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New Calls

Vertex Pharma - VRTX - close: 40.56 chg: +1.07 stop: 37.49

Company Description:
Vertex Pharmaceuticals Incorporated is a global biotechnology company committed to the discovery and development of breakthrough small molecule drugs for serious diseases. The Company's strategy is to commercialize its products both independently and in collaboration with major pharmaceutical companies. Vertex's product pipeline is principally focused on viral diseases, inflammation, autoimmune diseases and cancer. Vertex co-promotes the HIV protease inhibitor, Lexiva, with GlaxoSmithKline. (source: company press release or website)

Why We Like It:
VRTX presented at a conference this past week and the company revived the rally and interest in the company's hepatitis-C drug. The hepatitis-C drug isn't new news but investors certainly seem enthusiastic about its possibilities. On a technical basis shares of VRTX have a habit of bouncing from its rising 50-dma and the stock seems to have a lot of upward momentum. VRTX also have a decent amount of short interest. The latest data puts short interest at 8.7% of its 96 million-share float. We could be witnessing another short-squeeze. We're going to suggest bullish positions with VRTX above round-number resistance at the $40.00 mark. Our target will be the recent highs in the $44.00-44.50 range.

Suggested Options:
We are going to suggest the April calls.

BUY CALL APR 35 VQR-DG open interest=2150 current ask $6.20
BUY CALL APR 40 VQR-DH open interest=8785 current ask $2.60
BUY CALL APR 45 VQR-DI open interest=2016 current ask $0.80

Picked on March 19 at $ 40.56
Change since picked: + 0.00
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 1.5 million

New Puts

Biosite Inc. - BSTE - close: 50.21 chg: -1.45 stop: 52.55

Company Description:
Biosite Incorporated is a leading bio-medical company commercializing proteomics discoveries for the advancement of medical diagnosis. The Company's products contribute to improvements in medical care by aiding physicians in the diagnosis of critical diseases and health conditions. Biosite's Triage rapid diagnostics are used in approximately 50 percent of U.S. hospitals and in more than 50 international markets. (source: company press release or website)

Why We Like It:
BSTE spent most of 2005 in a very wide trading range. That changed in January. Some bearish analyst comments about the company's earnings and business sent BSTE gapping lower and falling out of its trading range. Since then the stock managed a rally on its earnings report but the rally has stalled under the $55.00 level. That was just enough for BSTE to fill the gap from January. Now shares are sinking and technical indicators are bearish. If BSTE trades under $49.00 it will produce a new P&F chart sell signal. We're going to suggest a trigger at $49.75 to buy puts since the $50.00 mark is acting as round-number support. The $49.00 level is also support and more conservative traders may want to wait for a breakdown under $49.00 before initiating positions. Our target will be the $45.25-45.00 range.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 50 BQS-PJ open interest=1039 current ask $2.15
BUY PUT APR 45 BQS-PI open interest= 374 current ask $0.70

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/25/06 (unconfirmed)
Average Daily Volume = 261 thousand


Gannett Co Inc. - GCI - close: 59.04 chg: -1.53 stop: 61.76

Company Description:
Gannett Co., Inc. is a leading international news and information company that publishes 91 daily newspapers in the USA, including USA TODAY, the nation's largest-selling daily newspaper. The company also owns nearly 1,000 non-daily publications in the USA and USA WEEKEND, a weekly newspaper magazine. Gannett subsidiary Newsquest is the United Kingdom's second largest regional newspaper company. Newsquest publishes more than 300 titles, including 17 daily newspapers, and a network of prize-winning Web sites. Gannett also operates 21 television stations in the United States and is an Internet leader with sites sponsored by its TV stations and newspapers including USATODAY.com, one of the most popular news sites on the Web. (source: company press release or website)

Why We Like It:
Newspaper stocks are headed toward new lows. The industry has seen its stocks sink for several months now. Friday saw major stocks in the industry sprint lower after some negative comments from Moody's investors service. Here's a quote from an AP article, "Fundamentals in the newspaper sector will remain weak for the foreseeable future," Moody's said. "Of particular concern is the continuing downward trend in circulation and intensifying competition from online rivals." Moody's also said they were considering a downgrade for their credit rating on Tribune (TRB) and the New York Times (NYT). Shares of GCI did not respond well. GCI had already been struggling under resistance at its 100-dma and trend of lower highs. Friday's breakdown below support at the $60.00 mark was fueled by above average volume and looks like a new bearish entry point to us. We are going to target a decline into the $55.50-55.00 range.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 60 GCI-PL open interest=919 current ask $1.95
BUY PUT APR 55 GCI-PK open interest=205 current ask $0.30

Picked on March 19 at $ 59.04
Change since picked: + 0.00
Earnings Date 04/12/06 (confirmed)
Average Daily Volume = 1.1 million

New Strangles

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