Option Investor
New Plays

New Option Plays

Printer friendly version
Call Options Plays
Put Options Plays
Strangle Options Plays
FO None None

New Calls

Fortune Brands - FO - close: 71.30 change: 1.24 stop: 69.74

Company Description:
Fortune Brands, Inc. is a leading consumer brands company with annual sales exceeding $7 billion. Its operating companies have premier brands and leading market positions in home and hardware products, spirits and wine, and golf equipment. (source: company press release or website)

Why We Like It:
We have been watching FO for a potential entry point to buy calls the last several days - ever since it began to look like shares had put in a bottom. In the last month the stock has built support near $68.50 and a few days ago the stock broke out over $70.00 and its 10-dma. Traders bought the dip yesterday and today's rebound looks like confirmation with a new relative high. Volume came in above average on today's gain too (which is bullish). We are somewhat worried about resistance at $75.00 and potential resistance at its descending 50-dma (currently at 74.53). Plus, the Point & Figure chart for FO is still bearish. Here's the plan. We're suggesting calls with FO above $70.00 but honestly if the markets respond positively to the jobs report tomorrow (Friday) we expect FO to continue higher. If the markets do NOT respond positively to the jobs report then we would not open new bullish plays in FO or any other candidate. We're going to set a short-term target at the $74.00 mark. We do not want to hold over the July earnings report (21st - unconfirmed). FYI: more aggressive traders may want to use a wider stop like under Wednesday's low.

Suggested Options:
Aggressive traders might want to consider trading the July calls. We're going to suggest the August strikes. Remember, we're not suggesting you buy both strikes. You pick the strike price that works best with your risk profile.

BUY CALL AUG 70.00 FO-HN open interest=106 current ask $2.85
BUY CALL AUG 75.00 FO-HO open interest=107 current ask $0.60

Picked on July 06 at $ 71.30
Change since picked: 0.00
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume = 674 thousand


Komag Inc. - KOMG - close: 47.54 change: 2.35 stop: 44.49

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. (source: company press release or website)

Why We Like It:
A few days ago KOMG broke out from its bearish pattern of lower highs and then followed through to push past potential resistance in the $45.00 region and its 100-dma. Today's bounce from the $45.00 area was fueled by above average volume and the stock set a new two-month high. Most of the technical indicators on the monthly and daily charts are bullish. Plus, KOMG has a bullish P&F chart with a nice bounce from support and a $60 target. We are suggesting calls here near $47.50 although if KOMG does pull back any tomorrow a bounce from the $45.50-46.00 region could be used as a new entry point. We do expect some resistance near the $50.00 level but our target is the $52.25-54.00 range. We do not want to hold over the late July earnings report. Please note that the DDX disk drive index is still struggling with resistance at the 150 level and its trend of lower highs. More conservative traders might want to wait for the DDX index to breakout over 150 before considering call plays in this sector.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 45.00 QKX-HI open interest=663 current ask $4.90
BUY CALL AUG 50.00 QKX-HJ open interest=583 current ask $2.40

Picked on July 06 at $ 47.54
Change since picked: 0.00
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.1 million

New Puts

None today.

New Strangles

None today.

New Play Archives