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Call Options Plays
Put Options Plays
Strangle Options Plays
SEPR CMI
  GPI  
  VNO  

New Calls

Sepracor - SEPR - close: 61.89 change: +0.54 stop: 59.65

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. Sepracor's drug development program has yielded a portfolio of pharmaceutical products and candidates with a focus on respiratory and central nervous system disorders. Sepracor's corporate headquarters are located in Marlborough, Massachusetts. (source: company press release or website)

Why We Like It:
Shares of SEPR have been relatively resistant to any profit taking following its gap higher in December. Now it looks like the sideways consolidation is over and SEPR could be poised for its next leg higher. We're going to suggest call positions following the Thursday-Friday rebound but more conservative traders may want to wait for a rally past $62.50 or $63.00 before initiating positions. We'll put our stop under Thursday's low but more aggressive traders may want to put their stop under the bottom of its gap near $58.00. We are going to target the January 2005 highs with an exit target of $66.45. More aggressive traders may want to aim higher since the P&F chart points to a $68 target.

Suggested Options:
We are suggesting the February calls. However, we do not want to hold over the late January earnings report (still unconfirmed).

BUY CALL FEB 60.00 ERU-BL open interest=1064 current ask $5.20
BUY CALL FEB 62.50 ERU-BZ open interest= 871 current ask $3.80
BUY CALL FEB 65.00 ERU-BM open interest=2725 current ask $2.65

Picked on January 07 at $ 61.89
Change since picked: + 0.00
Earnings Date 01/27/07 (unconfirmed)
Average Daily Volume = 2.2 million
 

New Puts

Cummins Inc. - CMI - close: 116.06 change: -1.98 stop: 118.15

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. Headquartered in Columbus, Indiana (USA), Cummins serves customers in more than 160 countries through its network of 550 company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $550 million on sales of $9.9 billion in 2005. (source: company press release or website)

Why We Like It:
Shares of CMI are breaking down after almost two months of consolidating sideways. This past week the stock has drifted to new relative lows and is now flirting with a breakdown under its simple 200-dma. More importantly CMI is poised to breakdown under its two-year trendline of support. If that occurs we want to be ready to capture the move. We are suggesting a trigger to buy puts at $114.50. If triggered we have two targets. Our conservative target is $110.50 and our aggressive target is the $106.00 level. Currently the Point & Figure chart has a triple-bottom breakdown sell signal with a $96 target but is also testing support in the $114-115 region. We do not want to hold over the late January or early February earnings report.

Suggested Options:
We are suggesting the February puts. Our suggested entry point to buy puts is at $114.50.

BUY PUT FEB 115.00 CMI-NC open interest= 79 current ask $3.90
BUY PUT FEB 110.00 CMI-NU open interest= 73 current ask $2.15

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 1.0 million

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Group 1 Auto - GPI - close: 49.81 change: -1.28 stop: 52.01

Company Description:
Group 1 owns 101 automotive dealerships comprised of 143 franchises, 33 brands and 30 collision service centers in Alabama, California, Florida, Georgia, Louisiana, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, New York, Oklahoma and Texas. Through its dealerships, the company sells new and used cars and light trucks; arranges related financing, vehicle service and insurance contracts; provides maintenance and repair services; and sells replacement parts. (source: company press release or website)

Why We Like It:
Almost all of the technical indicators for GPI are pointing lower. The daily chart's RSI and stochastics are bearish. The MACD is nearing a new sell signal. The weekly chart shows a bearish engulfing candlestick (reversal) pattern. Shares have a multi-month trend of lower highs. If you look at the last few months you can make out a bearish head-and-shoulders pattern. The Point & Figure chart is bearish and points to a $42 target. Plus volume on Friday's 2.5% decline was pretty strong. Aggressive traders may want to jump in now. We want to see GPI break support at the $49.40 level first. Our suggested trigger to buy puts is at $49.25. More conservative traders may want to wait for a drop under $49.00. Our target is the $45.15-45.00 range. We do not want to hold over the February earnings report.

Suggested Options:
We are suggesting the February puts although Aprils would work and currently have more open interest. Our suggested trigger to open plays is at $49.25.

BUY PUT FEB 50.00 GPI-NJ open interest=130 current ask $2.45
BUY PUT FEB 45.00 GPI-NI open interest= 8 current ask $0.65

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/19/07 (unconfirmed)
Average Daily Volume = 371 thousand

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Vornado Realty Trust - VNO - cls: 119.55 chg: -2.45 stop: 122.65

Company Description:
Vornado Realty Trust is a fully integrated equity real estate investment trust. (source: company press release or website)

Why We Like It:
REITs were big winners in 2006 but it looks like the tide has turned for VNO. Shares peaked in early December and now we are seeing the stock breakdown under support near $120.00, its 50-dma and its multi-month trendline of support. We are suggesting puts with VNO under $120. We have two targets. Our conservative target is $115.50, which is above potential support at its rising 100-dma. Our aggressive target is the $111.00 level, which is above potential support at $110.

Suggested Options:
We are suggesting the February puts. March options are also available and have more open interest.

BUY PUT FEB 120.00 VNO-ND open interest=336 current ask $3.60
BUY PUT FEB 115.00 VNO-NC open interest= 0 current ask $1.65

Picked on January 07 at $119.55
Change since picked: + 0.00
Earnings Date 02/27/07 (unconfirmed)
Average Daily Volume = 945 thousand
 

New Strangles

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