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New Option Plays

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Call Options Plays
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Strangle Options Plays
BSTE None None
MO    
RAI    

New Calls

Biosite Inc. - BSTE - close: 51.20 change: +1.75 stop: 48.65

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. (source: company press release or website)

Why We Like It:
Biotech stocks got a boost today after two big name stocks in the group were upgraded. Drug stocks also turned in a strong session. This bullish environment allowed BSTE to breakout over resistance in the $50.00-50.25 range. Furthermore the stock's rally was fueled by strong volume, which is typically a bullish sign. Shares look clear to run toward resistance in the $55 region. Readers can choose to buy calls now or wait for a possible dip back toward $50.50-50.00, which should now act as support. Our target will be the $54.85-55.00 range. The Point & Figure chart is more optimistic with an ascending triple top breakout buy signal and a $65 target.

Suggested Options:
We are suggesting the February calls but do not want to hold over BSTE's early February earnings report. As with all of our suggested plays it is you, the individual trader, who should decide which month and which strike price best suits your trading style and risk.

BUY CALL FEB 50.00 BQS-BJ open interest=155 current ask $3.50
BUY CALL FEB 55.00 BQS-BK open interest= 60 current ask $1.25

Picked on January 04 at $ 51.20
Change since picked: + 0.00
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 238 thousand

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Altria Group - MO - close: 87.65 change: +1.14 stop: 84.75

Company Description:
Altria Group is the parent company of Kraft Foods, Philip Morris International, Philip Morris USA and Philip Morris Capital Corporation. In addition, Altria Group has a 28.7% economic and voting interest in SABMiller. (source: company press release or website)

Why We Like It:
Now that it appears the legal troubles for the tobacco industry are finally beginning to diminish many equity analysts are betting that MO will finally spin-off their Kraft business. Spin-off expectations and improving trends for cigarettes overseas is pushing MO to new all-time highs. Volume behind today's rally was significantly above is average, which tends to be a bullish signal. Traders can choose to buy calls now or wait for a potential dip back toward the $86 region. Broken resistance in the $85.00-85.60 region should offer support. We are targeting a rally into the $92.50-95.00 range. Expect some round-number resistance near $90.00. The P&F chart currently points to a $114 target. We do not want to hold over the late January earnings report. FYI: The stock has been getting some positive analysts comments recently and just yesterday LEH raised their price target on the stock.

Suggested Options:
We are suggesting the February calls but do not want to hold over the earnings report.

BUY CALL FEB 85.00 MO-BQ open interest=6382 current ask $4.70
BUY CALL FEB 90.00 MO-BR open interest=6160 current ask $1.75

Picked on January 04 at $ 87.65
Change since picked: + 0.00
Earnings Date 01/31/07 (unconfirmed)
Average Daily Volume = 8.8 million

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Reynolds American - RAI - cls: 65.75 chg: +0.40 stop: 64.90

Company Description:
Reynolds American Inc. is the parent company of R.J. Reynolds Tobacco Company; Conwood Company, LLC; Santa Fe Natural Tobacco Company, Inc.; Lane, Limited; and R.J. Reynolds Global Products, Inc. R.J. Reynolds Tobacco Company, the second-largest U.S. tobacco company, manufactures about one of every three cigarettes sold in the country. The company's brands include five of the 10 best-selling U.S. brands: Camel, Kool, Winston, Salem and Doral. Conwood Company, LLC is the nation's second-largest manufacturer of smokeless tobacco products. (source: company press release or website)

Why We Like It:
RAI is another tobacco/cigarette stock that is looking poised to move higher. Shares have been consolidating under resistance in the $66 region for months with traders buying dips near its 50-dma and 100-dma. Now the stock has coiled to a point that a breakout, mostly likely higher, is almost imminent. We are suggesting a trigger to buy calls at $66.55. If triggered our target is the $69.90-70.00 range. More aggressive traders may want to aim higher.

Suggested Options:
We are suggesting the February calls but we do not want to hold over the early February earnings report. Our suggested trigger to open positions is at $66.55.

BUY CALL FEB 65.00 RAI-BM open interest=3549 current ask $2.70
BUY CALL FEB 67.50 RAI-BU open interest= 854 current ask $1.40
BUY CALL FEB 70.00 RAI-BN open interest= 917 current ask $0.60

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 1.2 million
 

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