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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CMG AAPL None
CTSH DRIV  
GD EXPD  
LM ISRG  
  SUPX  

New Calls

Chipolte Mex Grill - CMG - cls: 61.76 chg: -0.12 stop: 57.45

Company Description:
Chipotle Mexican Grill offers a focused menu of burritos, tacos, burrito bols (a burrito without the tortilla) and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. (source: company press release or website)

Why We Like It:
CMG is one of our favorite places to eat and we've never heard anyone complain about their service and food. Investors also seem pretty smitten with shares of CMG. The stock has been climbing in a wide, rising channel. The recent sell-off stalled at support at the bottom edge of its channel and now CMG is bouncing. The P&F chart shows a bearish signal quickly reversing into a new buy signal. Plus, the MACD on the daily chart has produced a new buy signal. We would consider buying calls right here but our preferred entry point would be a dip back towards $60.00 (maybe even $59.00). Our target is the $67.50-70.00 range. We do not want to hold over the late July earnings report. FYI: The P&F chart points to a $75 target.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 60.00 CMG-GL open interest=154 current ask $5.10
BUY CALL JUL 65.00 CMG-GM open interest=325 current ask $2.80

Picked on June 18 at $ 61.76
Change since picked: + 0.00
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 384 thousand

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Cognizant Tech. - CTSH - close: 63.62 chg: +0.61 stop: 62.49

Company Description:
Cognizant is a leading provider of IT services. Focused on delivering strategic information technology solutions that address the complex business needs of its clients, Cognizant uses its own on-site/offshore outsourcing model to provide applications management, development, integration, and reengineering; infrastructure management; business process outsourcing; and numerous related services, such as enterprise consulting, technology architecture, program management, and change management. (source: company press release or website)

Why We Like It:
If the market does continue higher then CTSH may be able to breakout over resistance in the $64.00 and $65.00 levels. Shares broke down below their bullish pattern in May but since then the stock has produced a bullish double-bottom pattern. The Thursday-Friday bounce has produced a new MACD buy signal on the daily chart. We are suggesting a trigger to buy calls at $65.05. More aggressive traders may want to jump in early around $64.35. Our target is the May highs in the $69.50-70.00 range.

Suggested Options:
We are suggesting the July calls. We do not want to hold over the July earnings report.

BUY CALL JUL 65.00 UPU-GM open interest=3425 current ask $2.45
BUY CALL JUL 70.00 UPU-GN open interest=1463 current ask $0.90

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.4 million

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General Dynamics - GD - cls: 66.12 chg: +1.35 stop: 63.99

Company Description:
General Dynamics, headquartered in Falls Church, Va., employs approximately 72,700 people worldwide and had 2005 revenue of $21.2 billion. The company is a market leader in mission-critical information systems and technologies; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and business aviation. (source: company press release or website)

Why We Like It:
The market wrap this weekend mentioned how investors might choose to protect their money and put it in highly liquid large cap blue chip stocks. GD may be one of the beneficiaries of such a move. The stock displayed relative strength on Friday with another 2% gain and a breakout over resistance at $65.00 and its 50-dma. The stock could have more room to run after a three-week consolidation above the $62.00 level. Volume on Friday's move was above average, which is bullish. We would consider new call positions here but our preferred entry point would be on a pull back into the $65.50-65.00 region. Broken resistance near $65.00 should be new support. Our target is the $69.00-70.00 range.

Suggested Options:
We are suggesting the July calls. We do not want to hold over the July earnings report.

BUY CALL JUL 65.00 GD-GM open interest=1890 current ask $2.45
BUY CALL JUL 70.00 GD-GN open interest= 498 current ask $0.50

Picked on June 18 at $ 66.12
Change since picked: + 0.00
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 1.5 million

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Legg Mason - LM - close: 102.45 chg: +1.97 stop: 96.99

Company Description:
Legg Mason, Inc., headquartered in Baltimore, is a global asset management firm, structured as a holding company. (source: company press release or website)

Why We Like It:
It looks like the selling may be over in shares of LM. The stock has produced a bottom over the last four weeks and now shares are gaining ground again. We noticed the breakout over $100 on Thursday but wanted to see more strength and LM delivered with a 1.9% gain on Friday. Volume came in above its daily average. The Point & Figure chart looks pretty attractive with a double-top breakout buy signal and a $114 target. Please note that the XBD broker-dealer index is still in a bearish trend and if the sector index turns lower next week that will put pressure on LM. We're going to suggest calls with LM over $100. Readers can choose to open positions here or wait for a potential pull back toward the $100 level. We're going to put our stop loss under the lower edge of the recent gap. More conservative traders might want to put their stop under the top edge of the gap (around 98.75). We are going to target the $107.50-108.00 range. We would aim higher but the descending 50-dma will probably be overhead resistance.

