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New Calls

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Itron - ITRI - close: 50.14 chg: -2.24 stop: 52.55

Company Description:
Itron is a leading technology provider and critical source of knowledge to the global energy and water industries. Nearly 3,000 utilities worldwide rely on Itron's award-winning technology to provide the knowledge they require to optimize the delivery and use of energy and water. (source: company press release or website)

Why We Like It:
We didn't see anything negative about ITRI's latest earnings report. If anything the news was pretty positive yet investors chose to sell the news. The reaction to its earnings pushed ITRI to resistance at $56.00 this morning but then the stock reversed. This is the third failed rally/bearish reversal at $56 in the last several days and the ensuing sell-off pushed shares of ITRI under technical support at the 200-dma and toward round-number support at $50. Volume was naturally way above the norm. We find it noteworthy that ITRI's Point & Figure chart shows multiple failed rallies at its descending trendline of resistance and today's sell-off produced a new sell signal. We are suggesting that readers use a trigger at $49.75 to open put positions. Aggressive traders may want to jump in early around $49.95. More conservative types may want to wait for a decline under $49.50 just to make sure. Our target is the $45.10-45.00 range.

Suggested Options:
We are suggesting the August and September puts. Please note that the August options expire in about three weeks. You choose which strike and month best suits your trading style.

BUY PUT AUG 55.00 IUP-TK open interest=281 current ask $5.90
BUY PUT AUG 50.00 IUP-TJ open interest=802 current ask $2.60
BUY PUT AUG 45.00 IUP-TI open interest=202 current ask $0.85

BUY PUT SEP 55.00 IUP-UK open interest= 10 current ask $6.80
BUY PUT SEP 50.00 IUP-UJ open interest= 2 current ask $3.70

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/06 (confirmed)
Average Daily Volume = 424 thousand
 

New Strangles

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