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New Option Plays

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NEW OPTION PLAYS TABLE-->
Call Options Plays
Put Options Plays
Strangle Options Plays
APC None None
CRS    
DE    
EXP    
KOMG    
OXY    

New Calls

Play Editor's note: Overall the tone of the market and our bias remains bearish. However, the markets are due for an oversold bounce. We're going to suggest a few call candidates today in an effort to capture any bounce but we're suggesting readers use relatively tight stops and be ready to exit quickly should the markets turn south again. We are moving into a slow time for oil and crude oil prices may continue to slide lower but we are choosing to add some oil stocks to the play list based on their short-term technical picture. The above comments about not getting married to your position and keeping an eye on the exits are especially true with our new oil candidates.


Anadarko Petrol. - APC - close: 99.44 chg: +1.89 stop: 97.99

Company Description:
Anadarko Petroleum Corporation's mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world's health and welfare. As of year-end 2005, the company had 2.45 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. Anadarko's operational focus in North America extends from the deepwater Gulf of Mexico, up through the western U.S. and Canadian regions and onto the North Slope of Alaska. Anadarko's international activities are focused on its major positions in North Africa, the Middle East, Indonesia and exploration or production operations in several other countries. (source: company press release or website)

Why We Like It:
The sell-off in oil stocks has pulled APC toward the bottom of its long-term rising channel and technical support near its simple 200-dma. Traders bought the dip on Friday and the stock produced a bullish engulfing candlestick pattern, which is usually interpreted as a one-day bullish reversal. Volume on the reversal was strong. We are suggesting a trigger to buy calls at $100.15. We are only looking for a short-term bounce. Our target is the $104.50-105.00 range. We'll use a tight loss at $97.99. Please note that crude oil prices may continue to slide toward $66.00-65.00 a barrel and that will put pressure on the oil stocks. If you don't see any follow through on this bullish reversal we'll exit quickly! FYI: APC is due to split 2-for-1 on May 29th.

Suggested Options:
We are suggesting the June calls since we expect this to be a short-term bounce.

BUY CALL JUN 100.00 APC-FT open interest= 908 current ask $3.80
BUY CALL JUN 105.00 APC-FA open interest=1504 current ask $1.90

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/27/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Carpenter Tech. - CRS - cls: 115.25 chg: +3.18 stop: 111.45

Company Description:
Carpenter Technology, based in Wyomissing, Pa., produces and distributes specialty alloys, including stainless steels, titanium alloys and superalloys, and various engineered products. (source: company press release or website)

Why We Like It:
We are going to try and hedge our bets on the steel sector. Currently we have a couple of aggressive, high-risk put plays IPS and NUE in the group. Several stocks in the steel industry has just been hammered lately after very big moves higher and most are all sporting bearish technicals and P&F chart sell signals. CRS is no different. The P&F chart points to a $90 target and weekly technicals look bearish but short-term the stock appears to have produced a bullish reversal with Friday's bounce from support. Volume on Friday's rebound was more than three times the daily average. We are going to suggest a trigger to buy calls at $116.51. If triggered we'll target a rebound into the $123.00-125.00 range. We'll set our stop loss at $111.45.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 115.00 CRS-FC open interest= 92 current ask $7.70
BUY CALL JUN 120.00 CRS-FD open interest=123 current ask $5.40

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/24/06 (unconfirmed)
Average Daily Volume = 448 thousand

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Deere Co - DE - close: 84.16 chg: +0.55 stop: 83.29

Company Description:
Deere & Company is the world's leading manufacturer of agricultural and forestry equipment; a major manufacturer of construction equipment; and a leading supplier of equipment used in lawn, grounds and turf care. The company was founded in 1837. John Deere agriculture, construction and forestry equipment is distributed through a network of more than 1800 independent dealers worldwide. (source: company press release or website)

Why We Like It:
DE has pulled back toward rising technical support at its 50-dma. The stock produced an intraday bullish reversal on Friday but we're not quite convinced yet. That's why we're suggesting a trigger to buy calls at $84.71. More conservative traders may want to use a trigger over $85.00. We're only looking for an oversold bounce since the P&F chart has turned bearish on the recent sell-off. Our target will be the $88.00-88.50 range. We'll use a stop loss at $83.29.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 85.00 DE-FQ open interest=3577 current ask $2.40
BUY CALL JUN 90.00 DE-FR open interest=1711 current ask $0.65

