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Call Options Plays
Put Options Plays
Strangle Options Plays
BSC MNST None
CMI NUE  
JCI    
TEX    

New Calls

Bear Stearns - BSC - close: 133.75 chg: +1.75 stop: 131.49

Company Description:
Founded in 1923, Bear, Stearns & Co. Inc. is a leading investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc.. With approximately $57.6 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, securities research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers financing, securities lending, clearing and technology solutions to hedge funds, broker-dealers and investment advisors. Headquartered in New York City, the company has approximately 12,000 employees worldwide. (source: company press release or website)

Why We Like It:
We are going to double up on our call plays in the broker-dealer investment sector. The XBD broker-dealer index produced a 1.4% bounce today and its MACD is nearing a new buy signal. Likewise BSC is bouncing and its MACD has already produced a new buy signal. However, please note that we are very cautious about this bounce. It may be nothing more than an oversold bounce in a new bearish market trend. Therefore we're going to use a relatively tight stop loss on BSC at $131.49. More aggressive traders may want to put their stop under $130.00. Another alternative for conservative traders would be to wait for a move over $135.00 or $135.50 to confirm the bounce. Our target is the 50-dma (currently 138.60) and BSC's bearish trendline of lower highs (see chart) so we are going to use a $137.25-138.50 exit range.

Suggested Options:
We do not want to hold over the June 15th earnings report so we're suggesting the June calls. That makes this a short-term two-week play.

BUY CALL JUN 130.00 BSC-FF open interest=1348 current ask $6.10
BUY CALL JUN 135.00 BSC-FG open interest=1899 current ask $3.10

Picked on May 31 at $133.75
Change since picked: + 0.00
Earnings Date 06/15/06 (unconfirmed)
Average Daily Volume = 1.3 million

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Cummins Inc - CMI - close: 110.21 chg: +2.96 stop: 106.99

Company Description:
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $550 million on sales of $9.9 billion in 2005. (source: company press release or website)

Why We Like It:
CMI has been relatively resistant to the recent selling pressure and the stock's P&F chart still points to a $146 price target. The bounce today was fueled by above average volume and the short-term technical indicators are improving. We are going to suggest calls here above $110 with a relatively tight stop at $106.99. More conservative traders may want to wait for a move over $111.25 or $112.00 before considering new long positions. Our target is the $116.00-117.00 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 110.00 CMI-GU open interest=205 current ask $5.70
BUY CALL JUL 115.00 CMI-GC open interest= 51 current ask $3.40

Picked on May 31 at $110.21
Change since picked: + 0.00
Earnings Date 07/28/06 (unconfirmed)
Average Daily Volume = 1.0 million

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Johnson Controls - JCI - close: 85.17 chg: +2.55 stop: 81.85

Company Description:
Johnson Controls is a global leader in interior experience, building efficiency and power solutions. The company provides innovative automotive interiors that help make driving more comfortable, safe and enjoyable. For buildings, it offers products and services that optimize energy use and improve comfort and security. Johnson Controls also provides batteries for automobiles and hybrid electric vehicles, along with systems engineering and service expertise. Johnson Controls, founded in 1885, is headquartered in Milwaukee, Wisconsin. (source: company press release or website)

Why We Like It:
It may have been a bad month for the major averages but shares of JCI posted a gain in May. During the May sell-off shares of JCI consolidated back to round-number support at the $80.00 level before taking off again. Short-term technical indicators are turning positive and its P&F chart points to a $100 target. Volume on today's rally was above average and we're suggesting calls with JCI above $84.00. However, we remain suspicious of the market bounce and this may be an aggressive entry point in JCI with May's resistance near 85.65. Conservative traders may want to wait for a move over last month's highs. We're going to try and use a relatively tight stop loss at $81.85 to reduce our risk. More aggressive traders might want to put their stop under support near $80.00. Our target is the $89.00-90.00 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 80.00 JCI-GP open interest=1035 current ask $6.60
BUY CALL JUL 85.00 JCI-GQ open interest= 611 current ask $3.20
BUY CALL JUL 90.00 JCI-GR open interest= 393 current ask $1.20

