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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CEO CAH None
GSF CTX  
HOC ICE  
PBR LEH  
RIG    
SLB    

New Calls

Editor's note: We are adding multiple bullish candidates in the oil sector. We suggest you only pick one or two that you like the most to consider as candidates for your own portfolio instead of trying to trade them all. It's not advisable to have too much exposure to one specific sector.

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CNOOC Ltd - CEO - close: 84.84 change: +0.73 stop: 82.89

Company Description:
We are a Hong Kong-incorporated public company that engages primarily in the exploration, development and production of crude oil and natural gas offshore China. We are the dominant producer of crude oil and natural gas .The Company is also one of the largest offshore crude producer in Indonesia. (source: company press release or website)

Why We Like It:
Oil and gas stocks look poised to move higher next week. We like CEO as a call option candidate because shares have been trying to breakout over resistance at the $85 level for days now and after last week's Thursday-Friday bounce the stock looks ready to succeed next week. Many of the technical indicators are positive or they are turning bullish. The P&F chart already points to a $100 target. We are suggesting a move over Friday's high to open positions. Our suggested entry point will be $85.25. If triggered our target is the $89.50-90.00 range. FYI: Another Chinese oil company with an improving chart is PTR.

Suggested Options:
We are suggesting the December calls. Our trigger to open plays is at $85.25. As with all of our plays it is you, the individual investor, who should decide which month and which strike price best suits your trading style and risk.

BUY CALL DEC 80.00 CEO-LP open interest=826 current ask $8.50
BUY CALL DEC 85.00 CEO-LQ open interest=856 current ask $4.30
BUY CALL DEC 90.00 CEO-LR open interest=717 current ask $1.05

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/31/06 (confirmed)
Average Daily Volume = 264 thousand

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GlobalSantaFe - GSF - close: 52.39 chg: +1.88 stop: 49.39

Company Description:
GlobalSantaFe is a leading provider of offshore oil and gas drilling and drilling management services. The company owns or operates a mobile fleet of marine drilling rigs that operates in major drilling regions around the world, including premium and heavy-duty, harsh-environment jackups, semisubmersibles, and dynamically positioned ultra-deepwater drillships. (source: company press release or website)

Why We Like It:
Traders bought the post-earnings dip in GSF near its 50-dma. Now the three-day pattern looks like a bullish reversal. Short-term technical indicators are turning positive and the MACD on the weekly chart recently produced a new buy signal. The P&F chart points to a $67 target. GSF is an oil services stock and the oil services sector tends to be more volatile than its oil and energy brethren. We're suggesting positions here near $52 although anywhere above $50 should suffice. We do expect some temporary resistance near $54 and again at its 200-dma near $55.00. Our target is the $57.50-58.00 range.

Suggested Options:
We are suggesting the December calls although January calls would also work well.

BUY CALL DEC 50.00 GSF-LJ open interest= 183 current ask $4.20
BUY CALL DEC 52.50 GSF-LA open interest=2066 current ask $2.70
BUY CALL DEC 55.00 GSF-LK open interest=1968 current ask $1.60

Picked on November 05 at $ 52.39
Change since picked: + 0.00
Earnings Date 11/01/06 (confirmed)
Average Daily Volume = 3.4 million

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Holly Corp. - HOC - close: 50.75 change: +1.46 stop: 46.99

Company Description:
Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries an 82,000 barrels per day ("bpd") refinery located in southeast New Mexico, and a 26,000 bpd refinery in Woods Cross, Utah. Holly also owns a 45% interest (including the general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 1,600 miles of petroleum product pipelines in Texas, New Mexico and Oklahoma and refined product terminals in several Southwest and Rocky Mountain states. (source: company press release or website)

Why We Like It:
HOC's strong earnings report and gains in the oil sector have helped the stock breakout over resistance at the $50.00 mark and the top of its three-week trading range. Short-term and weekly technical indicators are improving or already bullish. We're suggesting calls on the breakout over $50.00. Broken resistance at $50 should now act as support so more conservative traders may want to use a tighter stop loss (maybe near $48 or $49). We're sticking our stop near the bottom of the trading range under $47. Our target is the $54.90-55.00 range.

Suggested Options:
We are suggesting the December calls.

