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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
AMH None None
CRI    
SFCC    

New Calls

AmerUS Group - AMH - close: 60.85 change: +0.71 stop: 59.88

Company Description:
AmerUs Group Co. is an Iowa corporation located in Des Moines, Iowa, engaged through its subsidiaries in the business of marketing and distributing individual life insurance and annuity products in 50 states, the District of Columbia and the U.S. Virgin Islands. Its major operating subsidiaries include AmerUs Life Insurance Company, American Investors Life Insurance Company, Inc., Indianapolis Life Insurance Company and Bankers Life Insurance Company of New York. (source: company press release or website)

Why We Like It:
This is a short-term bullish play. AMH is expected to report earnings on or around February 1st and we don't want to hold over the report. What we like about the stock is that shares are beginning to rebound from broken resistance, now new support, at the $60.00 level. The stock soared from technical support at the 100-dma a couple of weeks ago on rumors that a British rival was in talks to buy the company. There was some speculation that another (unnamed) American company might step in and produce a larger bid. The British company eventually denied they had produced a bid to buy AMH and shares have been slowly consolidating lower. What could make things exciting is the potential for a short squeeze especially if the takeover rumors persist. The latest data puts short interest at 8.5% of AMH's 38.6 million shares outstanding. We are going to suggest bullish call positions here with AMH above $60.00. Our short-term target will be the $64.00-65.00 range. Our time frame is four to five days.

Suggested Options:
We are suggesting the February calls.

BUY CALL FEB 55 AMH-BK open interest= 10 current ask $6.40
BUY CALL FEB 60 AMH-BL open interest=142 current ask $2.30

Picked on January 25 at $ 60.85
Change since picked: + 0.00
Earnings Date 02/01/06 (unconfirmed)
Average Daily Volume = 325 thousand

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Carter's Inc. - CRI - close: 66.62 chg: +0.41 stop: 64.75

Company Description:
Founded in 1865, Carters has dressed generations of children. It all began when William Carter decided to knit mittens in his kitchen. Today, Carters is the number one childrens brand, selling over 10 products for every child born in the U.S. We have a childlike point-of-view that reflects our heritage of innovation and expertise. We make clothing for children from newborn through size 7: baby, sleepwear, play clothes and accessories. We provide trusted products that are super comfy, easy care, adorable and dont break the bank. (source: company press release or website)

Why We Like It:
CRI looks like a strong bullish candidate based on its technical picture. The stock has broken out through two levels of resistance in the past week. Traders were quick to buy the dip back toward broken resistance, now new support, at the $65.00 level. The P&F chart is very bullish with an $85 target. We see today's afternoon bounce as a new entry point for calls. Short-term traders could target a quick move into the $69.85-70.00 range. We are going to target a rally into the $72.50-75.00 range before the company's late February earnings report. We'll use a relatively tight stop loss so if we're wrong we'll be taken out quickly.

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

BUY CALL MAR 65 CRI-CM open interest=206 current ask $5.10
BUY CALL MAR 70 CRI-CN open interest=568 current ask $2.70

Picked on January 25 at $ 66.62
Change since picked: + 0.00
Earnings Date 02/20/06 (unconfirmed)
Average Daily Volume = 313 thousand

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SFBC Intl. - SFCC - close: 20.92 chg: +1.46 stop: 18.95

Company Description:
SFBC International, Inc. provides early and late stage clinical drug development services to branded pharmaceutical, biotechnology, generic drug and medical device companies around the world. SFBC has more than 30 offices located in North America, Europe (including Central and Eastern Europe), South America, Asia, and Australia. In early clinical development services, SFBC specializes primarily in the areas of Phase I and early Phase II clinical trials and bioanalytical laboratory services, including early clinical pharmacology. SFBC also provides late stage clinical development services globally that focus on Phase II through IV clinical trials. SFBC also offers a range of complementary services, including data management and biostatistics, central laboratory services, medical and scientific affairs, regulatory affairs and submissions, and clinical IT solutions. (source: company press release or website)

Why We Like It:
This is an aggressive, higher-risk short-term play. SFCC is expected to report earnings on February 2nd and we do not want to hold over the report. That only gives us about five or six days depending on whether the company reports before the bell or after the close. Looking at SFCC it appears that the stock has produced a noteworthy bottom. One could argue that the stock has produced an inverse head-and-shoulders pattern, which would be bullish. The breakout over the $20.00 level and its 50-dma today looks like a new bullish entry point. Traders should also note there is a big chance for a short squeeze here. The latest data we could find puts short interest at over 74% of the company's 18.4 million shares outstanding. More conservative traders may want to take a wait and see approach before opening positions. First of all conservative traders may want to wait and see how the markets react to Amgen's earnings report tomorrow morning. That will impact the sector's strength. Secondly, SFCC has not broken out above what looks like short-term resistance at the $21.00 level. One could wait for SFCC to trade over today's high (21.10) before initiating new positions. Our target is the $24.90-25.00 range. FYI: the P&F chart points to a $35 target.

Suggested Options:
We are suggesting the February calls since we plan to exit in a few days.

BUY CALL FEB 20.00 JQE-BD open interest=1875 current ask $2.00
BUY CALL FEB 22.50 JQE-BX open interest= 564 current ask $0.75

Picked on January 25 at $ 20.92
Change since picked: + 0.00
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 2.5 million
 

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