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NEW OPTION PLAYS TABLE-->
Call Options Plays
Put Options Plays
Strangle Options Plays
CRS None None
EMR    

New Calls

Carpenter Tech. - CRS - cls: 99.78 chg: +3.94 stop: 94.99

Company Description:
Carpenter Technology, based in Wyomissing, Pa, is a leading manufacturer and distributor of specialty alloys, including stainless steels, titanium alloys, superalloys, and various engineered products. (source: company press release or website)

Why We Like It:
We are seeing widespread strength in the steel sector this past week. Leading the charge higher on Friday was CRS. The stock added 4% after announcing it would raise its prices on some of its products. Most stocks in the sector have been consolidating flat to down over the past couple of months but it looks like the group has built a short-term base to rally from. There wasn't much of a reaction on Thursday when one analyst firm downgraded the steel sector. We like CRS because shares have been building on a technical support at its rising 200-dma (see chart). The Point & Figure chart has also turned bullish with a breakout over its trendline of resistance and a new buy signal that currently points to a $114 target. More conservative traders may want to wait for a rally past the 50-dma near $102.50 before committing capital to this play. We're going to suggest a slightly more aggressive trigger to buy calls at $100.75, which is above Friday's intraday high. If triggered our target is the $107.50-108.00 range, which is under the simple 100-dma. FYI: Another stock we are watching as a potential candidate for calls is IPS. IPS is another steel stock that produced a bullish breakout over $95 and its 100-dma on Friday. The Friday gain helped IPS' weekly chart produced a bullish engulfing candlestick pattern. Unfortunately, it looks like IPS may have additional resistance near $97.50 and the $100 level. Traders may want to keep an eye on it as a potential play.

Suggested Options:
We are suggesting the October calls. You, the individual trader, should decide which month and strike price best suits your trading style and risk.

BUY CALL OCT 95.00 CRS-JS open interest= 203 current ask $9.30
BUY CALL OCT 100.0 CRS-JT open interest= 69 current ask $6.40
BUY CALL OCT 105.0 CRS-JA open interest= 91 current ask $4.20

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/23/06 (unconfirmed)
Average Daily Volume = 847 thousand

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Emerson Elec. - EMR - close: 82.69 chg: +0.54 stop: 79.99

Company Description:
Emerson, based in St. Louis, is a global leader in bringing technology and engineering together to provide innovative solutions to customers through its network power, process management, industrial automation, climate technologies, and appliance and tools businesses. Sales in fiscal 2005 were $17.3 billion. (source: company press release or website)

Why We Like It:
This past week was good for EMR. The stock rallied off a test of the $80.00 level and managed to breakout over multiple levels of resistance. The P&F chart also looks good with a rebound from its rising trendline of support and a buy signal that points to a $92 target. If you check out the daily chart is looks like the stock has produced a big bull flag pattern. Aggressive traders might want to buy calls now or on a dip back towards $82.00. We want to see a little more confirmation of the current trend higher. Thus we're suggesting a trigger to buy calls at $83.55, which is above Friday's intraday high. If triggered our target is the $89.00-90.00 range.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 80.00 EMR-JP open interest= 273 current ask $4.30
BUY CALL OCT 85.00 EMR-JQ open interest=8011 current ask $1.40
BUY CALL OCT 90.00 EMR-JR open interest= 148 current ask $0.30

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/31/06 (unconfirmed)
Average Daily Volume = 1.5 million
 

New Puts

None today.
 

New Strangles

None today.
 

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