BUY CALL DEC 45.00 HOC-LI open interest= 736 current ask $6.90
BUY CALL DEC 50.00 HOC-LJ open interest=1249 current ask $3.40
BUY CALL DEC 55.00 HOC-LK open interest= 949 current ask $1.35

Picked on November 05 at $ 50.75
Change since picked: + 0.00
Earnings Date 11/01/06 (confirmed)
Average Daily Volume = 1.1 million

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Petroleo Brasileiro - PBR - cls: 88.94 chg: +1.96 stop: 85.65

Company Description:
Petroleo Brasileiro is an integrated company that performs in oil and oil byproduct exploration, production, refining, marketing, and transportation, both in Brazil and abroad. (source: company press release or website)

Why We Like It:
PBR is another oil stock that looks prepared to move higher. Shares have been rising in a bullish channel the last few weeks and Thursday's bounce looks like a new entry point. However, since some of the technical indicators look a little overextended we want to see more confirmation of the trend. Therefore we're suggesting a trigger to buy calls at $90.05. More conservative traders may even want to wait for a new relative high over $91.40. Meanwhile if you don't want to wait more aggressive traders could open positions now or look for a dip back toward $86.50-86.00 as a potential entry point. Our target is the $95.00-96.00 range. FYI: PBR is a Brasilian stock traded as an ADR here in the U.S. One risk traders are facing is the company's earnings report. We cannot find a specific date or even a history of recent earnings reports. The risk is that they announce a negative report while we're trading them.

Suggested Options:
We are suggesting the December calls although January strikes are another choice.

BUY CALL DEC 85.00 PBR-LQ open interest=1672 current ask $6.40
BUY CALL DEC 90.00 PBR-LR open interest=1388 current ask $3.20
BUY CALL DEC 95.00 PBR-LS open interest=1105 current ask $1.35

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/06 (unconfirmed)
Average Daily Volume = 2.5 million

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Transocean - RIG - close: 75.07 change: +2.64 stop: 69.99

Company Description:
Transocean Inc. is the world's largest offshore drilling contractor with a fleet of 82 mobile offshore drilling units. The company's mobile offshore drilling fleet, consisting of a large number of high-specification deepwater and harsh environment drilling units, is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. (source: company press release or website)

Why We Like It:
RIG is another oil service stock that's making progress. The company reported positive earnings on Thursday but the stock didn't really pop until Friday when the stock received an analyst upgrade. Volume was above average the last two days. We see the move over $75.00 as a new entry point to buy calls. However, this might be an aggressive entry point with potential resistance directly overhead at the 200-dma near $76. We're suggesting positions now with the stock over $75 but more conservative traders may want to wait for a move over $76. We're going to have two targets. Our conservative target is the $79.50 level. Our aggressive target is the $84.00 level.

Suggested Options:
We are suggesting the December calls although traders may want to consider buying January strikes.

BUY CALL DEC 70.00 RIG-LN open interest= 392 current ask $7.20
BUY CALL DEC 75.00 RIG-LO open interest=2472 current ask $4.00
BUY CALL DEC 80.00 RIG-LP open interest=1570 current ask $1.90

Picked on November 05 at $ 75.07
Change since picked: + 0.00
Earnings Date 11/02/06 (confirmed)
Average Daily Volume = 7.6 million

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Schlumberger - SLB - cls: 63.50 chg: +1.55 stop: 60.95

Company Description:
Schlumberger is the world's leading oilfield services company supplying technology, information solutions and integrated project management that optimize reservoir performance for customers working in the oil and gas industry. (source: company press release or website)

Why We Like It:
SLB is another oil services stock that is rising with a bullish trend of higher lows. Volume on Friday's gain was below average but the stock closed back above its 200-dma. Short-term and long-term technicals are positive or they are turning positive. We're suggesting calls with SLB above $62.00. Our target is the $67.50-68.00 range. SLB is an oil services company and the services sector tends to be a little more volatile than the rest of the oil sector.

Suggested Options:
We are suggesting the December calls although traders may want to consider buying January strikes.

BUY CALL DEC 60.00 SLB-LL open interest= 489 current ask $5.20
BUY CALL DEC 62.50 SLB-LZ open interest= 692 current ask $3.60
BUY CALL DEC 65.00 SLB-LM open interest=12232 current ask $2.30
BUY CALL DEC 67.50 SLB-LB open interest= 593 current ask $1.40

Picked on November 05 at $ 63.50
Change since picked: + 0.00
Earnings Date 10/20/06 (confirmed)
Average Daily Volume = 9.8 million
 

New Puts

Cardinal Health - CAH - cls: 63.26 chg: -1.36 stop: 64.85

Company Description:
Headquartered in Dublin, Ohio, Cardinal Health, Inc. is an $81 billion, global company serving the health-care industry with a broad portfolio of products and services. Through its diverse offerings, Cardinal Health delivers health-care solutions that help customers reduce their costs, improve safety and productivity, and deliver better care to patients. The company manufactures, packages and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. (source: company press release or website)

Why We Like It:
Investors were unhappy with CAH's most recent earnings report in late October. Some traders bought the initial dip but the stock failed at resistance near $66 and now shares are slipping toward new relative lows. Currently CAH has support near $63.00 and again at $62.35. Given the bearish turn in the technical indicators we suspect the stock may be ready to breakdown into a new trend lower. We're suggesting a trigger to buy puts at $61.99. If triggered our target is the $58.00-57.50 range. Be prepared for a bounce on CAH's initial test of the $60 level.

