Option Investor
New Plays

New Option Plays

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BPT None None

New Calls

Play Editor's Note: We normally strive to add three to five new plays for the weekend newsletter. Unfortunately, after looking at hundreds of stocks this weekend we struggled to find very many worth pursuing. We were actually looking to find some bearish/put candidates but failed to find anything significant. We are adding a couple of new call candidates but traders should use caution with new bullish plays. The rally in the markets is looking tired. A couple of stocks that did catch our eye were COL, and LFG. COL is hitting new all-time highs and the aerospace/defense sector has been relatively strong. Meanwhile LFG looks like it may have produced a bottom but we'd wait for a move over $61 before considering new plays.


B.P.Prudhoe Bay - BPT - close: 74.35 chg: +0.50 stop: 72.45

Company Description:
BPT is a royalty trust on the Alaskan Prudhoe Bay oil field.

Why We Like It:
Once again we're going to try and play a bullish breakout over resistance at the $75.00 level. BPT has been consolidating under the $75 level for weeks now. The rebound in crude oil futures back above $60 a barrel has lifted BPT back towards resistance and shares might see a breakout soon. We're suggesting a trigger to buy calls at $75.25. If triggered our target is the $79.75-80.00 range. Keep an eye on the 100-dma near $77, which might offer some resistance. The P&F chart is bullish with an $85 target.

Suggested Options:
We are suggesting the January calls although March calls would work and have more open interest. Our trigger to open plays is at $75.25.

BUY CALL JAN 70.00 BPT-AN open interest= 0 current ask $5.70
BUY CALL JAN 75.00 BPT-AO open interest=69 current ask $2.15
BUY CALL JAN 80.00 BPT-AP open interest= 2 current ask $0.40

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 219 thousand


Cummins Inc. - CMI - close: 124.15 chg: +0.28 stop: 119.90

Company Description:
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. (source: company press release or website)

Why We Like It:
The late October early November consolidation in CMI is over. The stock has been consolidating sideways the last few weeks and now the stock looks poised to resume its upward trek. The MACD on the daily chart just produced a new buy signal and short-term oscillators are positive. The big sell-off a few weeks ago did produce a bearish P&F chart but that doesn't mean shares can't rebound toward the $130 region. Currently CMI appears to have resistance near $125 and its 50-dma. We're suggesting a trigger at $125.15 to open positions. Our target is the $129.90-130.00 range.

Suggested Options:
We are suggesting the January calls. Our trigger to open plays is at $125.15.

BUY CALL JAN 120 CMI-AD open interest= 426 current ask $8.40
BUY CALL JAN 125 CMI-AE open interest= 374 current ask $5.50
BUY CALL JAN 130 CMI-AF open interest=2767 current ask $3.30

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume = 1.1 million

New Puts

None today.

New Strangles

None today.

New Play Archives