going to suggest a trigger at $128.51 to open call positions. Until then we'll sit on the sidelines and watch. More conservative traders may want to wait for a move over $130.00. If triggered we'll target a move into the $139.50-140.00 range. FYI: the Point & Figure chart points to a $142 target. We would consider this a higher-risk, aggressive play since the stock can be pretty volatile. We do not plan on holding past the December 7th earnings report.

Suggested Options:
We are suggesting the December calls. Our trigger to go long is $128.51.

BUY CALL DEC 125.00 KTQ-LE open interest=3515 current ask $8.00
BUY CALL DEC 130.00 KTQ-LY open interest=2886 current ask $6.00
BUY CALL DEC 135.00 KTQ-LX open interest=1871 current ask $4.30

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 12/07/05 (unconfirmed)
Average Daily Volume = 3.2 million
 

New Puts

Career Educ. - CECO - cls: 33.80 chg: -0.34 stop: 35.01

Company Description:
Career Education Corporation (www.careered.com) is one of the largest providers of private, for-profit, post secondary education and has a presence in both on-campus and online education. CEC's Colleges, Schools and Universities segment operates more than 80 campuses in the U.S., Canada, France, the United Kingdom, and the United Arab Emirates and offers doctoral degree, master's degree, bachelor's degree, associate degree, and diploma programs in the career-oriented disciplines of business studies, visual communication and design technologies, health education, information technology, and culinary arts. The Online Education Group operates American InterContinental University Online and Colorado Technical University Online and offers a variety of degrees in information technology, business, visual communication, and education. CEC's total student population as of October 31, 2005, was approximately 107,300 students. (source: company press release or website)

Why We Like It:
Investors were not happy with the company's latest earnings report and guidance. Shares gapped down following the report and at least one analyst firm downgraded the stock. Technically CECO doesn't look very healthy. The recent spike higher failed under its simple 100-dma. The MACD is nearing a new sell signal and weekly indicators are also turning south. The Point & Figure chart points to a $25 target. We are going to suggest a trigger to buy puts at $32.95, which is under support at the $33.00 level. If we're triggered we'll target a move into the $30.00-29.00 range although more aggressive traders may want to aim a lower, longer-range target.

Suggested Options:
We are suggesting the December puts. Our trigger to buy puts is at $32.95.

BUY PUT DEC 35.00 CUY-XG open interest=1130 current ask $2.70
BUY PUT DEC 30.00 CUY-XF open interest= 326 current ask $0.75

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/02/05 (confirmed)
Average Daily Volume = 1.3 million
 

New Strangles

Lear Corp - LEA - close: 30.24 chg: +0.01 stop: n/a

Company Description:
Lear Corporation is one of the world's largest suppliers of automotive interior systems and components. Lear provides complete seat systems, electronic products and electrical distribution systems and other interior products. With annual net sales of $17 billion in 2004, Lear ranks #127 among the Fortune 500. The Company's world-class products are designed, engineered and manufactured by a diverse team of more than 110,000 employees in 34 countries. Lear's headquarters are in Southfield, Michigan. (source: company press release or website)

Why We Like It:
Shares of LEA have been consolidating into a neutral pattern of lower highs and higher lows. The tighter the stock coils the closer it gets to a breakout and some say the bigger the move. Even LEA's earnings report on October 26th failed to push the stock out of this narrowing consolidation. We would normally expect the prevailing trend, which is bearish, to dictate direction when LEA does breakout but the stock is throwing off conflicting technical signals. One signal that seems pretty clear is the sell signal in the P&F chart, which points to an $11 target. We're going to try and capture any future move with a strangle. We'll use a $30.50-29.50 entry window.

Suggested Options:
We are suggesting January options for this strangle. A straddle at the $30.00 mark using the same month would cost about $5.00. We can get a strangle position for $1.60. Try and keep your investment under $1.75. We will target a rive to $3.20 or more.

BUY CALL JAN 35.00 LEA-AG open interest=1142 current ask $0.70
-and-
BUY PUT JAN 25.00 LEA-ME open interest=3375 current ask $0.90

Picked on November 06 at $ 30.24
Change since picked: + 0.00
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million
 

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