Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
Strangle Options Plays
None GPI None
  GRMN  
  IDXX  
  OSK  

New Calls

None today.
 

New Puts

Play Editor's note: You already know that the U.S. market's failure to rebound on Friday is pretty bearish. Part of the challenge here is that so many stocks and indices are already oversold. We need to anticipate a bounce and that makes setting stop loss a difficult task. Too tight and we'd be stopped out an almost any rebound. Too wide and we're taking too much risk. Our stops are only a suggestion. You may want to adjust yours to account for your own risk profile.

---

Group 1 Auto - GPI - close: 58.46 chg: -0.67 stop: 60.65

Company Description:
Group 1 owns 95 automotive dealerships comprised of 138 franchises, 32 brands and 30 collision service centers in California, Colorado, Florida, Georgia, Louisiana, Massachusetts, New Hampshire, New Jersey, New Mexico, New York, Oklahoma and Texas. Through its dealerships, the company sells new and used cars and light trucks; arranges related financing, vehicle service and insurance contracts; provides maintenance and repair services; and sells replacement parts. (source: company press release or website)

Why We Like It:
The failure to rebound on Friday would suggest that the selling is not over yet for stocks. If that's the case then the profit taking could get even uglier next week. One stock that looks like a big target for profit taking is GPI. You could argue that GPI's resistance to profit taking thus far is a sign of relative strength. We would agree but GPI is showing signs of weariness. The stock's weekly technical indicators are starting to turn bearish while its daily technical indicators are already bearish. It looks like a potential double-top/lower-high pattern over the last month and the recent bounce from Thursday failed at the $61.50 region (second time last week). The Point & Figure chart for GPI already sports a sell signal pointing to a $50 target. We are going to suggesting buying puts right here with the stock under $60.00. More conservative traders may want to wait for a move under Thursday's low (57.37) or the 50-dma (56.80) before initiating plays. We do expect a bounce at $55.00 but our target is the $51.50-50.00 range. This is just above the 38.2% Fibonacci retracement of GPI's seven-month bull run. We consider our stop at $60.65 to be relatively tight. More aggressive traders may want their stop to be near $63.00.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 60.00 GPI-SL open interest=454 current ask $3.80
BUY PUT JUL 55.00 GPI-SK open interest=585 current ask $1.55

Picked on June 11 at $ 58.46
Change since picked: + 0.00
Earnings Date 08/01/06 (unconfirmed)
Average Daily Volume = 498 thousand

---

Garmin Ltd. - GRMN - close: 90.47 chg: -0.99 stop: 95.01

Company Description:
Through its operating subsidiaries, Garmin Ltd. designs, manufactures, and markets navigation, communications and information devices, most of which are enabled by GPS technology. Garmin is a leader in the general aviation and consumer markets and its products serve aviation, marine, general recreation, automotive, wireless and OEM applications. Garmin Ltd. is incorporated in the Cayman Islands, and its principal subsidiaries are located in the United States, Taiwan and United Kingdom. (source: company press release or website)

Why We Like It:
It was a pretty rough week for GRMN with a drop from $97 to $90. Yet in spite of the sell-off GRMN is still holding on to its bullish up trend, at least for now. There are a lot of signals suggesting that the stock is poised to move lower. From June 1st, 2nd and 5th the stock produced a three-day bearish reversal candlestick pattern. Traders bought the dip at the 50-dma (near $89.00) on Thursday but that bounced failed on Friday under $95.00 and shares appear to have produced a bearish-engulfing style candlestick pattern, which is yet another bearish reversal. The weekly technical indicators are nearing new sell signals. While daily technicals are already bearish and the MACD produced a new sell signal about two days ago. GRMN's P&F chart has already produced a sell signal that points to an $82 target. Here's our plan. We want to catch the breakdown in GRMN should one occur. Our trigger to buy calls will be under support at $89.00 and its 50-dma. Our suggested entry point is $88.90. If triggered then we'll target support near $80.00 and its rising 100-dma. We'll use an exit range of $81.50-80.00 for now.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 90.00 GQR-SR open interest=1388 current ask $5.00
BUY PUT JUL 85.00 GQR-SQ open interest=2259 current ask $2.85
BUY PUT JUL 80.00 GQR-SP open interest=1476 current ask $1.50

