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Call Options Plays
Put Options Plays
Strangle Options Plays
None BNI None
  PCU  
  RAIL  
  SNDK  
  X  

New Calls

None today.
 

New Puts

Burlington Nor.SantaFe - BNI - cls: 68.60 chg: -1.82 stop: 71.01

Company Description:
A subsidiary of Burlington Northern Santa Fe Corporation, BNSF Railway 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 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:
In spite of plunging oil prices the transportation sector has not been able to breakout past resistance in the 4475-4500 region and its simple 200-dma. Now the sector is falling with today's 1.5% decline and breakdown under technical support at its 50-dma. The railroad stocks are performing worse with the Dow Jones railroad index falling 2.2% and also trading under its 50-dma. While momentum indicators are turning bearish we admit this may be a tough sell. Both the Transportation average and the railroad index have support that was built over the last couple of months. However, the railroads, including shares of BNI, have produced a third failed rally at its five-month trendline of resistance (see chart). This could be the beginning of a new leg lower. We are going to suggest a trigger to buy puts on BNI at $67.75, which is under the stock's 50-dma. We do expect some support near $64.00. Therefore we're going to list two targets. Our conservative target is $64.25 and our aggressive target is at $61.00. We do not want to hold over the late October earnings report.

Suggested Options:
We are suggesting the November puts. We do not want to hold over the October earnings. Our trigger to open plays is at $67.75. Remember that it is you, the individual trader, who should decide which month and strike price best suits your trading style and risk.

BUY PUT NOV 70.00 BNI-WN open interest= 236 current ask $3.80
BUY PUT NOV 65.00 BNI-WM open interest=1284 current ask $1.70

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 2.8 million

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Southern (Peru) Copper - PCU - cls: 87.51 chg: +0.20 stop: 92.51

Company Description:
Our mining operations are located in Peru and Mexico. We own and operate four open pit mines and three metallurgical complexes that make SCC a fully integrated copper producer with significant byproducts of molybdenum, zinc and precious metals. (source: company press release or website)

Why We Like It:
The trading in PCU has turned bearish. The stock has produced a bearish double-top pattern over the last couple of months and now shares are flirting with a breakdown under support in the $87.50-87.00 region. The P&F chart has already produced a breakdown sell signal with a $77 target. We do have a couple of concerns. PCU has potential support near $85 with its rising 200-dma. Plus, the price of copper has been rebounding since yesterday's gap down. Shares of PCU and its rival PD can be somewhat volatile. Therefore we have to label this a more aggressive, higher-risk play. At this time we're suggesting a trigger to buy puts at $86.50. If triggered our target is the $81.00-80.00 range. Traders should also note that PCU is due to split 2-for-1 on October 3rd. This shouldn't have any big impact on our play but our post-split target would be the $40.50-40.00 range. More aggressive traders may want to aim lower.

Suggested Options:
We are suggesting the October and November puts. Please note that we do not want to hold over the mid October earnings report.

BUY PUT OCT 90.00 PCU-VR open interest=1039 current ask $5.20
BUY PUT OCT 85.00 PCU-VQ open interest=3129 current ask $2.85
BUY PUT OCT 80.00 PCU-VP open interest=3287 current ask $1.35

BUY PUT NOV 90.00 PCU-WR open interest= 43 current ask $8.50
BUY PUT NOV 85.00 PCU-WQ open interest= 213 current ask $5.60
BUY PUT NOV 80.00 PCU-WP open interest= 195 current ask $3.50

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/16/06 (unconfirmed)
Average Daily Volume = 1.3 million

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FreightCar Amer. - RAIL - close: 54.50 chg: +1.16 stop: 56.32

Company Description:
FreightCar America, Inc. manufactures railroad freight cars, with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. It is headquartered in Chicago, Illinois and has manufacturing facilities in Danville, Illinois, Roanoke, Virginia and Johnstown, Pennsylvania. (source: company press release or website)

Why We Like It:
RAIL is another play in the railroad sector that we think is headed lower. The stock did show some relative strength today but the rally failed near old (recent) support near $56 and its descending 100-dma. This sort of failed rally looks like a low-risk entry point to buy puts. We'll put our stop loss just above today's high and the 100-dma. We're going to list two targets. We suggest selling half or more of your position at our first target in the $50.25-50.00 range. Sell the rest at our second target in the $46.00-45.00 range.

