Option Investor
New Plays

New Option Plays

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

New Calls

None today.

New Puts

US Airways - LCC - close: 43.54 chg: -2.15 stop: 47.51

Company Description:
US Airways and America West's recent merger creates the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of Star Alliance, which provides connections for our customers to 842 destinations in 152 countries worldwide. (source: company press release or website)

Why We Like It:
The XAL airline index has spent the last couple of weeks consolidating sideways in a neutral pattern of higher lows and lower highs. That pattern was broken down with a 2.7% decline in the sector index, which was mostly likely driven by another rise in crude oil. The sector weakness was lead by a 4.7% loss in shares of LCC. The stock has been channeling higher in a wide, rising channel for months. As of yesterday the stock had pulled back toward support at the bottom of its channel and its simple 100-dma. Today's breakdown is definitely bearish and we see a similar breakdown of support on the P&F chart. Currently the P&F chart points to a $35 target. We suspect that the $40 level might offer some support for LCC so we're setting our short-term conservative target at $40.25. We're also setting a more aggressive target at $36.00.

Suggested Options:
We are suggesting the September puts. You choose the strike price that best suits your trading style.

BUY PUT SEP 45.00 LCC-UI open interest= 656 current ask $4.50
BUY PUT SEP 40.00 LCC-UH open interest=1330 current ask $2.15

Picked on August 01 at $ 43.54
Change since picked: + 0.00
Earnings Date 07/27/06 (confirmed)
Average Daily Volume = 1.6 million


Martin Marietta - MLM - cls: 77.61 chg: -2.91 stop: 82.05

Company Description:
Martin Marietta is the nation's second largest producer of construction aggregates, a leading producer of magnesia-based chemical products and is developing structural composites products for use in a wide variety of industries. (source: company press release or website)

Why We Like It:
Investors were not happy with MLM's earnings report today. The company reported this morning and missed estimates by 2 cents. To make matters worse the company guided lower. The stock broke its short-term trendline of higher lows (support) and technical indicators are turning negative again. We see today's move as a new entry point to buy puts. We're suggesting that readers consider positions with MLM under $80.00. Our target is the $72.50-70.00 range. More conservative traders may want to consider a tighter stop loss.

Suggested Options:
We're suggesting the September puts but Octobers are also available.

BUY PUT SEP 80.00 MLM-UP open interest=2036 current ask $5.90
BUY PUT SEP 75.00 MLM-UO open interest= 236 current ask $3.50

Picked on August 01 at $ 77.61
Change since picked: + 0.00
Earnings Date 08/01/06 (confirmed)
Average Daily Volume = 890 thousand

New Strangles

None today.

New Play Archives