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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ANF IBM CME
FDX   LMT
HOC    
JLL    
NUE    

New Calls

Abercrombie - ANF - cls: 83.51 chg: +2.43 stop: 79.85

Company Description:
The Company operated 361 Abercrombie & Fitch stores, 178 abercrombie stores, 395 Hollister Co. stores and 15 RUEHL stores at the end of fiscal March. (source: company press release or website)

Why We Like It:
The RLX retail index is breaking out to new seven-week highs and looks poised to run toward the February peak. Meanwhile ANF is surging toward new all-time highs. The stock spent last week consolidating sideways above support at the $80 level and now it's about to rally past its February highs. Readers can choose to buy calls now or look for a dip. The $80-84 range looks like a good spot to open new positions. If ANF can trade over $84.00 it should reverse the Point & Figure chart into a new buy signal. Our target is the $89.00-90.00 range. We do not want to hold over the late May earnings.

Suggested Options:
We are suggesting the May or August options.

BUY CALL MAY 80.00 ANF-EP open interest=6666 current ask $5.00
BUY CALL MAY 85.00 ANF-EQ open interest=6530 current ask $2.00

BUY CALL AUG 85.00 ANF-HQ open interest=2787 current ask $5.50
BUY CALL AUG 90.00 ANF-HR open interest= 283 current ask $3.40

Picked on April 22 at $ 83.51
Change since picked: + 0.00
Earnings Date 05/23/07 (unconfirmed)
Average Daily Volume = 1.9 million

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FedEx - FDX - cls: 109.03 change: +1.73 stop: 106.85

Company Description:
FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $35 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. (source: company press release or website)

Why We Like It:
Transport stocks are breaking out to new highs. The group is ignoring strength in oil. With the sector in rally mode we suspect that FDX will reverse higher. There was no follow through on Thursday's bearish reversal in FDX and the stock has a short-term trend of higher lows (see chart). Volume came in strong on Friday's bounce. You can see that FDX has resistance at its 200-dma near $110.25-110.50. We are suggesting calls if FDX can breakout over resistance. Our suggested trigger to buy calls is at $110.55. This might be considered an aggressive entry point given potential resistance at the 50-dma and 100-dma still overhead near $112. If we are triggered at $110.55 our target is the $116.00-117.50 range. More conservative traders may want to exit early near $115. FYI: The P&F chart is still bearish from the March sell-off. Traders should be aware that rival UPS reports earnings on April 25th before the market's open. UPS' earnings announcement could have a big impact on FDX for better or for worse.

Suggested Options:
We are suggesting the May or July calls.

BUY CALL MAY 105 FDX-EA open interest= 899 current ask $5.40
BUY CALL MAY 110 FDX-EB open interest=1629 current ask $2.15
BUY CALL MAY 115 FDX-EC open interest=4716 current ask $0.55

BUY CALL JUL 110 FDX-GB open interest=1105 current ask $5.20
BUY CALL JUL 115 FDX-GC open interest=3679 current ask $2.95

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/20/07 (unconfirmed)
Average Daily Volume = 1.8 million

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Holly Corp. - HOC - cls: 62.30 chg: +1.01 stop: 59.49

Company Description:
Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. (source: company press release or website)

Why We Like It:
We remain bullish on oil and the energy sector. Shares of HOC have been consistently stepping higher. The stock is just now starting to rebound again after a week of consolidation. We are suggesting call positions now or on a dip near $60.00. Our target is the $67.50-70.00 range. The P&F chart is bullish with a $74 target. We do not want to hold over the May 8th earnings report.

Suggested Options:
We are suggesting the May and/or June calls.

BUY CALL MAY 60.00 HOC-EL open interest= 380 current ask $3.80
BUY CALL MAY 65.00 HOC-EM open interest= 807 current ask $1.25

BUY CALL JUN 60.00 HOC-FL open interest=2322 current ask $4.70
BUY CALL JUN 65.00 HOC-FM open interest= 969 current ask $2.05

Picked on April 22 at $ 62.30
Change since picked: + 0.00
Earnings Date 05/08/07 (confirmed)
Average Daily Volume = 669 thousand

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Jones Lang Lasalle - JLL - cls: 109.69 chg: +2.29 stop: 106.75

Company Description:
Jones Lang LaSalle has approximately 150 offices worldwide and operates in more than 450 cities in over 50 countries. With 2006 revenue of over $2.0 billion, the company provides comprehensive integrated real estate and investment management expertise on a local, regional and global level to owner, occupier and investor clients. Jones Lang LaSalle is an industry leader in property and corporate facility management services, with a portfolio of over 1.0 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse real estate money management firms, with approximately $40.6 billion of assets under management. (source: company press release or website)

Why We Like It:
JLL has spent the last six weeks digesting its gains from January and February earlier this year. Now the stock looks ready to breakout past resistance and hit new highs. We don't have a lot of time as JLL is due to report earnings on May 1st. We're suggesting a trigger to buy calls at $110.51. More aggressive traders may want to lower that trigger toward $110. If we are triggered at $110.51 our target is the $114.75-115.00 range. We would aim higher but our time frame just isn't long enough. The P&F chart looks bullish with a triple-top breakout buy signal and a $135 target.

Suggested Options:
We are suggesting the May calls. We do not see any May $115 strikes available.