Suggested Options:
We are suggesting the November puts although Octobers and Decembers could also work. We do not want to hold over the late October earnings report.

BUY PUT NOV 55.00 RQN-WK open interest= 0 current ask $4.20
BUY PUT NOV 50.00 RQN-WJ open interest=131 current ask $2.05

Picked on September 21 at $ 54.50
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume = 353 thousand

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SanDisk - SNDK - close: 57.69 chg: -1.21 stop: 60.05

Company Description:
SanDisk is the original inventor of flash storage cards and is the world's largest supplier of flash data storage card products, using its patented, high-density flash memory and controller technology. SanDisk is headquartered in Milpitas, CA and has operations worldwide, with more than half its sales outside the U.S. (source: company press release or website)

Why We Like It:
SNDK succumbed to profit taking like most of the tech sector on Thursday in spite of some new positive analyst comments this morning. The stock has been screaming higher from its July lows but the upward momentum has stalled near $60.00 resistance. Technical indicators are turning south and it looks like it's time for more significant profit taking. Nothing moves in a straight line and even a normal 38.2% (Fibonacci) retracement would pull SNDK toward the $51 region. More aggressive traders may want to open positions right now. The stock has already broken down under its two-month trendline of higher lows. However, we want to see a breakdown under its 200-dma. Thus we're suggesting a trigger to buy puts at $56.69. If triggered our target is the $51.50-50.00 range. We do not want to hold over the mid October earnings report so that only gives us about four weeks.

Suggested Options:
We are suggesting the October puts although Novembers would work well. We plan to exit before October strikes expire to avoid SNDK's earnings report.

BUY PUT OCT 60.00 SWF-VL open interest= 7552 current ask $4.80
BUY PUT OCT 57.50 SWF-VY open interest=10007 current ask $3.50
BUY PUT OCT 55.00 SWF-VK open interest=12604 current ask $2.30
BUY PUT OCT 52.50 SWF-VX open interest= 9120 current ask $1.45
BUY PUT OCT 50.00 SWF-VJ open interest= 9719 current ask $0.90

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume = 9.9 million

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U.S.Steel - X - close: 57.15 chg: -1.60 stop: 60.05

Company Description:
United States Steel Corporation headquartered in Pittsburgh, Pa., manufactures a wide variety of steel sheet, tubular and tin products; coke, and taconite pellets; and has a worldwide annual raw steel capability of 26.8 million net tons. (source: company press release or website)

Why We Like It:
X is another stock in the iron and steel sector that looks poised to breakdown. Shares have been consolidating in bearish fashion with a pattern of lower highs while it bounces from support near $56.00. More recently the trendline of lower highs has been bolstered by a descending 50-dma and now the $60.00 level with its 200-dma. Volume came in strong on today's failed rally under $60 and the technical indicators are bearish. More aggressive traders may want to open put plays right here. We want to wait for a breakdown under support at $56.00. Therefore we're suggesting a trigger to buy puts at $55.95. If triggered our target is the $50.25-50.00 range. We do not want to hold over the late October earnings report. FYI: We already have a couple of put candidates on the newsletter (NUE, STLD) in the steel and metals sector. We would suggest only trading one or two to prevent overexposure to one specific sector.

Suggested Options:
We are suggesting the November puts.

BUY PUT NOV 60.00 X-WL open interest=434 current ask $5.50
BUY PUT NOV 55.00 X-WK open interest=409 current ask $2.95
BUY PUT NOV 50.00 X-WJ open interest= 58 current ask $1.35

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/06 (unconfirmed)
Average Daily Volume = 4.4 million
 

New Strangles

None today.
 

New Play Archives