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HYDL    

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Giant Ind. - GI - close: 59.55 change: -0.57 stop: 55.45

Company Description:
Giant Industries, Inc., headquartered in Scottsdale, Arizona, is a refiner and marketer of petroleum products. Giant owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, New Mexico, which services the New Mexico refineries, finished products distribution terminals in Albuquerque, New Mexico and Flagstaff, Arizona, a fleet of crude oil and finished product truck transports, and a chain of retail service station/convenience stores in New Mexico, Colorado, and Arizona. Giant is also the parent Company of Phoenix Fuel Co., Inc. and Dial Oil Co., both of which are wholesale petroleum products distributors. (source: company press release or website)

Why We Like It:
We don't believe the issue with Iran and its nuclear aspirations is going away any time soon. The country has already threatened that sanctions against them would have an unwelcome effect on global oil prices. Therefore we see the dip in oil today as a potential temporary event. Aggressive traders may want to use the intraday rebound in GI today as a new bullish entry point. We're going to suggest that traders wait for a more convincing breakout. Our trigger to buy calls will be above Tuesday's high at $60.85. If triggered we are going to target a rally into the $66.00-67.00 range before GI reports earnings in late February. We do not want to hold over the earnings report.

Suggested Options:
We are suggesting the March calls so we can hold our position right up to, but not over, GI's February earnings report.

BUY CALL MAR 55 GI-CK open interest= 51 current ask $7.10
BUY CALL MAR 60 GI-CL open interest=248 current ask $4.30
BUY CALL MAR 65 GI-CM open interest=220 current ask $2.25

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/20/06 (unconfirmed)
Average Daily Volume = 279 thousand

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Hydril - HYDL - close: 73.94 change: -1.22 stop: 68.99

Company Description:
Hydril Company, 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:
Technically HYDL looks very bullish. The stock broke out over major resistance in the $70-72 region last week on above average volume. Its Point & Figure chart is also very bullish with a target in the high $90s. Fundamentally business sounds pretty strong as well. The recent breakout was fueled by news that HYDL's backlog of orders had more than doubled from September to December last year. We see today's dip as a new bullish entry point. There is a good chance that shares could dip lower, maybe toward the 10-dma, and we'd use any dip/bounce above the $70.00 level as a new bullish entry point. We do not want to hold over the company's earnings report no matter how good we might think it will be. Our target is going to be the $79.00-80.00 range. Currently we have an unconfirmed earnings date of 01/31/06.

Suggested Options:
We are suggesting the February calls since we plan to exit before the earnings report.

BUY CALL FEB 70 HBQ-BN open interest= 64 current ask $6.20
BUY CALL FEB 75 HBQ-BO open interest=143 current ask $3.40

Picked on January 18 at $ 73.94
Change since picked: + 0.00
Earnings Date 01/31/06 (unconfirmed)
Average Daily Volume = 259 thousand
 

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