Suggested Options:
We are suggesting the December puts although Januarys would also work well. Our trigger to open plays is at $61.99.

BUY PUT DEC 65.00 CAH-XM open interest=1660 current ask $2.60
BUY PUT DEC 60.00 CAH-XL open interest=3612 current ask $0.65

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/27/06 (confirmed)
Average Daily Volume = 1.3 million

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Centex - CTX - close: 50.39 change: -0.85 stop: 52.55

Company Description:
Dallas-based Centex, founded in 1950, is one of the nation's leading home building companies. Centex operates in major U.S. markets in 25 states and delivered more than 39,000 homes in the United States in its most recent fiscal year ended March 31, 2006. Its leading brands include Centex Homes, Fox & Jacobs Homes, CityHomes and Centex Destination Properties. (source: company press release or website)

Why We Like It:
The homebuilders struggled to build on their strength in September. Now after a month of trying to march higher it looks like momentum has reversed. Shares of CTX have begun to post lower highs and are on the verge of breaking support at the $50.00 level and its 100-dma. The P&F chart for CTX has already reversed into a sell signal. We are suggesting a trigger to buy puts at $49.75. If triggered our target is the $45.50-45.00 range.

Suggested Options:
We are suggesting the December puts although Januarys would also work well. Our trigger to open plays is at $49.75.

BUY PUT DEC 50.00 CTX-XJ open interest= 934 current ask $2.05
BUY PUT DEC 45.00 CTX-XI open interest=1409 current ask $0.60

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/23/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Intercont.Exchange - ICE - cls: 81.75 chg: -1.55 stop: 82.55

Company Description:
IntercontinentalExchange operates the leading global, electronic marketplace for trading both futures and OTC energy contracts. ICE offers a range of contracts based on crude oil and refined products, natural gas, power and emissions. ICE conducts its futures markets through its regulated London-based subsidiary, ICE Futures, Europe's leading energy exchange. ICE Futures offers liquid markets in the world's leading oil benchmarks: Brent Crude futures and West Texas Intermediate (WTI) Crude futures, as well as the leading heating oil futures contract by traded volume. (source: company press release or website)

Why We Like It:
ICE recently reported earnings. The company beat estimates by two cents but traders sold the news anyway in spite of some positive analyst comments and raised price targets. The XBD broker-dealer index looks tired and poised for more profit taking. Meanwhile shares of ICE may have produced a top formation over the last month. We want to buy puts on a breakdown under support at $80.00. We're suggesting a trigger to open positions at $79.85. If triggered our target is the $75.15-75.00 range. More conservative traders may want to exit at the rising 50-dma near $75. FYI: A decline under $81.00 would reverse the P&F chart into a new sell signal. More aggressive traders may want to consider opening early positions under $81.00.

Suggested Options:
We are suggesting the December puts. Our trigger to open positions is at $79.85.

BUY PUT DEC 85.00 ICE-XQ open interest= 556 current ask $6.40
BUY PUT DEC 80.00 ICE-XP open interest= 838 current ask $3.70
BUY PUT DEC 75.00 ICE-XO open interest=2919 current ask $1.85

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/02/06 (confirmed)
Average Daily Volume = 1.6 million

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Lehman Brothers - LEH - cls: 74.43 chg: -1.57 stop: 77.01

Company Description:
Lehman Brothers (ticker symbol: LEH), an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients and high-net-worth individuals worldwide. (source: company press release or website)

Why We Like It:
LEH is another investment-related stock that is seeing some profit taking after an impressive run up from its August lows. Technicals are bearish and shares are beginning to breakdown under various levels of support. Friday's session produced a failed rally under its 10-dma and it produced a bearish engulfing candlestick pattern. We are suggesting puts with LEH under $75.00 but more conservative traders may want to see a new relative low under Thursday's low of 73.69. There is potential support at its rising 50-dma but we are expecting a dip toward stronger support near $70.00 and its 200-dma. Our target is the $70.25-70.00 range.

Suggested Options:
We are suggesting the December puts.

BUY PUT DEC 75.00 LES-XO open interest=2437 current ask $3.10
BUY PUT DEC 70.00 LES-XN open interest= 664 current ask $1.25

Picked on November 05 at $ 74.43
Change since picked: + 0.00
Earnings Date 12/13/06 (unconfirmed)
Average Daily Volume = 3.6 million
 

New Strangles

None today.
 

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