New Plays, Wednesday, 05/17/2006
New Option Plays
by OI Staff
HAVING TROUBLE PRINTING?
Call Options Plays
Put Options Plays
Strangle Options Plays
| ||NUE|| |
CB Richard Ellis - CBG - cls: 77.93 chg: -4.90 stop: 82.71
CB Richard Ellis Group, Inc., a FORTUNE 1000 company headquartered in Los Angeles, is the world's largest commercial real estate services firm (in terms of 2005 revenue). With approximately 14,500 employees, the Company serves real estate owners, investors and occupiers through more than 200 offices worldwide (excluding affiliate and partner offices). CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; investment management; appraisal and valuation; and research and consulting. Founded in 1906, CB Richard Ellis marks a century of excellence in real estate services this year. (source: company press release or website)
Why We Like It:
The recent sell-off in stocks has really seen the profit taking targeted at the high-flyers from the first and second quarters. CBG is one such high-flying equity and now the stock appears to be seeing a correction. The company reported a strong earnings report in early May but shares of CBG failed to react to the news. Since then volume has been growing on the down days, which smells like distribution. One positive note about the stock is the upcoming 3-for-1 stock split due on June 2nd. We'd prefer to exit ahead of the stock split but if not any option positions should triple in quantity but see the value cut to one-third post-split. Today's session is a new breakdown below the $80.00 level and technical support at its 50-dma. Volume was more than double the daily average. The P&F chart points to a $68.00 target. Our target is the rising 100-dma, currently at 72.89. Since the 100-dma is a moving target we're going to use 73.25-72.75 as our exit range. Please note that we are very cautiously suggesting new bearish positions. Our concern here is after several down days in the market today's session might be a short-term capitulation and the major indices could surprise us and rebound sharply tomorrow. More conservative traders may want to wait for a decline under $77.50 before opening plays.
We are suggesting the June puts.
BUY PUT JUN 80.00 CBG-RP open interest= 368 current ask $5.10
BUY PUT JUN 75.00 CBG-RO open interest= 210 current ask $2.70
Picked on May 17 at $ 77.93
Change since picked: + 0.00
Earnings Date 05/02/06 (confirmed)
Average Daily Volume = 613 thousand
Nucor - NUE - close: 105.40 chg: -5.61 stop: 112.81
Nucor and affiliates are manufacturers of steel products, with operating facilities in seventeen states. Products produced are: carbon and alloy steel - in bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor is the nation's largest recycler. (source: company press release or website)
Why We Like It:
The high-flying steel and metal stocks have also been targeted for profit taking. Shares of NUE were already showing signs of trouble with several days of failed rallies near the $120 level. Recently the stock has been sliding on rising volume (distribution) and now shares have broken under support at the 50-dma. Volume on today's session was very strong. The P&F chart has produced a new sell signal that points to a $90 target. We are going to aim for the $95.50-95.00 range. Please note this is a HIGH-risk play. We are using a wide stop loss due to today's volatile session. Plus, we are concerned that while the major market indices look bearish they're also oversold and due for a bounce. You don't have to chase NUE here. Look for a bounce back into the $107-110 region and then open put positions on a failed rally. We would prefer to exit ahead of the 2-for-1 slit on June 1st merely because stocks tend to lose their volatility after a split.
We are suggesting the June or July puts.
BUY PUT JUN 110.00 NUE-RB open interest=1602 current ask $7.80
BUY PUT JUN 105.00 NUE-RA open interest=6697 current ask $5.10
BUY PUT JUN 100.00 NUE-RT open interest=1174 current ask $3.10
BUY PUT JUL 105.00 NUE-SA open interest=1096 current ask $7.50
BUY PUT JUL 100.00 NUE-ST open interest=1257 current ask $5.30
Picked on May 17 at $105.40
Change since picked: + 0.00
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 2.5 million