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TSCO NFLX None

New Calls

Tractor Supply - TSCO - cls: 52.13 chg: +1.38 stop: 49.95

Company Description:
Tractor Supply Company operates 562 stores in 34 states, focused on supplying the lifestyle needs of recreational farmers and ranchers. The Company also serves the maintenance needs of those who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located in towns outlying major metropolitan markets and in rural communities. The Company offers the following comprehensive selection of merchandise: (1) equine, animal and pet products, including everything necessary for their health, care, growth and containment; (2) maintenance products for agricultural and rural use; (3) hardware and tool products; (4) seasonal products, including lawn and garden power equipment; (5) truck, trailer and towing products; and (6) work clothing for the entire family. (source: company press release or website)

Why We Like It:
TSCO is a retailer that tends to march to the beat of its own drum. The company presented at an investor conference today and any news from the conference may have attributed to TSCO's relative strength in today's market. Current the stock has been consolidating sideways under resistance near $52.50. We're going to suggest a trigger to buy calls at $52.75. This way we can catch the breakout but hope to avoid any false starts. More conservative traders may want to wait for a move over $53.00. If TSCO trades over the $53 level again it should produce a new buy signal on its Point & Figure chart. Our six-week target is the $57-58 range.

Suggested Options:
We are suggesting the January calls. We do not plan on holding over TSCO's January earnings report.

BUY CALL JAN 50 QTF-AJ open interest=1302 current ask $4.50
BUY CALL JAN 55 QTF-AK open interest= 280 current ask $2.15

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 428 thousand
 

New Puts

Netflix - NFLX - close: 27.00 chg: -0.58 stop: 28.55

Company Description:
Netflix is the world's largest online movie rental service, providing more than three million subscribers access to over 50,000 DVD titles. Under the company's most popular program, for $17.99 a month, Netflix subscribers rent as many DVDs as they want and keep them as long as they want, with three movies out at a time. There are no due dates, no late fees and no shipping fees. DVDs are delivered for free by the USPS from regional shipping centers located throughout the United States. Netflix can reach more than 90 percent of its subscribers with generally one business-day delivery. Netflix offers personalized movie recommendations to its members and has more than 1 billion movie ratings. Netflix also allows members to share and recommend movies to one another through its Friends(TM) feature. (source: company press release or website)

Why We Like It:
Heavily shorted NFLX is once again testing the bottom of its rising channel. One could argue a play in either direction for NFLX. The old market maxim is "the trend if your friend". Well currently the trend in NFLX is up. A bounce from the bottom of its rising channel here could be a new bullish entry point. However, we suspect that NFLX could be poised for another consolidation lower. The weekly MACD is very close to a new sell signal. Meanwhile yesterday the stock was downgraded. We're going to suggest a trigger at $25.99 to open the play. Until NFLX trades at or below our trigger we'll sit on the sidelines. If we are triggered we'll target a drop to the $22.50 level. Obviously the biggest risk here is a short squeeze, which is certainly a possibility of the Santa Claus rally makes an appearance this year.

Suggested Options:
We're going to suggest the January puts. We do not plan on holding over NFLX's January earnings report.

BUY PUT JAN 27.50 QNQ-MY open interest=3178 current ask $2.75
BUY PUT JAN 25.00 QNQ-ME open interest=3092 current ask $1.55

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 1.4 million
 

New Strangles

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