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Call Options Plays
Put Options Plays
Strangle Options Plays
AAPL None None
APOL    
CAT    
GS    
LEH    
SHLD    

New Calls

Apple Computer - AAPL - close: 76.30 chg: +1.92 stop: 69.99

Company Description:
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store. (source: company press release or website)

Why We Like It:
Pure and simple this is a momentum play. AAPL has been a huge part of the strength in the hardware sector. Friday's rally is a bullish technical breakout above resistance at the top of its one-month trading range. Friday's move also produced a new triple-top breakout buy signal for its P&F chart, which points to a $118 target. We also see that the MACD is nearing a new buy signal. If you consider that once again the ipod and its many mutations were the must have gifts for the holidays this year then you can understand investor enthusiasm for the upcoming earnings report. The report is coming up quick on January 18th and that doesn't give us much time. We are going to be aggressive and use January calls. We'll set our stop loss at $69.99 under the bottom of its trading range. More conservative traders may want to use a tighter stop. Our target is the $79.85-80.00 range. FYI: it's been almost one year since AAPL had a stock split and shares are in range to split again. We're not predicting a split announcement but we would not be surprised if AAPL announced one with its earnings report.

Suggested Options:
We are suggesting the January calls. We plan to exit ahead of the January 18th earnings report, which is three days before January options expire.

BUY CALL JAN 75 QAA-AO open interest=57666 current ask $3.70
BUY CALL JAN 80 QAA-AP open interest=39922 current ask $1.55

Picked on January 08 at $ 76.30
Change since picked: + 0.00
Earnings Date 01/18/06 (confirmed)
Average Daily Volume = 25.5 million

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Apollo Group - APOL - close: 62.40 change: +1.60 stop: 59.95

Company Description:
Apollo Group, Inc. has been providing higher education programs to working adults for almost 30 years. Apollo Group, Inc., operates through its subsidiaries: The University of Phoenix, Inc., Institute for Professional Development, The College for Financial Planning Institutes Corporation, and Western International University, Inc. The consolidated enrollment in its educational programs makes it the largest private institution of higher education in the United States. It offers educational programs and services at 95 campuses and 153 learning centers in 39 states, Puerto Rico, Alberta, British Columbia, Netherlands, and Mexico. (source: company press release or website)

Why We Like It:
The latest earnings report for APOL in mid December was pretty uninspiring. The company missed the revenue estimates and guided lower for revenues in 2006. Since then the stock has been pretty weak until the last four days where shares suddenly started bouncing. The stock is rebounding from the $60 level and all the daily technical indicators are pointing higher. Of course after being so oversold it doesn't take much to push the oscillators higher but we think this bounce might have legs. Technical traders will note that weekly chart has produced a bullish engulfing candlestick pattern at the end of a downtrend. This is usually interpreted as a bullish reversal pattern. We would consider buying calls here or anywhere in the $61.40-62.60 region. Our target is going to be the $67.00-68.00 range. If APOL fails to push past the $63.50 level in the next several days we'll probably pull the plug early.

Suggested Options:
We are suggesting the February calls.

BUY CALL FEB 60 OAQ-BL open interest= 260 current ask $4.10
BUY CALL FEB 65 OAQ-BM open interest= 495 current ask $1.45

Picked on January 08 at $ 62.40
Change since picked: + 0.00
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 1.9 million

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Caterpillar - CAT - close: 60.45 change: +1.18 stop: 56.95

Company Description:
For 80 years, Caterpillar Inc. has been building the world's infrastructure and, in partnership with its worldwide dealer network, is driving positive and sustainable change on every continent. With 2004 sales and revenues of $30.25 billion, Caterpillar is a technology leader and the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. (source: company press release or website)

Why We Like It:
We're adding CAT to the list as a bullish candidate following Friday's breakout over significant resistance at the $60.00 level. The stock has been consolidating sideways under $60 for the last five weeks. This past week's rally has seen an influx of volume and Friday's move represents a buying opportunity. Technical indicators are bullish and the P&F chart points to a $72 target. We are going to target a run into the $64.75-65.00 range. We do not want to hold over the late January earnings report so we have just less than three weeks.