Picked on May 31 at $ 81.85
Change since picked: + 0.00
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 951 thousand

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Terex Corp. - TEX - close: 91.50 chg: +1.52 stop: 88.99

Company Description:
Terex Corporation is a diversified global manufacturer with 2005 revenue of $6.4 billion. Terex operates in five business segments: Terex Construction, Terex Cranes, Terex Aerial Work Platforms, Terex Materials Processing & Mining, and Terex Roadbuilding, Utility Products and Other. Terex manufactures a broad range of equipment for use in various industries, including the construction, infrastructure, quarrying, surface mining, shipping, transportation, refining, and utility industries. Terex offers a complete line of financial products and services to assist in the acquisition of Terex equipment through Terex Financial Services. (source: company press release or website)

Why We Like It:
Shares of TEX suffered a pretty severe sell-off in May but the stock has bounced right back into its rising, bullish pattern. Technicals are positive again with its MACD on the verge of a new buy signal. The P&F chart has reversed back into a new buy signal with a $107 target. Volume on today's session was very strong, probably due to market reaction to TEX's 10-Q filing today. We want to see more confirmation before suggesting calls. Therefore we're going to use a trigger at $92.65 to open plays. If triggered we'll target a run into the $99.50-100.00 range. More aggressive traders may want to target the highs near $103.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 90.00 TEX-GR open interest= 920 current ask $6.80
BUY CALL JUL 95.00 TEX-GS open interest=1566 current ask $4.30
BUY CALL JUL 100.00 TEX-GT open interest= 837 current ask $2.65

Picked on June x at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/02/06 (unconfirmed)
Average Daily Volume = 719 thousand
 

New Puts

Monster Worldwide - MNST - cls: 48.87 chg: -1.01 stop: 52.01

Company Description:
Founded in 1967, Monster Worldwide, Inc. is the parent company of Monster, the leading global online careers and recruitment resource. The company also owns TMP Worldwide, one of the largest Recruitment Advertising agencies in North America. Headquartered in New York with approximately 4,300 employees in 25 countries. (source: company press release or website)

Why We Like It:
MNST failed to participate in the market-wide bounce today. The stock broke down under support at its 50-dma several days ago and has been consolidating sideways with support at its 100-dma and resistance at its 10-dma. Today's session saw MNST close under its 100-dma and volume on the day was very high. The Point & Figure chart for MNST points to a $38 target. We are going to suggest put options on MNST with the stock under $50.00. Our target will be the $45.25-45.00 level since the $45.00 mark looks like potential support. More aggressive traders may want to aim for the 200-dma. Conservative traders may want to wait for a bit more confirmation and use a trigger somewhere under $48.80 to confirm the breakdown (you may also want to consider a tighter stop near $51.00).

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 50.00 BSQ-SJ open interest= 159 current ask $3.40
BUY PUT JUL 45.00 BSQ-SI open interest=1309 current ask $1.25

Picked on May 31 at $ 48.87
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Nucor - NUE - close: 105.27 chg: -0.89 stop: 113.25

Company Description:
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:
We are going to try again with a put play on NUE. We tried earlier with the breakdown below the 50-dma but the late May bounce was too strong. Now the oversold bounce has failed and the stock did not participate in the market's bounce today. Volume was pretty high at almost double the daily average volume. The stock is due to split 2-for-1 tomorrow, which could contribute some post-split depression. We are going to suggest puts with NUE under $110 ($55.00 post-split). Our target is going to be the $92.50-90.00 (46.25-45.00 post-split) range. The P&F chart, on a post-split basis, points to a $37.00 target. We would label this an aggressive, high-risk play given the volatility in the stock and the sector. Our stop loss will be $56.65 on a post-split basis.

Suggested Options:
We are not suggesting option symbols tonight since the symbols will change tomorrow morning due to the split. We'd use the July puts.

Picked on May 31 at $105.27
Change since picked: + 0.00
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 2.8 million
 

New Strangles

None today.
 

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