Suggested Options:
We are suggesting the July and/or August calls. Remember our plan to exit ahead of LM's July earnings report.

BUY CALL JUL 100.00 LM-GT open interest=1674 current ask $5.70
BUY CALL JUL 105.00 LM-GA open interest= 879 current ask $3.10

BUY CALL AUG 100.00 LM-HT open interest=2680 current ask $7.50
BUY CALL AUG 105.00 LM-HA open interest= 787 current ask $4.90

Picked on June 18 at $102.45
Change since picked: + 0.00
Earnings Date 07/25/06 (unconfirmed)
Average Daily Volume = 1.8 million
 

New Puts

Apple Computer - AAPL - close: 57.56 chg: -1.82 stop: 60.05

Company Description:
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store. (source: company press release or website)

Why We Like It:
Shares of AAPL may look oversold from their six-week sell-off but they could get a lot more oversold pretty soon. On Thursday the stock looked poised to breakout over the $60.00 level with a bullish engulfing candlestick pattern. There was no follow through higher after one analyst firm downgraded their earnings estimate on the company. More importantly word has gotten out that Microsoft is about to launch a rival for AAPL's iPod products. Whether the product is better or not it's more competition for AAPL's revenue stream. We suspect the next move could be lower. Once AAPL trades under support at $57.00 the next level of significant support appears to be the $50 level. The P&F chart looks pretty bearish with a $44.00 target. We're going to suggest a trigger to buy puts at $56.85. If triggered our target will be the $50.50-50.00 range. We do not want to hold over AAPL's mid July earnings report.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 60.00 QAA-SL open interest=49406 current ask $4.50
BUY PUT JUL 57.50 QAA-SY open interest=17154 current ask $3.00
BUY PUT JUL 55.00 QAA-SK open interest=49027 current ask $1.95
BUY PUT JUL 52.50 QAA-SX open interest= 6779 current ask $1.25

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 33.1 million

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Digital River - DRIV - close: 40.21 change: -0.96 stop: 42.55

Company Description:
Digital River, Inc., a global leader in e-commerce outsourcing, builds and manages online businesses for more than 40,000 software publishers, manufacturers, distributors and online retailers. Its multi-channel e-commerce solution, which supports both direct and indirect sales, is designed to help companies of all sizes maximize online revenues as well as reduce the costs and risks of running an e-commerce operation. (source: company press release or website)

Why We Like It:
We are going to add DRIV back to the play list as a put candidate again. The stock did well for us on the initial breakdown in early June. Now it looks like the oversold bounce is failing under its 100-dma. The Point & Figure chart points to a $26.00 target. We suspect that DRIV could fall toward the $35.00 region. Our plan is to use a trigger at $39.45 to open new plays. More aggressive traders may want to open positions now given Friday's failed rally. Or consider a bounce and failed rally under $42.50 as another entry point to buy puts. If triggered at $39.45 our target will be the $35.25-35.00 range.

Suggested Options:
We are suggesting the July puts. We do not want to hold over the July earnings report.

BUY PUT JUL 40.00 DQI-SH open interest=1526 current ask $2.30
BUY PUT JUL 35.00 DQI-SG open interest=1383 current ask $0.65

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 1.0 million

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Expeditors - EXPD - close: 99.35 chg: +0.86 stop: 100.35

Company Description:
Expeditors is much more than getting a piece of freight from one point to another. The Council of Logistics Management defines logistics as that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customers' requirements. Our job is to make sure that from raw material to finished goods sitting on the retail shelf, we provide the critical services and information necessary to give our clients a competitive advantage in the management of their supply chains. (source: company press release or website)

Why We Like It:
This is an aggressive bearish play. Not only does EXPD have plenty of upward momentum but the P&F chart is bullish with a $119 target. Technicals on the daily chart look positive given the three-day bounce but it looks like the rally is stalling under resistance at the top of its six-week bearish channel. We're suggesting a trigger to buy puts at $97.85. If triggered our target is the $90.50-90.00 range, where shares found support a few days ago. We want to reiterate that this is an aggressive play. EXPD could be building a big bull-flag pattern. If that's the case then traders will want to buy calls on a breakout over the $102.00-102.50 region.

