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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
APA None None
HYDL    
TOT    
VLO    

New Calls

Apache - APA - close: 70.98 change: +1.71 stop: 66.99

Company Description:
Apache Corporation is a large oil and gas independent with core operations in the United States, Canada, Australia, the United Kingdom North Sea and Egypt. (source: company press release or website)

Why We Like It:
Now that crude oil has broken out over resistance at the $60.00/barrel mark and its simple 50-dma we're going to increase our exposure to the energy sector. APA looks like a tempting candidate with its six-week trend of higher lows and its recent breakout over round-number resistance at the $70.00 level. The P&F chart for APA is bullish and points to an $83 target. We are listing multiple candidates in the energy sector tonight and we certainly don't expect you to play them all. Look them over and find the right one that fits your style. We're going to suggest call positions in APA over the $70 level. Our end of January target is the $76-77 range, near its September highs.

Suggested Options:
You can choose the January or April calls. We do not plan on holding over the late January earnings report.

BUY CALL JAN 65 APA-AM open interest= 8681 current ask $7.30
BUY CALL JAN 70 APA-AN open interest=13776 current ask $3.80
BUY CALL JAN 75 APA-AO open interest= 8832 current ask $1.60

Picked on December 08 at $ 70.98
Change since picked: + 0.00
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Hydril - HYDL - close: 69.44 change: +2.15 stop: 65.95

Company Description:
Hydril, headquartered in Houston, Texas, is engaged worldwide in engineering, manufacturing and marketing premium connections and pressure control products used for oil and gas drilling and production. (source: company press release or website)

Why We Like It:
HYDL is part of the oil services sector. A quick look at the OSX oil services index and you'll see that the group is hitting new all-time highs. HYDL looks tempting because it's been consolidating under resistance in the $70.00-70.85 range for the last few months. The pattern actually looks like an inverse or bullish head-and-shoulders pattern with the neckline near $70.00. If the pattern holds true then it points to an $85 target. Coincidentally the P&F chart for HYDL points to an $88 target. We don't want to initiate longs with HYDL under resistance. Therefore we're suggesting a trigger at $71.01. If triggered we'll target a run into the $78-80 range by its January earnings report.

Suggested Options:
Traders can choose the January or March calls. March options have more open interest but remember that we don't plan on holding over the late January earnings report.

BUY CALL MAR 65 HBQ-CM open interest=324 current ask $9.00
BUY CALL MAR 70 HBQ-CN open interest=208 current ask $6.10
BUY CALL MAR 75 HBQ-CO open interest=170 current ask $3.80

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/23/06 (unconfirmed)
Average Daily Volume = 263 thousand

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Total S.A. - TOT - close: 129.42 change: +2.60 stop: 126.49

Company Description:
Total is a leading multinational energy company with 111,401 employees and operations in more than 130 countries. Together with its subsidiaries and affiliates, Total is the fourth largest publicly-traded oil and gas integrated company in the world**. Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to the gas downstream (including power generation), transportation, refining, petroleum product marketing, and international crude oil and product trading. Total is also a world-class chemicals manufacturer. (source: company press release or website)

Why We Like It:
TOT has been consolidating between its rising 200-dma and the $130 region for the past two months. Now with crude oil breaking out we believe TOT is poised to breakout over resistance at the $130 level. We'll suggest a trigger to buy calls at $130.25. If triggered we'll target a rise into the $136-137 range before its February earnings report. The P&F chart for TOT points to a $152 target.

Suggested Options:
We are suggesting the February calls.

BUY CALL FEB 125 TOT-BE open interest=413 current ask $8.20
BUY CALL FEB 130 TOT-BF open interest=172 current ask $5.30
BUY CALL FEB 135 TOT-BG open interest=213 current ask $3.20

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume = 936 thousand

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Valero Energy - VLO - close: 106.56 chg: +2.58 stop: 99.49

Company Description:
Valero Energy Corporation is a Fortune 500 company based in San Antonio, with approximately 22,000 employees and expected annual revenue of more than $75 billion. The company owns and operates 18 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America. Valero is also one of the nation's largest retail operators with more than 4,700 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names including Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon. (source: company press release or website)

Why We Like It:
Refining stocks have been one of the best performing groups all year and they're not showing any signs of stopping. We like VLO because today's 2.4% gain appears to be a breakout over its two-month trendline of resistance produced by its lower highs. This is also a breakout from a two-month consolidation pattern and its weekly technical oscillators are looking bullish again. The P&F chart for VLO points to a $127 target. We are going to suggest call positions with VLO above $102.50. Our target is the September highs at $117.00. Please note that VLO is due to split 2-for-1 on December 16th. That means your option positions will double in number while halving in value. Our post-split target will be $58.50. Our post-split stop loss will be $49.74. FYI: VLO is also a current strangle play in the strangle section.

Suggested Options:
We are suggesting the March calls because we want to hold VLO right up to its end of January earnings report.

BUY CALL MAR 100 VLO-CT open interest=8133 current ask $13.70
BUY CALL MAR 105 VLO-CA open interest=6060 current ask $10.90
BUY CALL MAR 110 VLO-CB open interest=5117 current ask $ 8.50
BUY CALL MAR 115 VLO-CC open interest=11204 current ask $6.60

Picked on December 08 at $106.56
Change since picked: + 0.00
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 9.8 million
 

New Puts

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New Strangles

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