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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
BSC VMSI None
GRMN    
RIMM    
RYL    

Play Editor's note: We hope everyone read the market wrap this Sunday. This is a challenging time to pick stocks. Why? Because the market is so overbought and veteran traders know that nothing goes up forever. Eventually this market will see a correction and the selling will likely be sharp and painful. It is essential that traders, no matter what direction you play, use a stop loss to try and limit your risk. The market's trend is up so we are sticking with the trend and adding more bullish than bearish candidates. However, we suggest readers consider new positions very cautiously and keep one foot pointed toward the exit door.


New Calls

Bear Stearns - BSC - cls: 166.35 chg: +1.07 stop: 161.49

Company Description:
Founded in 1923, The Bear Stearns Companies Inc. is the parent company of Bear, Stearns & Co. Inc., a leading investment banking, securities trading and brokerage firm. With approximately $66.7 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. (source: company press release or website)

Why We Like It:
Shares of BSC look like a bullish candidate for calls again. The stock is bouncing from the bottom of its rising, bullish channel and from what looks like a potential bull flag pattern. We will stick our stop under last week's lows and suggest new positions now with BSC above $165. More conservative traders may want to wait for a rally past $167.50 before initiating positions. We have two targets. Our first target is the $172.00 level. Our second target is the $174.75-175.00 range. We do not want to hold over the mid-March earnings report.

Suggested Options:
We are suggesting the March calls.

BUY CALL MAR 165 BSC-CM open interest=497 current ask $6.80
BUY CALL MAR 170 BSC-CN open interest=784 current ask $4.20
BUY CALL MAR 175 BSC-CO open interest=314 current ask $2.35

Picked on February 04 at $166.35
Change since picked: + 0.00
Earnings Date 03/15/07 (unconfirmed)
Average Daily Volume = 1.3 million

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Garmin - GRMN - close: 51.15 change: +1.45 stop: 48.79

Company Description:
Through its operating subsidiaries, Garmin Ltd. designs, manufactures, markets, and sells navigation devices and applications -- most of which are enabled by GPS technology. Garmin is a leader in consumer and general aviation navigation and its products serve the automotive/mobile, outdoor/fitness, marine, and aviation markets. (source: company press release or website)

Why We Like It:
GRMN is a short-term swing trade. The company is expected to report earnings on the morning of Wednesday, February 14th. That means we need to exit the night before. We like GRMN as a bullish candidate now that shares are breaking out from a two-week basing pattern above a significant trendline of support and its 200-dma. Technicals on the daily chart are turning bullish and we suspect that GRMN could make a run for its highs ahead of earnings. We are suggesting new positions with GRMN above $50.00. More conservative traders may want to use a tighter stop loss (maybe 49.49). Our target is the $54.75-55.00 range. We have seven trading days. FYI: This weekend GRMN plans on airing a 30-second commercial during the Super Bowl.

Suggested Options:
We are suggesting the March calls although more aggressive traders could use Februarys, which expire in two weeks.

BUY CALL MAR 50.00 GQR-CJ open interest=1776 current ask $3.30
BUY CALL MAR 55.00 GQR-CK open interest=1705 current ask $1.25

Picked on February 04 at $ 51.15
Change since picked: + 0.00
Earnings Date 02/14/07 (confirmed)
Average Daily Volume = 2.3 million

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Research In Motion - RIMM - cls: 132.82 chg: +5.44 stop: 124.95

Company Description:
Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, Internet and intranet-based applications. (source: company press release or website)

Why We Like It:
This is an aggressive, higher-risk play for the gambling type. RIMM can be a volatile stock and buying it now with the market's upward momentum in doubt could be dangerous. The stock suffered a rough January as investors did some serious profit taking on fears that Apple's new iPhone would be too much competition. The stock bounced near $120 and now we're seeing a follow through on the rebound as analysts defend RIMM claiming there is still plenty of growth for the company. The technicals have turned bullish with a new MACD buy signal on the daily chart. Plus, Friday's rally produced a bullish breakout over resistance near $130 and its 50-dma. We are going to suggest calls with RIMM over $130. Our target is the $140.00-142.50 range. FYI: The P&F chart is still bearish due to the January sell-off.

Suggested Options:
We are suggesting the March calls. FYI: If you choose the March $125 call we would double check the symbol with your broker. We checked two different sources and they both had the same symbol. Normally a $25 or $125 call would end in an E.

BUY CALL MAR 125 RUP-CG open interest=2576 current ask $12.30
BUY CALL MAR 130 RUP-CF open interest=3427 current ask $ 9.10
BUY CALL MAR 135 RFY-CG open interest=4115 current ask $ 6.40
BUY CALL MAR 140 RFY-CH open interest=7072 current ask $ 4.40

Picked on February 04 at $132.82
Change since picked: + 0.00
Earnings Date 03/22/07 (unconfirmed)
Average Daily Volume = 9.2 million

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Ryland Group - RYL - close: 59.29 chg: +2.19 stop: 54.99

Company Description:
With headquarters in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. The company currently operates in 28 markets across the country and has built more than 260,000 homes and financed more than 220,000 mortgages since its founding in 1967. (source: company press release or website)

Why We Like It:
We believe the homebuilders have room to run. The sector got a dose of adrenaline this past week after the FOMC noted that the housing market was showing tentative signs of stabilizing. The DJUSHB home construction index broke out over significant resistance late last week and is trading at new nine-month highs. Shares of RYL have produced a similar move with a bullish breakout over resistance near $57.50. Volume on Friday's rally was strong, which is another bullish sign for RYL. We are suggesting new call positions now. However, our preferred entry point would be on a dip back toward $57.50. Broken resistance near $57.50 should now act as support. The Point & Figure chart for RYL has produced a double-top breakout buy signal with a $70 target. We are aiming for the $64.00-65.00 range.

Suggested Options:
We are suggesting the March calls.

BUY CALL MAR 55.00 RYL-CK open interest=1223 current ask $5.70
BUY CALL MAR 57.50 RYL-CC open interest= 444 current ask $3.90
BUY CALL MAR 60.00 RYL-CL open interest=1057 current ask $2.45

Picked on February 04 at $ 59.29
Change since picked: + 0.00
Earnings Date 04/25/07 (unconfirmed)
Average Daily Volume = 1.2 million
 

New Puts

Ventana Medical - VMSI - cls: 40.14 chg: -2.15 stop: 42.05

Company Description:
Ventana develops, manufactures, and markets instrument/reagent systems that automate slide preparation and staining in clinical histology and drug discovery laboratories worldwide. (source: company press release or website)

Why We Like It:
This could be a "sell-the-news" sort of event. VMSI reported earnings on Friday morning and beat estimates by a penny. Yet management's guidance was mixed and the stock lost over 5% on the day. We're suggesting bearish positions because VMSI's technicals were already bearish and now it looks ready to breakdown from an ugly head-and-shoulders pattern. We are suggesting a trigger to open new put positions at $39.75. More conservative traders may want to set their trigger lower to try and confirm the breakdown. If we are triggered at $39.75 our target is the $35.50-36.00 range.

Suggested Options:
We are suggesting the March puts. Our suggested trigger is at $39.75.

BUY PUT MAR 45.00 UMI-OI open interest= 15 current ask $5.20
BUY PUT MAR 40.00 UMI-OH open interest=266 current ask $1.45
BUY PUT MAR 35.00 UMI-OG open interest= 87 current ask $0.30

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/02/07 (confirmed)
Average Daily Volume = 351 thousand
 

New Strangles

None today.
 

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