Suggested Options:
We are suggesting the February calls so we can hold the position right up to CAT's earnings report.

BUY CALL FEB 55.00 CAT-BK open interest=10354 current ask $6.20
BUY CALL FEB 57.50 CAT-BY open interest= 6632 current ask $4.20
BUY CALL FEB 60.00 CAT-BL open interest=18261 current ask $2.55
BUY CALL FEB 65.00 CAT-BM open interest= 5069 current ask $0.70

Picked on January 08 at $ 60.45
Change since picked: + 0.00
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 4.0 million

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Goldman Sachs - GS - close: 128.84 chg: +1.80 stop: 125.59

Company Description:
Goldman Sachs is a leading global investment banking, securities and investment management firm. However, to our clients and those associated with us, we are much more than that. (source: company press release or website)

Why We Like It:
The XBD broker-dealer index is looking pretty bullish right now. After consolidating under resistance at the 200 level for the last five weeks the XBD index broke out to new all-time highs in the last few days and produced a new MACD buy signal on its daily chart. We think shares of GS will follow suit. The stock is currently consolidating under resistance at the $130 level but short-term technicals are turning more positive. The Point & Figure chart is already bullish with a $177 target. We are going to suggest a trigger to buy calls at $130.05. If triggered we will target a rally into the $134.80-135.00 range. More aggressive traders might want to aim higher.

Suggested Options:
We are going to suggest February calls since the next available are Aprils and we don't plan to hold the play that long.

BUY CALL FEB 125.00 GS-BE open interest= 509 current ask $6.10
BUY CALL FEB 130.00 GS-BF open interest=1179 current ask $3.10
BUY CALL FEB 135.00 GS-BG open interest=1024 current ask $1.30

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Lehman Brothers - LEH - close: 130.24 chg: +1.59 stop: 125.90

Company Description:
Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The Firm is headquartered in New York, with regional headquarters in London and Tokyo and operates in a network of offices around the world. (source: company press release or website)

Why We Like It:
LEH is another play on the bullish broker-dealer sector. The stock has been consolidating sideways between $130 and $125 for the last five weeks. Now that the XBD index has broken out we expect LEH to follow in its tracks. We're going to suggest a trigger to buy calls at $131.05. More conservative traders may want to wait for a new high over the November peak near $133. If triggered we will target a rally into the $138.50-140.00 range over the next several weeks. Coincidentally LEH's P&F chart points to a $177 target, which is the same as GS' P&F chart.

Suggested Options:
We are suggesting the February calls.

BUY CALL FEB 130 LES-BF open interest=505 current ask $4.10
BUY CALL FEB 135 LES-BG open interest=675 current ask $1.80

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Sears Holding - SHLD - close: 119.46 change: +1.56 stop: 114.99

Company Description:
Sears Holdings Corporation is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,900 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as one of the leading retailers of tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. Holdings is the nation's largest provider of home services, with more than 14 million service calls made annually. (source: company press release or website)

Why We Like It:
This is a simple play. We are just trying to play the ups and downs in SHLD's trading range. The stock has been bouncing around the $114-126 region for more than three months now. Currently shares are starting to rebound. We'll suggest a trigger to buy calls at $120.05. If triggered we'll target a rally into the $124.90-125.00 range. We are going to put our stop loss under the recent low at $114.99. That doesn't offer a great risk-reward ratio but leaves room for shares to maneuver.

Suggested Options:
We are suggesting the February calls.

BUY CALL FEB 115 KTQ-BC open interest= 393 current ask $8.00
BUY CALL FEB 120 KTQ-BD open interest=2386 current ask $5.20
BUY CALL FEB 125 KTQ-BE open interest=1166 current ask $3.20

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/07/06 (unconfirmed)
Average Daily Volume = 2.7 million
 

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New Strangles

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