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Strangle Options Plays
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    SPC

New Calls

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New Puts

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New Strangles

Four Seasons - FS - close: 55.37 chg: -0.56 stop: n/a

Company Description:
Dedicated to continuous innovation and the highest standards of hospitality, Four Seasons invented luxury for the modern traveler. From elegant surroundings of the finest quality, to caring, highly personalized 24-hour service, Four Seasons embodies a true home away from home for those who know and appreciate the best. The deeply instilled Four Seasons culture is personified in its employees - people who share a single focus and are inspired to offer great service. Founded in 1960, Four Seasons has followed a targeted course of expansion, opening hotels in major city centers and desirable resort destinations around the world. Currently with 67 hotels in 29 countries, and more than 20 properties under development, Four Seasons will continue to lead luxury hospitality with innovative enhancements, making business travel easier and leisure travel more rewarding. (source: company press release or website)

Why We Like It:
Investors didn't react very well to the company's last earnings report so we'd like to try and capture any post-earnings volatility this time with a strangle play. FS is due to report earnings on Thursday morning (Nov. 10th) before the market open. Estimates are for the company to earn 37 cents per share. We are going to suggest an entry window of $55.50-54.50 and the closer to the $55.00 mark the better. Tomorrow is our only day to try and initiate positions ahead of earnings.

Suggested Options:
We are going to suggest the January strikes although traders could also use the December strikes. This is a strangle so traders should buy an out of the money call and an out of the money put. Our time frame is about eight weeks. At current prices this strangle should cost about $2.60 Try not to pay more than $2.75. We'll target a rise to $5.00.

BUY CALL JAN 60 FS-AL open interest= 49 current ask $1.45
-and-
BUY PUT JAN 50 FS-MJ open interest=330 current ask $1.15

Picked on November 08 at $ 55.37
Change since picked: + 0.00
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand


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Spectrum Brands - SPC - close: 20.63 change: +0.20 stop: n/a

Company Description:
Spectrum Brands (formerly Rayovac Corporation) is a global consumer products company and a leading supplier of batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insecticides, personal care products and portable lighting. Spectrum Brands' products are sold by the world's top 25 retailers and are available in more than one million stores in 120 countries around the world. Headquartered in Atlanta, Georgia, Spectrum Brands generates approximately $2.7 billion in annualized revenues and has approximately 10,000 employees worldwide. (source: company press release or website)

Why We Like It:
SPC is another stock that has been consolidating (mostly) sideways as investors wait for the company's earnings report. The company is due to report on Thursday morning (Nov. 10th) before the market's open. Estimates are for earnings of 13 cents a share. There was a big reaction to the company's last earnings report so we're looking for another dose of volatility to make our strangle play effective. We are suggesting an entry window of $20.00-21.00 and we only have one day to launch positions ahead of earnings.

Suggested Options:
We are going to suggest the December options for this strangle play. At current prices this strangle should cost about $1.25. Try not to pay more than $1.40. We'll aim for a rise to $2.50.

BUY CALL DEC 22.50 SPC-LX open interest=134 current ask $0.80
-and-
BUY PUT DEC 17.50 SPC-XW open interest=335 current ask $0.45

Picked on November 08 at $ 20.63
Change since picked: + 0.00
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand
 

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