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New Option Plays

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Call Options Plays
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Strangle Options Plays
GILD None None
OS    
SEPR    

New Calls

Gilead Sciences - GILD - close: 69.43 chg: +1.15 stop: 66.75

Company Description:
Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. (source: company press release or website)

Why We Like It:
The BTK biotech index ignored any market weakness on Friday and posted another gain to hit a new multi-year high. With the sector out performing it looks like odds are good that GILD will breakout over resistance at the $70.00 level. We are suggesting a trigger to buy calls at $70.25. If triggered our target is the $74.74-75.00 range. Right now we have a stop loss just under technical support at its 50-dma but it's a little too wide for our comfort zone and we'll be planning to adjust it higher the first chance we get.

Suggested Options:
We are suggesting the January calls although Decembers would work. Our trigger to open plays in GILD is at $70.25.

BUY CALL JAN 65.00 GDQ-AM open interest=4106 current ask $6.20
BUY CALL JAN 70.00 GDQ-AN open interest=8007 current ask $2.85
BUY CALL JAN 75.00 GDQ-AO open interest=5731 current ask $1.00

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/17/07 (unconfirmed)
Average Daily Volume = 3.7 million

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Oregon Steel Mills - OS - cls: 58.96 chg: +2.11 stop: 56.99

Company Description:
Oregon Steel Mills, which is headquartered in Portland, Oregon, is organized into two divisions. The Oregon Steel Division produces as-rolled and heat-treated steel plate, coil, welded pipe (both large and small diameter line pipe and casing) and structural tubing from plants located in Portland, Oregon, and Camrose, Alberta, Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colorado, produces steel rail, rod and bar, and seamless tubular products. (source: company press release or website)

Why We Like It:
A number of the steel-related stocks were higher on Friday thanks to renewed rumors and talk about mergers in the sector. We like OS due to its relative strength. The stock is very close to its all-time high and the pattern looks bullish with the rally past resistance near $52 and $54 in the past few weeks. The P&F chart is very optimistic with an $85 target. We see the $60 level as round-number, psychological resistance so we want to wait for a breakout. Our suggested trigger to buy calls is at $60.25. If triggered our target is the $64.75-65.00 range. Once the play begins we'll try and adjust the stop loss higher. Right now we're sticking it under Friday's low.

Suggested Options:
We are suggesting the January calls although Decembers might work well. Our trigger to open plays is at $60.25.

BUY CALL JAN 55.00 OS-AK open interest=1157 current ask $6.70
BUY CALL JAN 60.00 OS-AL open interest=1373 current ask $3.90
BUY CALL JAN 65.00 OS-AM open interest= 337 current ask $1.95

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 970 thousand

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Sepracor - SEPR - close: 54.69 chg: +2.22 stop: 50.75

Company Description:
Sepracor Inc. is a research-based pharmaceutical company dedicated to treating and preventing human disease by discovering, developing and commercializing innovative pharmaceutical products that are directed toward serving unmet medical needs. (source: company press release or website)

Why We Like It:
An upgrade for SEPR on Friday morning was enough to spark a rally that pushed shares out of its four-week consolidation and past resistance near $54.00. Volume on the rally was strong, which tends to be another bullish signal. Friday's rally also produced a bullish breakout over P&F chart resistance and a new triple-top breakout buy signal with a $68 target. Readers can choose to buy calls now or look for a dip back into the $53.75-54.00 region. SEPR has significant resistance near $60 so we're aiming for the $59.50-60.00 range as our target.

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

BUY CALL JAN 50.00 ERU-AJ open interest= 9362 current ask $7.30
BUY CALL JAN 52.50 ERU-AX open interest= 3035 current ask $5.70
BUY CALL JAN 55.00 ERU-AK open interest=13100 current ask $4.20
BUY CALL JAN 57.50 ERU-AY open interest= 3885 current ask $3.20
BUY CALL JAN 60.00 ERU-AL open interest=22413 current ask $2.25

Picked on November 19 at $ 54.69
Change since picked: + 0.00
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 2.3 million
 

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