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Lowes Cos. - LOW - close: 60.33 chg: -0.17 stop: n/a

Company Description:
With fiscal year 2004 sales of $36.5 billion, Lowe's Companies, Inc. is a FORTUNE 50 company that serves approximately 11 million customers a week at more than 1,150 home improvement stores in 49 states. Based in Mooresville, N.C., the 59-year old company is the second-largest home improvement retailer in the world. (source: company press release or website)

Why We Like It:
Investors will be curious to see what LOW has to say with its earnings report next week. One might normally assume that the recent TOL homebuilder warning might be bad news for LOW. Yet rival HomeDepot (HD) just got upgraded today. LOW is expected to report earnings on Monday, November 14th before the market's opening bell. That gives us two days to launch a strangle position and try to catch any earnings-inspired volatility. We are going to suggest a $60.50-59.50 entry window.

Suggested Options:
We are going to suggest December options for this strangle although traders could certainly use Januarys if they're willing to pay more. As a strangle traders need to buy an out of the money call and an out of the money put. At current prices this strangle should cost about $1.20. Try and keep your cost under $1.35. We are going to aim for a rise to $2.40 or higher.

BUY CALL DEC 65 LOW-LM open interest=2372 current ask $0.65
-and-
BUY PUT DEC 55 LOW-XK open interest=3496 current ask $0.55

Picked on November 09 at $ 60.33
Change since picked: + 0.00
Earnings Date 11/14/05 (confirmed)
Average Daily Volume = 4.3 million
 

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