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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CCJ AAPL None
UPL IBM  
VLO KBH  

New Calls

Cameco - CCJ - close: 38.01 change: +0.67 stop: 35.29

Company Description:
Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest uranium producer. The company's uranium products are used to generate electricity in nuclear energy plants around the world, providing one of the cleanest sources of energy available today. Cameco's shares trade on the Toronto and New York stock exchanges. (source: company press release or website)

Why We Like It:
We are going to try and play CCJ again but this time as a call candidate. We are very bullish long-term on the stock. On a big-picture basis oil is only going higher and as countries around the world look for alternatives they'll be compelled to use nuclear energy. CCJ is a major supplier of uranium so business should be good for the foreseeable future. The stock has spent the last month consolidating its post-earnings trauma and traders bought the dip at its rising 50-dma. Now after two weeks of consolidating (mostly) between $36.00 and $38.00 the stock looks ready to breakout higher again. We are going to suggest a trigger to buy calls at $38.51. More aggressive traders may want to jump the gun and consider bullish positions over $38.00. If triggered then we will target a rally into the $42.00-42.50 range. We do expect some resistance at the $40.00 level. Our time frame is about six weeks.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 35.00 CCJ-DG open interest=642 current ask $4.20
BUY CALL APR 37.50 CCJ-DU open interest=479 current ask $2.60
BUY CALL APR 40.00 CCJ-DH open interest=680 current ask $1.50

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/01/06 (confirmed)
Average Daily Volume = 2.7 million

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Ultra Petrol. - UPL - close: 54.60 change: +2.13 stop: 51.95

Company Description:
Ultra Petroleum is an independent, exploration and production company focused on developing its long-life natural gas reserves in the Green River Basin of Wyoming, and oil reserves in Bohai Bay, offshore China. (source: company press release or website)

Why We Like It:
Looking at the daily chart for UPL and it's easy to see that shares have broken their longer-term up trend. The P&F chart is also bearish and points lower. However, these don't tell the whole story. The stock bounced from round-number support near $50.00 this past week and we don't believe the bounce is over yet. The weekly chart has produced a "hammer" style candlestick pattern, which is typically seen as a bullish reversal. Meanwhile short-term technical oscillators have turned higher but then again that doesn't take much since UPL was so oversold. More importantly we expect the global oil markets to react negatively to the next U.N. security counsel meeting when they discuss Iran. Only if the counsel chooses not to pursue Iran over its nuclear arms ambitions would oil (temporarily) turn lower. The rebound in shares of UPL has stalled at the simple 10-dma. We are going to suggest a trigger to go long at $55.05. If triggered then we will target a quick rebound into the $59.50-60.00 range, which is under resistance at the 50-dma. More aggressive traders may want to use a wider stop loss.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 50 UPL-DJ open interest=1176 current ask $6.70
BUY CALL APR 55 UPL-DK open interest=1347 current ask $3.70
BUY CALL APR 60 UPL-DL open interest= 969 current ask $1.80

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/09/06 (unconfirmed)
Average Daily Volume = 1.7 million

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Valero Energy - VLO - close: 56.52 change: -0.21 stop: 53.49

Company Description:
Valero Energy Corporation is a Fortune 500 company based in San Antonio, with approximately 22,000 employees and annual revenue of more than $80 billion. The company owns and operates 18 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America. Valero is also one of the nation's largest retail operators with approximately 5,000 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names including Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon. (source: company press release or website)

Why We Like It:
We're adding another oil stock to the play list and this one's a refiner. VLO has rebounded sharply from its lows in February where it bounced from its simple 200-dma. Over the last two weeks the stock has been churning sideways between $53.50 and 57.00. If VLO can breakout of this trading range we think it will make another run at its highs. We're suggesting a trigger to buy calls at $57.55. If triggered we'll target a move into the $62.50-63.00 range.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 55.00 VLO-DK open interest=4213 current ask $4.20
BUY CALL APR 57.50 VLO-DY open interest=6410 current ask $2.80
BUY CALL APR 60.00 VLO-DL open interest=2741 current ask $1.80

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/02/06 (unconfirmed)
Average Daily Volume = million
 

