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StanCorp. - SFG - close: 44.94 change: -0.56 stop: 46.01

Company Description:
StanCorp Financial Group, Inc., ("StanCorp") through its subsidiaries marketed as The Standard -- Standard Insurance Company, The Standard Life Insurance Company of New York, StanCorp Investment Advisers, StanCorp Equities, Inc., StanCorp Trust Company and StanCorp Mortgage Investors -- is a leading provider of financial products and services. StanCorp's subsidiaries serve approximately 7.8 million customers nationwide as of June 30, 2006, with group and individual disability insurance group life and dental insurance, retirement products and services and investment advice. (source: company press release or website)

Why We Like It:
The last couple of earnings seasons have been rough for SFG. The stock has experienced some major sell-offs (see chart). Shares managed to avoid a big sell-off when SFG announced earnings today but unfortunately for shareholders the trend still appears to be down. The company reported earnings and the EPS numbers were a bit better than analysts expected but revenues were light and the company said fiscal year numbers would be toward the low end of previous guidance. This was effectively an earnings warning going forward. The stock lost 1.2% on strong volume and looks poised to challenge and probably breakdown under support at the $44.00 level. Short-term technicals are bearish and SFG has been trading in a very wide, long-term bearish channel for months. The P&F chart points to a $36 target but appears to have some support near $39.00. We are suggesting a trigger to buy puts at $43.89, which is under support at $44.00 and its September 25th low (43.92). If triggered at $43.89 our target is the $40.25-40.00 range. More aggressive traders may want to aim lower toward the bottom edge of its channel. The same group of aggressive traders might want to consider early positions now with the failed rally under $46.00.

Suggested Options:
We are suggesting the November and/or December puts. Be advised that the November strikes expire in about four weeks. You the individual trader should decide which month and strike price works best for your trading style and risk. Our suggested entry point is $43.89.

BUY PUT NOV 45.00 SFG-WI open interest=119 current ask $1.35
BUY PUT NOV 40.00 SFG-WH open interest= 10 current ask $0.55

BUY PUT DEC 45.00 SFG-XI open interest= 0 current ask $2.00
BUY PUT DEC 40.00 SFG-XH open interest= 0 current ask $0.55

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/06 (confirmed)
Average Daily Volume = 267 thousand
 

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