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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ARE FFIV
MAC RL  

New Calls

Alexandria RealEst. - ARE - cls: 104.74 chg: +1.77 stop: 101.99

Company Description:
Alexandria Real Estate Equities, Inc. is a publicly-traded real estate investment trust focused principally on the ownership, operation, management, acquisition and selective redevelopment and development of properties for the life sciences industry. (source: company press release or website)

Why We Like It:
The REITs continue to be a significant pocket of strength in the market. Shares of ARE have been rising on strong volume and the stock is quickly approaching all-time highs. If you are looking for a bullish play then ARE's relative strength makes it a decent candidate. Aggressive traders may want to buy calls now. We want to see a breakout past the December high so we're suggesting a trigger to buy calls at $105.51. If triggered our is the $109.90-110.00 range. More aggressive traders may want to aim higher but we have a limited time frame. ARE is due to report earnings (unconfirmed) on February 8th. We do not want to hold over the report.

Suggested Options:
We are suggesting the February calls. March and Aprils are also available but we plan to exit ahead of the February earnings announcement. Our trigger to open plays is at $105.51.

BUY CALL FEB 100 ARE-BT open interest= 0 current ask $5.90
BUY CALL FEB 105 ARE-BA open interest= 0 current ask $2.25
BUY CALL FEB 110 ARE-BB open interest= 0 current ask $0.50

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/08/07 (unconfirmed)
Average Daily Volume = 213 thousand

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Macerich - MAC - close: 93.46 change: +0.31 stop: 89.95

Company Description:
Macerich is a fully integrated self-managed and self-administered real estate investment trust, which focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the United States. (source: company press release or website)

Why We Like It:
MAC is another REIT that is showing plenty of relative strength. The stock recent broke out from a two-week consolidation above the $90 level and looks poised to make a run toward $100. MAC is the second REIT we are adding to the newsletter tonight. We are suggesting that readers only choose one to limit any exposure to the group should the sector see some profit taking. MAC looks somewhat overbought so we're labeling it an aggressive, higher-risk play. We're setting our stop under $90 but you might be able to get away with a stop loss under $92.00. Our target is the $98.00-100.00 range. We do not want to hold over the February 13th earnings report.

Suggested Options:
We are suggesting the February calls because they have more open interest and we plan to exit before they expire. We currently do not see any $100 strikes.

BUY CALL FEB 90.00 MAC-BR open interest=194 current ask $4.50
BUY CALL FEB 95.00 MAC-BS open interest=310 current ask $1.30

Picked on January 28 at $ 93.46
Change since picked: + 0.00
Earnings Date 02/13/07 (confirmed)
Average Daily Volume = 436 thousand
 

New Puts

F5 Networks - FFIV - close: 72.70 change: -1.34 stop: 76.25

Company Description:
F5 Networks is the global leader in Application Delivery Networking. F5 provides solutions that make applications secure, fast, and available for everyone, helping organizations get the most out of their investment. (source: company press release or website)

Why We Like It:
After a long run from its July and August bottom it looks like shares of FFIV are tired, overbought and due for a correction. The company recently reported earnings and beat estimates by eight cents but then guided lower. Positive broker comments following the earnings announcement were not enough to spark any new buying pressure. We are suggesting put positions now with the stock under its 50-dma. More conservative traders may want to wait for more confirmation and only buy puts on a break down under $70.00. A 38.2% Fibonacci retracement would be very close to $65.00 and FFIV's rising 100-dma so we are aiming for the $66.00-65.00 range. FYI: The Point & Figure chart has produced a triple-bottom breakdown sell signal with a $63 target.

Suggested Options:
We are suggesting the March puts.

BUY PUT MAR 75.00 FLK-OO open interest=1127 current ask $4.80
BUY PUT MAR 70.00 FLK-ON open interest=2474 current ask $2.40

Picked on January 28 at $ 72.70
Change since picked: + 0.00
Earnings Date 01/24/07 (confirmed)
Average Daily Volume = 1.0 million

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Ralph Lauren/Polo - RL - cls: 78.80 change: -0.62 stop: 82.05

Company Description:
Polo Ralph Lauren Corporation is a leader in the design, marketing and distribution of premium lifestyle products in four categories: apparel, home, accessories and fragrances. For more than 39 years, Polo's reputation and distinctive image have been consistently developed across an expanding number of products, brands and international markets. (source: company press release or website)

Why We Like It:
RL is another stock that has produced a huge run up from its July 2006 lows and now appears ripe for a correction. Weekly technicals are all suggesting the next move is lower. Most of the daily technicals have produced a bearish divergence between the stock's price. The recent weakness in RL has produced a breakdown under $80.00 and its rising 50-dma, which we see as a new entry point to buy puts. More conservative traders may want more confirmation and can look for a drop under $77.50 before opening plays. Our target is the $73.00-72.50 range but traders may want to exit at the rising 100-dma (currently 73.08). We do not want to hold over the February 7th earnings report and that gives us seven trading days. FYI: The P&F chart is still bullish (for now).

