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Call Options Plays
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Strangle Options Plays
None AAPL None
  AZO  
  BNI  
  CMI  

New Calls

None today.
 

New Puts

Apple Computer - AAPL - close: 64.78 chg: -2.43 stop: 70.01

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:
AAPL is still being plagued by the stock options backdating story. Furthermore the stock looks like a target for profit taking after its impressive $20 run from the July lows. Monday saw the stock produce a failed rally at the $70.00 level and today's session AAPL produced a breakdown below its 10-dma and 200-dma. Short-term technical indicators are bearish and a move under the $64.00 level would produce a new Point & Figure chart sell signal. We are suggesting puts with AAPL under $65.00 although a failed rally under $67.50 could also work. Unfortunately, since AAPL has been so volatile in the last few days bouncing around the $65-70 region we are using a wide stop loss at $70.01. Our short-term target is the $60.50-60.00 range. The top of the July gap near $59.70 could act as support.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 67.50 QAA-UU open interest=5387 current ask $4.80
BUY PUT SEP 65.00 QAA-UM open interest=6828 current ask $3.40
BUY PUT SEP 62.50 QAA-UZ open interest=4046 current ask $2.25
BUY PUT SEP 60.00 QAA-UL open interest=5157 current ask $1.50

Picked on August 08 at $ 64.78
Change since picked: + 0.00
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume = 28 million

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Autozone Inc. - AZO - close: 87.73 chg: -1.31 stop: 90.05

Company Description:
As of May 6, 2006, AutoZone sells auto and light truck parts, chemicals and accessories through 3,699 AutoZone stores in the United States and 92 AutoZone stores in Mexico, and also sells the ALLDATA brand automotive diagnostic and repair software. (source: company press release or website)

Why We Like It:
AZO looks like a put option candidate following its recent failed rally under the four-month trendline of resistance and its bearish reversal near $90.00. The MACD indicator on the daily chart looks ready to roll over and short-term technicals like the RSI and stochastics are already turning over. The P&F chart is bearish and points to a $72 target. Last Friday's session was the failed rally and today's 1.4% decline produced a bearish engulfing candlestick pattern and a breakdown below its 10-dma. We are suggesting puts with AZO under $89.00. Our target is the $82.50-80.00 range.

Suggested Options:
We do not want to hold over the late September earnings report so we're suggesting the September puts.

BUY PUT SEP 90.00 AZO-UR open interest= 965 current ask $3.90
BUY PUT SEP 85.00 AZO-UQ open interest=4268 current ask $1.70

Picked on August 08 at $ 87.73
Change since picked: + 0.00
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 700 thousand

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Burlington Nor.SantaFe - BNI - cls: 68.06 chg: +0.44 stop: 72.05

Company Description:
Burlington Northern Santa Fe Corporation's subsidiary BNSF Railway Company operates one of the largest railroad networks in North America, with about 32,000 route miles in 28 states and two Canadian provinces. The railway is among the world's top transporters of intermodal traffic, moves more grain than any other North American railroad, transports the components of many of the products we depend on daily, and hauls enough low-sulphur coal to generate about ten percent of the electricity produced in the United States. (source: company press release or website)

Why We Like It:
Oil is still trading near its highs and the ongoing violence in the Middle East and Nigeria in addition to the news from BP yesterday about shutting down their Alaskan field will likely keep oil prices high. That's bad news for the transports. Furthermore if investors are going to start worrying more about a slow down in the economy then transports could also come under fire. BNI is already in an established down trend and while the MACD on the daily chart is trying to hold on to a buy signal the price action suggests BNI is ready to move lower. On Friday the stock produced a failed rally near $72, its exponential 200-dma and the top of its descending channel. The P&F chart is very bearish with a $49 forecasted price target. We are suggesting put options with BNI under $70.00. Our target is the bottom edge of the current channel in the $62.50-60.00 range.

Suggested Options:
We are suggesting the September or October puts. As with all of our plays, you, the individual trader, need to choose which month and strike price best suits your trading style.

BUY PUT SEP 70.00 BNI-UN open interest= 924 current ask $3.90
BUY PUT SEP 65.00 BNI-UM open interest=1087 current ask $1.55

BUY PUT OCT 70.00 BNI-VN open interest=1457 current ask $4.80
BUY PUT OCT 65.00 BNI-VM open interest=3387 current ask $2.45

Picked on August 08 at $ 68.06
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Cummins Inc. - CMI - close: 119.77 chg: -2.59 stop: 123.51

Company Description:
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $550 million on sales of $9.9 billion in 2005. (source: company press release or website)

Why We Like It:
This is an aggressive, high-risk play on CMI. For the most part everything looks pretty bullish on the stock. Shares are trading near new highs and the P&F chart has a bullish triangle breakout pattern with a $164 target. So why consider puts? Our market bias is bearish and CMI just produced a failed rally near the early July high making this a potential double-top pattern. We're going to stick our stop loss just above the highs and suggest that traders only consider put positions with CMI under $120.00. If there isn't any bearish follow through on today's reversal we'll probably exit early. Our target is the $112.75 mark.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 120.00 CMI-UD open interest=2052 current ask $5.40
BUY PUT SEP 115.00 CMI-UC open interest=1585 current ask $3.30

Picked on August 08 at $119.77
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 1.2 million
 

New Strangles

None today.
 

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