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/15/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Eagle Materials - EXP - close: 52.21 chg: +2.49 stop: 49.45

Company Description:
Eagle Materials Inc. is a Dallas-based company that manufactures and distributes Cement, Gypsum Wallboard, Recycled Paperboard, and Concrete and Aggregates. (source: company press release or website)

Why We Like It:
After reaching all time highs near $75.00 in April shares of EXP were crushed in the month of May. Shares fell back toward support near $49.00. The stock is way overdue for a bounce and with the markets also due for a bounce this looks like a good spot to buy calls. Aggressive traders probably want to keep their stops under Friday's low (48.30) we're going to try and reduce our risk with a stop loss at $49.45. We are going to suggest two targets. Considering selling half your position at the $55.00 level. Then sell the rest of your position in the $59.00-60.00 range.

Suggested Options:
We are suggesting the June or July calls.

BUY CALL JUN 50.00 EXP-FJ open interest=1680 current ask $4.50
BUY CALL JUN 55.00 EXP-FK open interest=1409 current ask $2.15

BUY CALL JUL 50.00 EXP-GJ open interest= 204 current ask $5.60
BUY CALL JUL 55.00 EXP-GK open interest=1371 current ask $3.30

Picked on May 21 at $ 52.21
Change since picked: + 0.00
Earnings Date 08/01/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Komag - KOMG - close: 45.70 chg: +1.98 stop: 41.99

Company Description:
Founded in 1983, Komag is a leading independent supplier of thin-film disks, the primary high-capacity storage medium for digital data. Komag leverages the combination of its world-class U.S. research and development center and Malaysian manufacturing operations to produce disks that meet the high-volume, stringent quality, low cost and demanding technology needs of its customers. By enabling rapidly improving storage density at ever-lower cost per gigabyte, Komag seeks to create extraordinary value for consumers of computers, enterprise storage systems and electronic appliances such as digital video recorders, game boxes and consumer electronic storage systems. (source: company press release or website)

Why We Like It:
Over the last week the DDX disk-drive index has produced a bullish turnaround. Leading the way appears to be shares of KOMG. The stock is up six days in a row on rising volume. In the month of May KOMG has produced what looks like a double-bottom (bullish) pattern. Friday's gain pushed KOMG above the 100-dma and resistance in the $45.15-45.25 region. Aggressive traders may want to consider positions now. We want to see more confirmation since a move over $46.00 will reverse the P&F chart into a new triple-top breakout buy signal. Plus, a move over $46.00 will be a technical breakout over its simple 50-dma. We're suggesting a trigger to buy calls at $46.11. Our short-term target will be the $49.75-50.00 range. More aggressive traders may want to aim higher. We are starting the play with a wide (aggressive) stop loss at 41.99. More conservative traders may want to put theirs closer to $44.00.

Suggested Options:
We are suggesting the June calls. Hopefully we'll see some July options become available soon.

BUY CALL JUN 45.00 QKX-FI open interest=1800 current ask $2.90
BUY CALL JUN 50.00 QKX-FJ open interest=2123 current ask $0.85

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Occidental Petrol. - OXY - cls: 94.06 chg: +1.68 stop: 91.99

Company Description:
Occidental Petroleum Corporation (NYSE: OXY) is a world leader in oil and natural gas exploration and production and a major North American chemical manufacturer. (source: company press release or website)

Why We Like It:
OXY has been a great performer over the past several months and traders hammered it the last two weeks with profit taking. The move has produced a big sell signal on its P&F chart but it looks like shares have produced a short-term bottom. The stock rebounded from the $89.50 level on Friday and created a bullish engulfing candlestick pattern, which is normally seen as a one-day bullish reversal. Volume on the reversal was more than double the daily average. Aggressive traders may want to buy calls here. We want to see more confirmation behind the move so we're suggesting a trigger to buy calls at $95.05. We're only looking for an oversold bounce into the $99.00-100.00 range. Remember, this is an aggressive play because our short-term outlook on crude oil is bearish with an expectation crude will slide toward the $66-65 range before moving higher again. That will put pressure on the oil stocks.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 90.00 OXY-FR open interest= 441 current ask $6.30
BUY CALL JUN 95.00 OXY-FS open interest=1247 current ask $3.50
BUY CALL JUN 100.00 OXY-FT open interest=2477 current ask $1.70

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 3.4 million
 

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New Strangles

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