New Puts

Apple Computer - AAPL - cls: 67.72 change: -1.89 stop: 70.11

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:
It looks like the oversold bounce in shares of AAPL is fading. The mid-February rally topped out at $73.00 under the descending 50-dma. Friday's decline proved to be a failed rally at $70.00 and a breakdown below its simple 100-dma. Technical oscillators are turning bearish and even the company's latest new products announcement failed to generate any excitement for the stock. If you look at an intraday chart (30-minute or 60-minute) you'll see that AAPL has produced a bearish head-and-shoulders pattern over the last three weeks with the neckline at the $68.00 level. This H&S pattern points to a $63.00 target. We agree. We're going to suggest puts here with AAPL under $68.00 and target a decline into the $63.00-62.50 range.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 70.00 QAA-PN open interest=22163 current ask $5.60
BUY PUT APR 67.50 QAA-PU open interest=19531 current ask $4.20
BUY PUT APR 65.00 QAA-PM open interest=32529 current ask $3.10

Picked on March 05 at $ 67.72
Change since picked: + 0.00
Earnings Date 04/19/06 (unconfirmed)
Average Daily Volume = million

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Intl. Bus. Mach. - IBM - cls: 79.96 chg: +0.02 stop: 81.05

Company Description:
IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. Drawing on resources from across IBM and key IBM Business Partners, IBM offers a wide range of services, solutions and technologies that help enable customers, large and small, to take full advantage of the new era of e-business on demand. (source: company press release or website)

Why We Like It:

Shares of Big Blue have been under performing the market and its peers for several weeks in a row now. The slow trend of lower highs is pressing the stock closer toward the bottom of its $79.00-82.00 trading range. The P&F chart is bearish with a triple-bottom breakdown sell signal and points to a $73.00 target. We suspect that the next move will be lower. We're suggesting that traders use a trigger to buy puts at $78.89, under the February low. If triggered then we'll target the $74.00-73.00 range.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 85 IBM-PQ open interest=12553 current ask $5.30
BUY PUT APR 80 IBM-PP open interest=26516 current ask $1.90
BUY PUT APR 75 IBM-PO open interest=19122 current ask $0.50

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/18/06 (unconfirmed)
Average Daily Volume = 6.2 million

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KB Home - KBH - close: 65.47 chg: -1.46 stop: 68.05

Company Description:
Building homes for nearly half a century, KB Home is one of America's premier homebuilders with domestic operating divisions in some of the fastest-growing regions and states: West Coast -- California; Southwest -- Arizona, Nevada and New Mexico; Central -- Colorado, Illinois, Indiana, Louisiana and Texas; and Southeast -- Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia. Kaufman & Broad S.A., the Company's publicly-traded French subsidiary, is one of the leading homebuilders in France. In fiscal 2005, the Company delivered homes to 37,140 families in the United States and France. KB Home also offers complete mortgage services through Countrywide KB Home Loans, a joint venture with Countrywide Financial Corporation. (source: company press release or website)

Why We Like It:
Homebuilders continue to look weak despite the onset of spring in many parts of the country. You may be seeing a lot more open-house signs but the markets are worried about a slow down in new home sales and how rising interest rates will affect mortgage applications. Checking out the daily chart for KBH and you'll see that the mid-February bounce failed under the simple 200-dma and happened to be an almost perfect reversal at the 38.2% Fibonacci retracement level of its January-February decline. Aggressive traders can look for a failed rally near the 10-dma as a new entry point. We're suggesting readers wait for a new relative low. Our trigger to buy puts will be $64.75. If triggered then we'll target a decline into the $60.50-60.00 range. Keep your eyes and ears open for any news on Tuesday, March 7th since KBH will be presenting at a Citigroup conference. We will plan to exit before KBH's earnings announcement in March.

Suggested Options:
We are suggesting the April puts although we plan to exit ahead of the late March earnings report.

BUY PUT APR 70 KBH-PN open interest=1798 current ask $6.10
BUY PUT APR 65 KBH-PM open interest=4820 current ask $3.30
BUY PUT APR 60 KBH-PL open interest=3242 current ask $1.55

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/22/06 (confirmed)
Average Daily Volume = 1.9 million
 

New Strangles

None today.
 

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