Suggested Options:
We are suggesting the February puts only because we plan to exit ahead of the early February earnings report.

BUY PUT FEB 80.00 RL-NP open interest=1069 current ask $3.10
BUY PUT FEB 75.00 RL-NO open interest= 354 current ask $1.15

Picked on January 28 at $ 78.80
Change since picked: + 0.00
Earnings Date 02/07/07 (confirmed)
Average Daily Volume = 726 thousand
 

New Strangles

Google - GOOG - cls: 495.84 change: +7.75 stop: n/a

Company Description:
Google Inc. is the most popular Internet search engine on the planet.

Why We Like It:
It is earnings season and that means we usually give GOOG a look as a potential strangle play. The stock can produce some huge moves following an earnings report and we have been successful using a strangle strategy to capture the move. Right now the stock is consolidating near the $500 level. We're going to suggest that readers consider opening strangle positions in the $490-510 range but the closer to $500.00 the better. This is not for the faint of heart and options can be expensive so we consider this an aggressive, higher-risk trade. GOOG is expected to report earnings on January 31st after the closing bell. Wall Street expects to see a profit of $2.90 a share. Editor's note: Many times the biggest move in GOOG is on the first day after earnings but it might pay off to hold the strangle position for two or three days to capture the largest chunk of any post earnings news. If after three days following the earnings report and the options have not hit our target we'll probably exit. Remember - we only want to enter positions ahead of the January 31st post-market report.

Suggested Options:
There are plenty of options to consider with GOOG and it depends on your trading style and risk. We're going to suggest two different strangles using the February options. Don't forget that as a strangle you buy both a call and a put.

Strangle play No. 1
BUY CALL FEB 530 GOP-BW open interest= 4401 current ask $8.10
-and-
BUY PUT FEB 470 GOP-NG open interest= 5467 current ask $9.30
With this plan our estimated cost is $17.40 but it could vary depending on your entry. We want to exit if either option rises to $29.00.

Strangle play No. 2
BUY CALL FEB 550 GOP-BY open interest= 8387 current ask $4.00
-and-
BUY PUT FEB 450 GOP-NJ open interest= 7454 current ask $4.70
With this plan our estimated cost is $8.70. We want to exit if either option rises to $16.00.

Picked on January 28 at $495.84
Change since picked: + 0.00
Earnings Date 01/31/07 (confirmed)
Average Daily Volume = 5.2 million

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Intuitive Surgical - ISRG - cls: 94.98 chg: -0.18 stop: n/a

Company Description:
Intuitive Surgical is the global leader in the rapidly emerging field of robotic-assisted minimally invasive surgery. Since its inception, the company has consistently provided surgeons and hospitals with the tools needed to improve clinical outcomes and to help patients return to active and productive lives. (source: company press release or website)

Why We Like It:
ISRG can be a very volatile stock especially after the company reports earnings. The last three earnings reports have produced some significant swings. We want to capture any future moves with the company's upcoming earnings report on February 1st. We are suggesting that readers open strangle positions in the $92.50-97.50 range but the closer to $95.00 the better.

Suggested Options:
As a strangle we need to buy both a call and a put. We're suggesting the February strikes below. Our estimated cost is $7.20. We want to exit if either option rises to $14.80 or more.

BUY CALL FEB 100.00 AXQ-BT open interest=2423 current ask $3.80
-and-
BUY PUT FEB 90.00 AXQ-NR open interest=2678 current ask $3.40

Picked on January 28 at $ 94.98
Change since picked: + 0.00
Earnings Date 02/01/07 (confirmed)
Average Daily Volume = 882 thousand

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United Parcel Srv. - UPS - cls: 72.49 chg: -1.12 stop: n/a

Company Description:
UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. (source: company press release or website)

Why We Like It:
After more than a month of trading sideways shares of UPS broke down on Friday with above average volume fueling the move. Normally with this type of technical breakdown we would be inclined to suggest puts. However, the company is due to report earnings on Tuesday morning and the results could produce a big move. We want to open a strangle play ahead of earnings so Monday is our only chance. We are suggesting an entry range in the $72.00-73.00 region. If UPS gaps open outside of this range on Monday morning we'll abort the play.

Suggested Options:
As a strangle we need to buy both a call and a put. We're suggesting the February strikes below. Our estimated cost is $1.65. We want to exit if either option rises to $3.75 or more.

BUY CALL FEB 75.00 UPS-BO open interest=10538 current ask $0.75
-and-
BUY PUT FEB 70.00 UPS-NN open interest= 7710 current ask $0.90

If you really want to gamble you could try the February $80 calls for 10 cents and the February $65 puts for 20 cents.

Picked on January 28 at $ 72.49
Change since picked: + 0.00
Earnings Date 01/30/07 (confirmed)
Average Daily Volume = 2.9 million
 

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