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BNI
BSTE    
LLL    

New Calls

Burlington Nor.SantaFe - BNI - cls: 77.26 chg: +2.34 stop: 73.99

Company Description:
A subsidiary of Burlington Northern Santa Fe Corporation, BNSF Railway Company operates one of the largest North American rail networks, with about 32,000 route miles in 28 states and two Canadian provinces. BNSF moves more grain than any other American railroad, is among the world's top transporters of intermodal traffic, carries 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:
We noticed that today's market rally helped the railroad sector breakout from a six-week consolidation pattern. The group should be rested and ready for another leg higher. BNI was a leader in the industry with a 3% rally and a breakout over technical resistance at the 200-dma and the 50-dma. We are suggesting calls positions with BNI above $76.00. Our target is the $84.00-85.00 range. More conservative traders may want to play with a tighter stop loss and exit early near the October highs.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 75.00 BNI-AO open interest=5576 current ask $4.20
BUY CALL JAN 80.00 BNI-AP open interest=6845 current ask $1.60

Picked on December 04 at $ 77.26
Change since picked: + 0.00
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.5 million

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Biosite - BSTE - close: 49.81 change: +1.17 stop: 47.49

Company Description:
Biosite Incorporated is a leading bio-medical company commercializing proteomics discoveries for the advancement of medical diagnosis. The Company's products contribute to improvements in medical care by aiding physicians in the diagnosis of critical diseases and health conditions. Biosite's Triage rapid diagnostics are used in approximately 50 percent of U.S. hospitals and in more than 60 international markets. (source: company press release or website)

Why We Like It:
Biotech stocks were unaffected by the news from Pfizer today. The BTK index rose 1.3% and the group looks ready to rally higher with the rest of the market despite being overbought. Shares of BSTE do not look overbought. The stock has been consolidating under resistance at the $50.00 level for weeks. The rebound in the last few days has pushed BSTE right back to resistance again and shares look poised to breakout. We are suggesting a trigger to buy calls at $50.05. If triggered our target is the $54.50-55.00 range. More conservative traders might want to wait and use a trigger above $50.53, which was the bottom of BSTE's gap down from May and could be resistance. The P&F chart looks pretty bullish with a $65 target.

Suggested Options:
We are suggesting the January calls. Our trigger to open plays is at $50.05. FYI: For some reason we cannot find a quote or a symbol for the January $55 calls on BSTE. You may want to ask your broker. The symbol for the Jan $55s should be BQS-AK but it's missing.

BUY CALL JAN 45.00 BQS-AI open interest= 747 current ask $5.80
BUY CALL JAN 50.00 BQS-AJ open interest=1273 current ask $2.15
or
BUY CALL APR 55.00 BQS-DK open interest= 417 current ask $2.45

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 263 thousand

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L-3 Comm. - LLL - close: 83.81 change: +2.89 stop: 79.99

Company Description:
Headquartered in New York City, L-3 Communications is a leading provider of Intelligence, Surveillance and Reconnaissance (ISR) systems, secure communications systems, aircraft modernization, training and government services. The Company is a leading merchant supplier of a broad array of high technology products, including guidance and navigation, sensors, scanners, fuzes, data links, propulsion systems, simulators, avionics, electro optics, satellite communications, electrical power equipment, encryption, signal intelligence, antennas and microwave components. L-3 also supports a variety of Homeland Security initiatives with products and services. (source: company press release or website)

Why We Like It:
Defense-related stocks were breaking out to new highs today. While LLL isn't close to new highs the stock is breaking out nonetheless. Shares have been consolidating under resistance at the $82 level for about six weeks. Today's bullish breakout was done on above average volume and looks like a new entry point to buy calls. However, traders have a choice. A big move like today's can tend to inflate the option premiums. Readers might be tempted to wait for a dip to open positions. We are willing to open plays here but a dip back towards $82 would be a preferable entry. Our target is the $88.00-90.00 range. The Point & Figure chart forecasts a $104 target.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 80.00 LLL-AP open interest=2461 current ask $5.30
BUY CALL JAN 85.00 LLL-AQ open interest=3832 current ask $2.05
BUY CALL JAN 90.00 LLL-AR open interest=1722 current ask $0.55

Picked on December 04 at $ 83.81
Change since picked: + 0.00
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 840 thousand
 

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New Strangles

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