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New Calls

None today.
 

New Puts

Play Editor's note: The markets continue to look very bearish and today's late afternoon sell-off only reinforces the technical damage done to the major averages. It would be tempting to add a bunch of new put candidates to the play list but we know nothing goes straight down for very long and we're running into the risk of a sharp snap-back rally. We're choosing to only add one play tonight and we would classify it as aggressive.


Ipsco Inc. - IPS - close: 93.95 chg: -3.39 stop: 100.26

Company Description:
IPSCO, traded as "IPS" on both the New York Stock Exchange and Toronto Stock Exchange, operates steel mills at three locations and pipe mills at six locations in the United States and Canada. As a low cost North American steel producer, IPSCO has a combined annual steel making capacity of 3,500,000 tons. The Company's tubular facilities produce a wide range of tubular products including line pipe, oil and gas well casing and tubing, standard pipe and hollow structurals. Steel can also be further processed at IPSCO's five temper leveling and coil processing facilities. (source: company press release or website)

Why We Like It:
The sell-off continues for IPS. The stock has put in what looks like a double-top near $110 in the last few weeks. Shares consummated the topping pattern with a sharp sell-off fueled by very strong volume last week. The stock tried to bounce near support at $95.00 and its simple 100-dma. Yet in the last couple of hours today IPS violated support again on strong volume. The P&F chart has produced a triple-bottom breakdown sell signal that currently points to an $87 target. While everything looks very bearish for IPS we're concerned about how oversold the major averages are in addition to how oversold some of IPS' rivals in the steel industry are. Thus we are labeling this play as high-risk, especially since we are using a wide stop loss. We suspect that IPS will find technical support at the rising 200-dma (82.30) so we're going to aim for the $85.50-84.50 range. FYI: traders don't have to chase IPS here. You could look for a bounce and another failed rally under the $100 level as a potential entry point. Although we'd like to see broken support at $95.00 act as new resistance.

Suggested Options:
We are suggesting the June puts.

BUY PUT JUN 95.00 IPS-RS open interest= 417 current ask $5.20
BUY PUT JUN 90.00 IPS-RR open interest=1450 current ask $3.00

Picked on May 18 at $ 93.95
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 459 thousand
 

New Strangles

None
 

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