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Call Options Plays
Put Options Plays
Strangle Options Plays
CMI None None
COF    
HYDL    
TM    

New Calls

Cummins Inc. - CMI - cls: 104.66 change: +1.24 stop: 102.49

Company Description:
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $550 million on sales of $9.9 billion in 2005. (source: company press release or website)

Why We Like It:
Shares of CMI appear to be bouncing from their trendline of support. Some of the technical indicators for the stock say that CMI is short-term oversold and due for a bounce too. Of course some of the indicators are bearish and point lower. However, if the major market indices can build on Friday's rally next week then we suspect that CMI will re-challenge the recent highs near $110. We're going to suggest a trigger to buy calls at $105.05. If triggered then we'll target a move into the $109.75-110.00 range.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 100 CMI-DT open interest= 22 current ask $7.00
BUY CALL APR 105 CMI-DA open interest=243 current ask $3.90
BUY CALL APR 110 CMI-DB open interest=665 current ask $1.85

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/20/06 (unconfirmed)
Average Daily Volume = 867 thousand

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Capital One - COF - close: 89.92 change: +4.02 stop: 87.39

Company Description:
Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., and Hibernia National Bank (www.hibernia.com), offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One's subsidiaries collectively had $47.9 billion in deposits and $105.5 billion in managed loans outstanding as of December 31, 2005. (source: company press release or website)

Why We Like It:
Financials turned in a decent day on Friday and leading the pack was COF after one analyst firm raised their earnings estimate for the company. Volume on COF's gain was very strong. The stock managed to breakout over the $90.00 level on an intraday basis and that move produced a new triple-top breakout buy signal on its P&F chart, which points to a $99 target. By adding COF as a bullish candidate we are sort of hedging our bets since we have a put play on UBB. We want to see more confirmation of the current move so we're suggesting a trigger at $90.25 to buy calls on COF. If triggered we'll target a move into the $94.75-95.00 range. More aggressive traders may want to aim higher (maybe $98-99).

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 85 COF-DQ open interest=137 current ask $6.40
BUY CALL APR 90 COF-DR open interest=282 current ask $2.95
BUY CALL APR 95 COF-DS open interest=340 current ask $1.00

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/20/06 (unconfirmed)
Average Daily Volume = 1.6 million

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Hydril - HYDL - close: 70.23 change: +2.40 stop: 66.95

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:
We hesitated to add another oil-related play. Crude oil futures have been testing support in the $59-60/bbl range lately and frankly they look somewhat poised to move lower. In contrast the OIX oil index appears poised to bounce from its 200-dma and the OSX oil services index looks ready to rebound from its 100-dma. Meanwhile shares of HYDL have already begun to bounce from its 200-dma, which the stock has a habit of doing. Friday's gain in HYDL was fueled by very strong volume and the rally was a bullish breakout over its six-week trendline of lower highs. Short-term technical indicators are already turning bullish and its MACD is nearing a new buy signal. The weekly chart shows a new "hammer" style candlestick, which at the bottom of a trend can be seen as a bullish reversal. We are going to suggest call positions here with HYDL over $70.00. More conservative traders may want to wait for a move over $71.10 or a move over its 50-dma (72.18) before initiating positions. Our target is going to be the $77.50-80.00 range. Keep an eye on crude oil prices. If they start breaking down we might want to abandon this play early. We'll have to see if HYDL reacts to oil under $59/bbl. The stock might not since the company makes products for the oil sector instead of producing and selling oil.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 65 HBQ-DM open interest= 50 current ask $7.50
BUY CALL APR 70 HBQ-DN open interest=195 current ask $4.40
BUY CALL APR 75 HBQ-DO open interest=106 current ask $2.35

Picked on March 12 at $ 70.23
Change since picked: + 0.00
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 289 thousand

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Toyota Motor Corp. - TM - close: 106.68 chg: +0.68 stop: 104.75

Company Description:
Toyota Motor Corporation is one of the worlds leading automakers, offering a full range of models, from minivehicles to large trucks. Global sales of its Toyota and Lexus brands, combined with those of Daihatsu and Hino, totaled 6.78 million units in CY2003*. Besides its own 12 plants and 11 manufacturing subsidiaries and affiliates in Japan, Toyota has 51 manufacturing companies in 26 countries/locations, which produce Lexus- and Toyota-brand vehicles and components. As of March 2004, Toyota employs 264,000 people worldwide (on a consolidated basis), and markets vehicles in more than 140 countries. Automotive business, including sales finance, accounts for more than 90% of the company's total sales, which came to a consolidated 17.29 trillion in the fiscal year to March 2004. Diversified operations include telecommunications, prefabricated housing and leisure boats. (source: company press release or website)

Why We Like It:
The future of the American car makers may be in question but there seems to be no stopping Toyota (TM). The stock has been a huge winner and shares have a consistent trend of bouncing from its rising, simple 50-dma. Guess what it's doing right now? Yes, it just spent a few days consolidating above the 50-dma and now shares are rebounding higher again. There is some resistance near $109 but we believe that TM can breakout to new highs. The average analyst estimate on this stock is in the $114-120 range. We're going to target the $112.50-115.00 range.

Suggested Options:
We are suggesting the April calls.

BUY CALL APR 105 TM-DA open interest=1081 current ask $4.00
BUY CALL APR 110 TM-DB open interest=1171 current ask $1.35

Picked on March 12 at $106.68
Change since picked: + 0.00
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 438 thousand
 

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