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/002/6 (unconfirmed)
Average Daily Volume = 1.0 million

---

IDEXX Labs - IDXX - close: 78.58 chg: -0.67 stop: 80.05

Company Description:
IDEXX Laboratories, Inc. is a worldwide leader in the development and commercialization of innovative, technology-based products and services for veterinary, food and water applications. The Company's largest business is focused on companion animal health, combining biotechnology, medical device technology and information technology to aid veterinarians in providing better medicine while building successful practices. IDEXX Laboratories' food and water businesses are focused on employing innovative technologies to monitor production animal health and the safety and quality of drinking water and milk. (source: company press release or website)

Why We Like It:
The BTK biotech index tried to rally again on Friday but ended up producing another failed rally bearish reversal under its descending 50-dma. Speaking of the 50-dma it just crossed under the 200-dma, which is typically a very bearish development. The MACD on the BTK index also looks like it is nearing a new sell signal. With the sector looking vulnerable we're going to suggest put plays on IDXX. However, readers need to remember that trading biotech stocks always carries an extra element of risk. You never know when the company might announce some new drug development, clinical trial test results, an acceptance or rejection letter from the FDA, or something similar that could send shares gapping open either direction. We would always keep that in the back of your mind when considering how much capital to trade with in biotech stocks. Looking at IDXX you'll notice that the stock's oversold bounce stalled at resistance near $80.00 and under its descending 50-dma. Shares have held up pretty well over the past week with a sideways trading range of $78.00-80.00. It also looks like this is a consolidation near the top of IDXX's new bearish channel (see chart). We are going to suggest a trigger to buy puts at $77.95, which is under support at $78.00 and under short-term technical support at the 10-dma. If triggered we are suggesting two targets. Consider selling half or more of your position at $75.25, which is above potential support at $75.00 and its simple 200-dma. We would then try and sell the rest of your position in the $72.00-70.00 range, near the bottom of its descending channel. The P&F chart is bearish and points to a $64.00 target.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 80.00 UID-SP open interest=208 current ask $3.10
BUY PUT JUL 75.00 UID-SO open interest=129 current ask $1.15

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/28/06 (unconfirmed)
Average Daily Volume = 144 thousand

---

Oshkosh Truck - OSK - close: 50.60 chg: -0.05 stop: 52.05

Company Description:
Oshkosh Truck Corporation is a leading manufacturer of specialty trucks and truck bodies for the defense, fire and emergency, concrete placement and refuse hauling markets. Oshkosh Truck is a Fortune 1000 company with products marketed under the Oshkosh, Pierce, McNeilus, Medtec(TM), Geesink, Norba, Jerr-Dan, CON-E-CO and London brand names. The company is headquartered in Oshkosh, Wis., and had annual sales of $2.96 billion in fiscal 2005. (source: company press release or website)

Why We Like It:
During the month of June shares of OSK have thus far tested resistance at $55.00 and its 100-dma while also testing support near $50.00 and its 200-dma. The question now is where too next? Shares produced a nice oversold bounce from its first test of the 200-dma back May that peaked in early June. Unfortunately for the bulls that bounce has faded and the technical picture is bearish. The MACD is about to produce a new sell signal. The Point & Figure chart already shows a sell signal with a very bearish $34.00 target. If the markets continue lower next week then OSK may breakdown under support at its 200-dma. We're going to suggest a trigger to buy puts at $49.49, which is under the 200-dma and Thursday's low. Our target would be the $45.50-45.00 range.

Suggested Options:
We are suggesting the July puts. Our trigger is at $49.49.

BUY PUT JUL 50.00 OSK-SJ open interest=266 current ask $1.75
BUY PUT JUL 45.00 OSK-SI open interest=321 current ask $0.50

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/01/06 (unconfirmed)
Average Daily Volume = 737 thousand
 

New Strangles

None today.
 

New Play Archives