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New Calls

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Omnicare - OCR - close: 56.10 change: -1.74 stop: 57.51

Company Description:
Omnicare, Inc., a Fortune 500 company based in Covington, Kentucky, is a leading provider of pharmaceutical care for the elderly. Omnicare serves residents in long-term care facilities and other chronic care settings comprising approximately 1,441,000 beds in 47 states, the District of Columbia and Canada. Omnicare is the largest U.S. provider of professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other institutional healthcare providers as well as for hospice patients in homecare and other settings. Omnicare also provides distribution and patient assistance services for specialty pharmaceuticals. It also offers clinical research services for the pharmaceutical and biotechnology industries in 30 countries worldwide. (source: company press release or website)

Why We Like It:
The bullish pattern in OCR appears to be in trouble. The stock has peaked back in early December and now the stock's upward momentum has reversed. Today's 3% decline was fueled by very strong volume, which is bearish. Plus, shares have broken down below technical support at the 50-dma. Technical oscillators on the daily and weekly charts are bearish and its P&F chart has produced a new sell signal. Aggressive traders may want to open put positions here under $57.00. We are going to suggest a trigger at $54.99 to open the play. We're suggesting a trigger because we want to see confirmation that OCR is going to breakdown under its 100-dma (56.08). If triggered we'll target a decline into the $51.00-50.00 range before its February earnings report.

Suggested Options:
We are going to suggest the March puts so we can hold the position right up to, but not over, its earnings report. The list of options here are for reference. You the individual trader need to decide which strike fits your trading style best.

BUY PUT MAR 60 OCR-OL open interest= 615 current ask $5.40
BUY PUT MAR 55 OCR-OK open interest=1025 current ask $2.65
BUY PUT MAR 50 OCR-OJ open interest=1730 current ask $1.10

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 1.3 million

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