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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
BIDU IWM None
GS    
PCP    
SHLD    
VWO    

New Calls

Baidu.com - BIDU - cls: 128.12 chg: +3.24 stop: 124.95

Company Description:
Baidu.com, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ. (source: company press release or website)

Why We Like It:
The market loved BIDU's latest earnings report back in April. The stock soared to new three-month highs. Since then the stock hasn't seen much profit taking. Instead BIDU has consolidated sideways with a bullish pattern of higher lows. We suspect that BIDU is poised to breakout over the $130 level again. We're suggesting a trigger to buy calls at $130.51. More conservative traders may want to set their trigger above the April 27th high of $132.80 or set their trigger above the January 2007 high at $134.10. If we are triggered at $130.51 then our target is the $139.50-140.00 range. The P&F chart is bullish with a $203 target. FYI: Due to BIDU's volatility we would consider this a more aggressive, higher-risk play.

Suggested Options:
We are suggesting the June calls. Our trigger to open positions is at $130.51.

BUY CALL JUN 125 BDQ-FE open interest=7937 current ask $8.20
BUY CALL JUN 130 BDQ-FF open interest=3770 current ask $5.50
BUY CALL JUN 135 BDQ-FG open interest=2185 current ask $3.50

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/26/07 (unconfirmed)
Average Daily Volume = 2.2 million

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Goldman Sachs - GS - cls: 227.50 chg: +4.40 stop: 222.45

Company Description:
Founded in 1869, Goldman Sachs is one of the oldest and largest investment banking firms. Goldman Sachs is also a global leader in private corporate equity and mezzanine investing. (source: company press release or website)

Why We Like It:
The broker-dealer stocks and the XBD index are rebounding. If you study the XBD index's daily chart you can see that it's bouncing from a three-month trendline of support. We do note that the technical indicators are mixed for the XBD and the group does have resistance near 260. However, in this current environment of fast-paced M&A activity we believe the brokers will continue to out perform. Leading the way is GS. The stock is bouncing from the bottom of last week's trading range. We're going to try and keep our risk to a minimum with a stop loss under Thursday's low. We're suggesting call positions now. More conservative traders may want to wait for a rally past $230 before initiating plays. Our target is the $238.00-240.00 range. The P&F chart currently points to a $246 target. We do not want to hold over the mid June earnings report.

Suggested Options:
We are suggesting the June calls since we plan to exit ahead of the mid June earnings report. The July strikes would also work well.

BUY CALL JUN 220 GPY-FD open interest=9340 current ask $12.70
BUY CALL JUN 230 GPY-FF open interest=4138 current ask $ 6.80
BUY CALL JUN 240 GPY-FH open interest=4797 current ask $ 3.00

Picked on May 13 at $227.50
Change since picked: + 0.00
Earnings Date 06/12/07 (unconfirmed)
Average Daily Volume = 7.4 million

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Precision Castparts - PCP - cls: 110.91 chg: +2.45 stop: 105.75

Company Description:
Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power generation, automotive, and general industrial and other markets. PCC is the market leader in manufacturing large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines. The Company is also a leading producer of highly engineered, critical fasteners for aerospace, automotive, and other markets. (source: company press release or website)

Why We Like It:
The momentum in PCP continues. The company recently reported earnings on May 9th and beat the estimate by 14 cents. Traders are buying the post-earnings dip and the trend of higher lows continues. The close over $110 is bullish and we're suggesting new call positions after Friday's rally. We're setting our stop loss at $105.75. More conservative traders may want to put their stop closer to the 10-dma. Our target is the $118.00-120.00 range.

Suggested Options:
We are suggesting the June calls although the September's (which are the next available) would work too.