Suggested Options:
We are suggesting the July and August puts but we do not want to hold over the early August earnings report. Our preference is for the August strikes.

BUY PUT JUL 100.00 URP-ST open interest=381 current ask $4.60
BUY PUT JUL 95.00 URP-SS open interest=607 current ask $2.55
BUY PUT JUL 90.00 URP-SR open interest=372 current ask $1.25

BUY PUT AUG 100.00 URP-TT open interest= 513 current ask $6.60
BUY PUT AUG 95.00 URP-TS open interest=1495 current ask $4.40
BUY PUT AUG 90.00 URP-TR open interest= 821 current ask $2.80

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/01/06 (unconfirmed)
Average Daily Volume = 1.1 million

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Intuitive Surgical - ISRG - cls: 104.76 chg: -3.08 stop: 108.25

Company Description:
Surgical robotics was little more than a medical curiosity until 1999, the year Intuitive Surgical introduced the da Vinci Surgical System. Today, Intuitive Surgical is the global leader in the rapidly emerging field of robotic-assisted minimally invasive surgery. Since its inception, the company has consistently provided surgeons and hospitals with the tools needed to improve clinical outcomes and to help patients return to active and productive lives. (source: company press release or website)

Why We Like It:
ISRG is a high-flying winner from 2005 that has seen a lot of volatility in 2006. Shares produced a lower high around $130 in early May and now the stock is testing support and looks poised to breakdown under support at its rising 200-dma. Volume on Friday's 2.8% decline came in above the daily average. ISRG failed to participate during the market's big bounce last week. Aggressive traders may want to initiate put positions now with the stock under $107.50. We're going to suggest a trigger at $102.45, which is under the technical support at the 200-dma. More conservative traders might feel better waiting for a breakdown under the $100.00 mark before buying puts. The Point & Figure chart is bearish and points to a $74.00 target. We are only going to target a decline into the $91.00-90.00 range. We do anticipate some time of bounce at $100 and probably another bounce near $95.00. We do not want to hold over the late July earnings report.

Suggested Options:
We are suggesting the July puts. Unfortunately, at this time August strikes are not yet available. Our trigger to buy puts is at $102.45.

BUY PUT JUL 105.00 AXQ-SA open interest= 879 current ask $6.50
BUY PUT JUL 100.00 AXQ-ST open interest=1027 current ask $4.40
BUY PUT JUL 95.00 AXQ-SS open interest=1145 current ask $2.75

Picked on June xx at $xxx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/27/06 (unconfirmed)
Average Daily Volume = 1.2 million

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Supertex - SUPX - close: 37.00 change: -1.68 stop: 39.25

Company Description:
Supertex, Inc. is a publicly held mixed signal semiconductor manufacturer, focused on high voltage interface products for use in the telecommunications, networking systems, medical, automotive and industrial electronics industries. (source: company press release or website)

Why We Like It:
The SOX semiconductor index produced a big bounce on Thursday but the sector saw no follow through on Friday. The SOX index remains inside its six-week bearish channel and under resistance at the 460 level. Meanwhile shares of SUPX, which have been out performing its peers in the semiconductor sector these last several weeks, are starting to falter. The stock has produced a bearish double-top pattern (see chart) and shares are now poised to breakdown under significant support at its rising 200-dma. The P&F chart for SUPX has already turned bearish with a $31.00 target. We want to catch a breakdown under the 200-dma. Our plan is to use a trigger at $35.99. More aggressive traders may want to jump in early with a drop under $36.50. More conservative traders can wait for a drop below the $35.00 level, which could be round-number support. Our target is the $31.00-30.00 range. We do not want to hold over the early August earnings report.

Suggested Options:
We are suggesting the July puts. At this time August strikes are not yet available. Traders might want to play the September strikes since they have more open interest.

BUY PUT JUL 40.00 SQO-SH open interest= 12 current ask $4.20
BUY PUT JUL 35.00 SQO-SG open interest= 86 current ask $1.50

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/03/06 (unconfirmed)
Average Daily Volume = 263 million
 

New Strangles

None today.
 

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