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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
GRMN None None
RYL    
STR    

New Calls

Garmin ltd - GRMN - close: 63.54 change: +2.70 stop: 57.90

Company Description:
Garmin International Inc. is a member of the Garmin Ltd. group of companies, which designs and manufactures navigation, communication and information devices -- most of which are enabled by GPS technology. Garmin is a leader in the general aviation and consumer GPS markets and its products serve aviation, marine, outdoor recreation, automotive, wireless and OEM applications. Garmin Ltd. is incorporated in the Cayman Islands, and its principal subsidiaries are located in the United States, Taiwan and the United Kingdom. (source: company press release or website)

Why We Like It:
GRMN appears to be one of the new growth/momentum stocks that trades like to follow. After a very strong summer and early fall the stock retreated back to the $55 level. Now after consolidating sideways for the last several weeks shares of GRMN are breaking out. Today's rally was fueled by volume almost double the daily average, which is a bullish development. Today's rally is also a breakout above its two-month trendline resistance consisting of its lower highs. Today's move also confirms yesterday's breakout over the simple 50-dma. The Point & Figure chart has turned positive and points to a $82 target. We are willing to buy calls here but more patient trades might want to wait for a better entry point on a dip back toward the $62.00 or even $61.00 level before initiating positions. Our mid-January target is the $69.00-70.00 range. We do not want to hold over the January earnings report.

Suggested Options:
We are suggesting the January calls. April calls would work too but we don't want to hold over the January earnings report.

BUY CALL JAN 60 GQR-AL open interest=2653 current ask $5.30
BUY CALL JAN 65 GQR-AM open interest=2229 current ask $2.15

Picked on December 13 at $ 63.54
Change since picked: + 0.00
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Ryland Group - RYL - close: 73.96 change: +1.94 stop: 69.90

Company Description:
With headquarters in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. The company currently operates in 27 markets across the country and has built more than 245,000 homes and financed more than 205,000 mortgages since its founding in 1967. (source: company press release or website)

Why We Like It:
Homebuilders are on the rebound despite some negative forecasts and concerns over a slow down in 2006. Today's FOMC decision on interest rates and expectations that the Fed is nearing the end of its rate hike cycle is considered good news for the industry. The DJUSHB home construction index was one of the best performers today and the sector index looks poised to breakout from its current consolidation pattern. The same holds true for RYL. The stock added 2.6% on decent volume and technical indicators are turning positive. The P&F chart for RYL suggests an $89 target. We are suggesting calls here with the stock over $72.50. There is some resistance near $77 but we suspect the stock can trade into the $79.50-80.00 range (our target) before its earnings report in January.

Suggested Options:
We are suggesting the January calls since we plan to exit ahead of the January earnings report.

BUY CALL JAN 70 RYL-AN open interest=1262 current ask $6.20
BUY CALL JAN 75 RYL-AO open interest=1715 current ask $3.10

Picked on December 13 at $ 73.96
Change since picked: + 0.00
Earnings Date 01/17/06 (unconfirmed)
Average Daily Volume = 1.3 million

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Questar Corp - STR - close: 80.85 chg: +1.38 stop: 77.45

Company Description:
Questar Corp. is a natural gas-focused energy company with an enterprise value of approximately $8 billion. Questar finds, develops, produces, gathers, processes, transports, stores and distributes natural gas, primarily in the Rocky Mountain region of the United States. (source: company press release or website)

Why We Like It:
We are adding another natural gas play to the call list. Natural gas futures hit new all-time highs above $15.00 today as investors worry that a cold winter will increase demand too much and produce gas shortages. This would send natural gas prices even higher with some predicting highs in the $20 range. STR is in an advantageous position because most of its natural gas production is in the Rocky Mountain region so the company doesn't have any exposure to the troubles located in the Gulf of Mexico. Technically we like the breakout over the $80.00 level. The move has helped the P&F chart produce a new buy signal that points to a $96 target. We are suggesting calls here with the stock over $80.00. More conservative traders may want to wait for STR to clear the November high at $81.35 first before initiating positions. Our target is the October highs in the $89.00-90.00 range. FYI: STR is also a current strangle play on the newsletter's play list.

Suggested Options:
We are suggesting January calls because we do not plan to hold over the January earnings report.

BUY CALL JAN 75 STR-AO open interest=2792 current ask $7.50
BUY CALL JAN 80 STR-AP open interest= 759 current ask $4.10
BUY CALL JAN 85 STR-AQ open interest=1063 current ask $1.50

Picked on December 13 at $ 80.85
Change since picked: + 0.00
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 752 thousand
 

New Puts

None
 

New Strangles

None
 

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