BUY CALL JUN 110 PCP-FB open interest=2056 current ask $4.70
BUY CALL JUN 115 PCP-FC open interest= 585 current ask $2.30

Picked on May 13 at $110.91
Change since picked: + 0.00
Earnings Date 05/09/07 (confirmed)
Average Daily Volume = 1.0 million

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Sears Holding - SHLD - cls: 177.96 chg: +1.94 stop: 174.74

Company Description:
Sears, Roebuck and Co., a wholly owned subsidiary of Sears Holdings Corporation, is a leading broadline retailer providing merchandise and related services. Sears, Roebuck offers its wide range of home merchandise, apparel and automotive products and services through more than 2,400 Sears-branded and affiliated stores in the United States and Canada, which includes approximately 926 full-line and 1,100 specialty stores in the U.S. (source: company press release or website)

Why We Like It:
The big drop in SHLD earlier this month was a reaction to SHLD's earnings warning. The retailers had a tough April with it being the coldest April in the last 100 years. Volume has been strong on the sell-off but bears are having a hard time breaking its trendline of support (see chart). Many of the technical indicators are negative and SHLD has been showing relative weakness so this should be considered an aggressive, speculative play. We'll try and limit our risk with a stop under last week's low. Our target is the $184.00-185.00 range.

Suggested Options:
We are suggesting the June calls. Please note we do not want to hold over the late May earnings report.

BUY CALL JUN 175 KDU-FO open interest=5062 current ask $7.90
BUY CALL JUN 180 KDU-FP open interest=6429 current ask $5.00
BUY CALL JUN 185 KDU-FQ open interest=7516 current ask $3.00

Picked on May 13 at $177.96
Change since picked: + 0.00
Earnings Date 05/31/07 (unconfirmed)
Average Daily Volume = 1.7 million

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Vangard Emergy Mkts ETF -VWO- cls: 85.80 chg: +2.19 stop: 83.45

Company Description:
This Exchanged Traded Fund seeks to mimic the performance of the MSCI Emerging Markets index. It's commonly called the VIPERs.

Why We Like It:
The VWO has seen a ton of momentum and every time it looks like it's over traders buy the dip. The sell-off on Thursday looked like another bearish reversal but traders bought the dip. Currently shares are trading near the top of its recent trading range. We want to buy calls on a breakout over $86.00. Therefore we are suggesting a trigger at $86.15. If triggered our target is the $89.85-90.00 range. More aggressive traders may want to aim higher since the P&F chart points to $113.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 85.00 VWO-FQ open interest=16 current ask $3.50
BUY CALL JUN 90.00 VWO-FR open interest=10 current ask $1.10

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 416 thousand
 

New Puts

Russell 2000 Ishares - IWM - cls: 82.34 chg: +0.76 stop: 83.55

Company Description:
This Exchanged Traded Fund seeks to mimic the results of the Russell 2000 smallcap index.

Why We Like It:
Currently the market's trend is up and we've been playing the trend with a majority of bullish candidates on the newsletter. The trend in the Russell 2000 and IWM is also up but the IWM has really been struggling with resistance near 83.00. If the market decides to reverse course we want to take advantage of it with a put on the IWM. Here's the plan. The IWM is bouncing and will probably retest resistance near $83 soon. We're suggesting a trigger to buy puts at $82.90. We'll try and limit our risk with a tight stop at $83.55. More aggressive traders may want to put their stop just above $84.00. If we are triggered at $82.90 then we will have two targets. Our conservative target is $80.25-80.00. Our aggressive target is the $78.25-78.00 range.

Suggested Options:
We are suggesting the June puts. Our trigger is at $82.90. Take your pick on a strike price.

BUY PUT JUN 84.00 IOW-RF open interest= 6975 current ask $2.47
BUY PUT JUN 83.00 IOW-RE open interest=87967 current ask $1.95
BUY PUT JUN 82.00 IOW-RD open interest=97612 current ask $1.55
BUY PUT JUN 81.00 IOW-RC open interest=77416 current ask $1.23
BUY PUT JUN 80.00 IOW-RB open interest=224284 current ask $0.97

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 58.4 million
 

New Strangles

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