Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
Strangle Options Plays
None FFIV None
  MDC  

New Calls

None today.
 

New Puts

F5 Networks - FFIV - cls: 66.68 chg: -2.56 stop: 71.01

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:
The rally in FFIV ran out of gas back in January and shares have been consolidating lower in a very volatile fashion ever since. The trend of lower highs is bearish and the recent breakdown under $70 and the failed rally on the oversold bounce looks like a new entry point. Volume has risen sharply on the declines suggesting more weakness ahead. There is potential support at the exponential 200-dma and the $65.00 level but we suspect any bounce will be short lived. Our biggest concern is the post-October 2006 gap low near $63.50 and the simple 200-dma near $62.50. However, the P&F chart looks very bearish with a breakdown under support and a $58 price target. We're going to aim for the $60.50-60.00 range. We do not want to hold over the late April earnings report. FYI: FFIV can be volatile so expect a lot of up and downs in the option prices.

Suggested Options:
We are suggesting puts with FFIV under $70.00. We like the May puts.

BUY PUT MAY 70.00 FLK-QN open interest=776 current ask $6.10
BUY PUT MAY 65.00 FLK-QM open interest=747 current ask $3.50

Picked on April 01 at $ 66.68
Change since picked: + 0.00
Earnings Date 04/25/07 (unconfirmed)
Average Daily Volume = 1.0 million

---

MDC Holdings - MDC - cls: 48.07 chg: -0.49 stop: 50.05

Company Description:
MDC, whose subsidiaries build homes under the name "Richmond American Homes," is one of the top ten homebuilders in the United States, based on 2005 revenue. The Company also provides mortgage financing, primarily for MDC's homebuyers, through its wholly owned subsidiary HomeAmerican Mortgage Corporation. (source: company press release or website)

Why We Like It:
The homebuilders have been getting crushed this year following the sub-prime lender melt down and negative comments from the homebuilders themselves. The recent news about a Federal investigation into Beazer (BZH) doesn't build any confidence for investors. MDC also has a mortgage arm and could see its own investigation of its lending practices. Technicals for MDC are turning bearish again and the recent oversold bounce has failed. We are suggesting that readers buy puts on a breakdown under $47.00. We'll use a trigger at $46.95 as our suggested entry point. If triggered our target is the $41.00-40.00 range. Prepare for some support near $45.00. The P&F chart looks very bearish with a $35 target. We do not want to hold over the mid-April earnings report so our target might be a little optimistic. Then again, stocks tend to drop faster than they rise.

Suggested Options:
Our suggested trigger to buy puts is at $46.95. If triggered we like the May puts.

BUY PUT MAY 50.00 MDC-QJ open interest=523 current ask $3.40
BUY PUT MAY 45.00 MDC-QI open interest=163 current ask $1.25

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/19/07 (unconfirmed)
Average Daily Volume = 870 thousand
 

New Strangles

None today.
 

New Play Archives