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New Option Plays

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Strangle Options Plays
AAPL None None
COP    
PCU    

New Calls

Apple Computer - AAPL - close: 62.30 chg: +3.59 stop: 57.65

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:
Tech stocks really helped lead the market-wide rally today. This helped the NASDAQ composite index breakout through resistance at the top of its three-month trading range and close at a multi-year highs. Given this sort of development we suspect that the oversold bounce in shares of AAPL may have legs. AAPL had drifted toward technical support at its simple 200-dma. This looks like a classic bounce from support. However, volume was extremely high today and we could be witnessing a panic by the shorts. AAPL still has various levels of resistance in the $64.00, 65.00 and $66.00 levels so we would classify this play as an aggressive, high-risk speculation. We have a wide stop loss given the range of today's trading. Our target will be the declining 50-dma. Currently the simple 50-dma is at 68.57. We're going to use a temporary target in the $67.50-68.50 range.

Suggested Options:
We do not want to hold over the April 19th earnings report so we're suggesting April calls.

BUY CALL APR 60.00 QAA-DL open interest=34935 current ask $4.60
BUY CALL APR 62.50 QAA-DZ open interest=16885 current ask $3.20
BUY CALL APR 65.00 QAA-DM open interest=47320 current ask $2.05

Picked on March 29 at $ 62.30
Change since picked: + 0.00
Earnings Date 04/19/06 (unconfirmed)
Average Daily Volume = 34.2 million

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ConocoPhillips - COP - close: 64.80 chg: +1.05 stop: 61.45

Company Description:
ConocoPhillips is an integrated petroleum company with interests around the world. (source: company press release or website)

Why We Like It:
It's no secret that we're bullish on oil and oil stocks. COP is one of the biggest companies in the sector and their stock just recently broke out higher. Shares had been consolidating under a trend of lower highs since last September. Yesterday the stock broke out over that trendline paving the way for a rally higher. We are going to suggest bullish positions here over $64.00. More conservative traders may feel more comfortable waiting for a move over today's high (65.04) since the $65 level might act as round-number resistance. Our target is the $69.00-70.00 range but we plan to exit ahead of the late April earnings report. Please note that COP is due to complete its acquisition of Burlington Resources (BR) on April 1st. Unfortunately, we do not know if the completion of that transaction will have any adverse impact on the share price of COP.

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

BUY CALL MAY 60 COP-EL open interest=15014 current ask $6.00
BUY CALL MAY 65 COP-EM open interest=27568 current ask $2.65
BUY CALL MAY 70 COP-EN open interest=14566 current ask $0.85

Picked on March 29 at $ 64.80
Change since picked: + 0.00
Earnings Date 04/26/06 (unconfirmed)
Average Daily Volume = 10.5 million

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Southern Peru Copper - PCU - close: 82.95 chg: +2.10 stop: 79.95

Company Description:
Our mining operations are located in Peru and Mexico. We own and operate four open pit mines and three metallurgical complexes that make SCC a fully integrated copper producer with significant byproducts of molybdenum, zinc and precious metals. (source: company press release or website)

Why We Like It:
We are bullish on some of the commodity stocks, especially copper. You may remember that Citigroup recently joined the bulls after a much publicized reversal of opinion. Shares of PCU have been consolidating in a two-month trend of lower highs inside its larger bullish up trend. The MACD on the daily chart is on the verge of a new buy signal. We want to suggest a trigger at $84.05 to buy calls. This should mark a breakout over this two-month trendline of resistance. More aggressive traders might want to consider jumping the gun if PCU can trade over today's high at $83.50. If we are triggered at $84.05 our target will be the $89.50-90.00 range. We do not want to hold over the late April earnings report.

Suggested Options:
We are suggesting May calls.

BUY CALL MAY 80.00 PCU-EP open interest= 287 current ask $6.20
BUY CALL MAY 85.00 PCU-EQ open interest= 207 current ask $3.60
BUY CALL MAY 90.00 PCU-ER open interest= 119 current ask $1.95

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/06 (unconfirmed)
Average Daily Volume = 1.3 million
 

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