BUY CALL MAY 105 JLL-EA open interest= 11 current ask $7.40
BUY CALL MAY 110 JLL-EB open interest= 6 current ask $4.30

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/01/07 (confirmed)
Average Daily Volume = 300 thousand

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Nucor - NUE - cls: 67.69 change: +1.06 stop: 63.99

Company Description:
Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel - in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor is the nation's largest recycler. (source: company press release or website)

Why We Like It:
We are going to try playing NUE again. The company recently reported earnings and beat Wall Street's estimates in addition to offering some positive comments in their outlook. The recent breakdown under $66 looks like a bear trap and now NUE is set to breakout over resistance near $68.25. We are suggesting a trigger to buy calls at $68.51. If triggered our target is the $74.00-75.00 range. The P&F chart is bullish with an $83 target. FYI: We would expect a little bit of resistance near $70.

Suggested Options:
We are suggesting the July calls. May calls would work but they only have four weeks left.

BUY CALL JUL 65.00 NUE-GM open interest=5672 current ask $6.60
BUY CALL JUL 70.00 NUE-GN open interest=5448 current ask $3.90
BUY CALL JUL 75.00 NUE-GO open interest=1360 current ask $2.00

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/19/07 (confirmed)
Average Daily Volume = 3.6 million
 

New Puts

Intl.Bus.Mach. - IBM - cls: 94.58 chg: +0.29 stop: 96.06

Company Description:
IBM is one of the largest and most diversified technology companies in the world with a variety of systems, software, servicing and financing divisions.

Why We Like It:
The market was not happy with IBM's recent earnings report. The results were unimpressive and the news sparked some analysts' downgrades. The stock price is under performing and technically we're seeing some bearish signals. More aggressive traders may want to open put positions now with IBM under $95.00 and its 50-dma (and 100-dma). We are suggesting a trigger under Friday's low at $93.89. If triggered at $93.89 our short-term target is the $90.10-90.00 range. An alternative target would be the slowly rising 200-dma currently near $89.37. The P&F chart looks very bearish with a $77 target.

Suggested Options:
We are suggesting the May puts. July puts would also work well.

BUY PUT MAY 95.00 IBM-QS open interest=19997 current ask $1.80
BUY PUT MAY 90.00 IBM-QR open interest=10268 current ask $0.30

BUY PUT JUL 95.00 IBM-SS open interest=16011 current ask $2.85
BUY PUT JUL 90.00 IBM-SR open interest=11766 current ask $1.10

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/27/07 (unconfirmed)
Average Daily Volume = 6.8 million
 

New Strangles

Chicago Merc.Exc. - CME - cls: 555.89 chg: +2.04 stop: n/a

Company Description:
CME is the world's largest and most diverse derivatives exchange. As an international marketplace, CME brings together buyers and sellers on the CME Globex electronic trading platform and on its trading floors. CME offers futures and options on futures in these product areas: interest rates, stock indexes, foreign exchange, agricultural commodities, energy, and alternative investment products such as weather, real estate and economic derivatives. (source: company press release or website)

Why We Like It:
We tried playing calls on CME when shares broke out higher past resistance several days ago. The P&F chart looks very bullish and points to a $625 target. Unfortunately, there has been no follow through on the breakout that occurred April 16th. Investors are waiting to hear the company's earnings report. Given the stock's big volatility we're suggesting a strangle to capture any post-earnings move. This remains an aggressive, higher-risk play because options are so expensive. CME is due to announce earnings on Tuesday morning. That gives us Monday to open any strangle positions. We'd use the $550-560 range to open new plays. FYI: CME is currently in the process of trying to merge/acquire CBOT (symbol:BOT).

Suggested Options:
A strangle is a neutral strategy that requires buying both a call option and a put option. You could buy the May $560 call for almost $15 and the May $550 put for about $12.50 for a cost of $27.50. We already know this is a speculative, higher-risk play so we're going to use wider strike prices. We like the $580 call and $530 put this keeps our cost around $13. We still need to see a big move in the stock but should raise our profit margin if it does move. You could do the same play with the June $580 call and $530 put but it would cost close to $23. FYI: We only have four weeks for May options. This is not for the faint hearted.

BUY CALL MAY $580 CNM-EV open interest= 664 current ask $6.70
-and-
BUY PUT MAY $530 CNM-QF open interest= 204 current ask $6.30

Our plan is to sell if either option rises to $18.50 or more.

Picked on April 22 at $555.89
Change since picked: + 0.00
Earnings Date 04/24/07 (confirmed)
Average Daily Volume = 693 thousand

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Lockheed Martin - LMT - cls: 95.40 change: -0.23 stop: n/a

Company Description:
Headquartered in Bethesda, Md., Lockheed Martin employs approximately 140,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The corporation reported 2006 sales of $39.6 billion. (source: company press release or website)

Why We Like It:
LMT produced a stellar run up from summer 2006. The stock ran out of gas in late February and has been consolidating sideways since. More recently we've been noticing a bearish trend and shares look poised to breakdown under $95.00. We were tempted to just buy puts on a break under $95. Yet earnings are coming up on Tuesday morning and the news could shoot the stock either direction. Thus we're suggesting a strangle. Monday is our only day to open strangle positions. We're suggesting the $94.00-96.00 range to open plays.

Suggested Options:
A strangle involves buying both a call and a put option. We're suggesting the May strikes because earnings are soon and we should know very quickly if LMT is going to move or not. Using the May $100 call and the May $90 put our cost is about $1.50. We want to sell if either option rises to $2.25 or more. More aggressive traders may want to hold out for more.

BUY CALL MAY $100 LMT-ET open interest=1884 current ask $0.90
-and-
BUY PUT MAY $90. LMT-QR open interest= 290 current ask $0.60

Picked on April 22 at $ 95.40
Change since picked: + 0.00
Earnings Date 04/24/07 (confirmed)
Average Daily Volume = 1.7 million
 

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