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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
FCX AXE None
OMG GILD  
XTO    

Play Editor's Note: We are very reluctant to add new bullish positions to the newsletter. The market averages are overbought and due for a correction. Unfortunately, Friday's bounce took the bite out of Thursday's decline. If you are patient we would hesitate to open new positions for a day or two and see what mood the market is in after Memorial day.


New Calls

Freeport McMoran - FCX - cls: 74.61 chg: +2.32 stop: 69.95

Company Description:
FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. FCX has a dynamic portfolio of operating, expansion and growth projects in the copper industry. The Grasberg mining complex, the world's largest copper and gold mine in terms of reserves, is the company's key asset. FCX also operates significant mining operations in North and South America and is developing the potentially world-class Tenke Fungurume project in the Democratic Republic of Congo. (source: company press release or website)

Why We Like It:
FCX is one of the larger copper mining companies and given the world-wide economic growth the stock price is breaking out to new highs. Shares are breaking out from its recent sideways consolidation and technical indicators are turning positive again. The relative strength on Friday is encouraging and we're suggesting new call positions now or on a dip back toward $73.00. More conservative traders may want to wait for a new high since the $75.00 level might be round-number, psychological resistance. More cautious types might also want to use a tighter stop loss. Our target is the $79.50-80.00 range.

Suggested Options:
It is up to the individual trader to decide which month and which strike price best suits their trading style and risk. We're suggesting the July calls.

BUY CALL JUL 70.00 FCX-GN open interest=1984 current ask $7.40
BUY CALL JUL 75.00 FCX-FO open interest=5675 current ask $4.40
BUY CALL JUL 80.00 FCX-GP open interest=1751 current ask $2.60

Picked on May 27 at $ 74.61
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 12.3 million

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OM Group - OMG - cls: 62.44 chg: +2.00 stop: 59.85

Company Description:
OM Group is a leading, vertically integrated international producer and marketer of value-added, metal-based specialty chemicals and related materials. Headquartered in Cleveland, Ohio, OM Group operates manufacturing facilities in the Americas, Europe, Asia, Africa and Australia. (source: company press release or website)

Why We Like It:
We hesitated to add OMG as a bullish play given the daily chart's MACD, which is flirting with a sell signal. Overall most of what we see here is bullish although one could easily argue that OMG is overbought. OMG reported earnings back in early May and just crushed the earnings estimates. That produced the big gap higher on May 3rd. OMG spent several days digesting those gains with a sideways consolidation but eventually broke out over resistance at the $60.00 level. This last week's pull back was an opportunity to buy the dip near broken resistance and what should be support. We'll use a relatively tight stop loss at $59.85. Our target is the $68.50-70.00 range. The P&F chart is bullish with an $86 target.

Suggested Options:
We are suggesting the July calls although readers might want to consider Septembers, which have more open interest.

BUY CALL JUL 60.00 OMG-GL open interest=163 current ask $5.90
BUY CALL JUL 65.00 OMG-GM open interest=292 current ask $3.30

Picked on May 27 at $ 62.44
Change since picked: + 0.00
Earnings Date 08/02/07 (unconfirmed)
Average Daily Volume = 801 thousand

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XTO Energy - XTO - cls: 57.63 chg: +0.55 stop: 54.99

Company Description:
XTO Energy Inc. has grown from its inception in 1986 to one of the nation's largest independent oil and gas producers. Our proven strategy has built a domestic reserve base with greater than 1 billion barrels of oil equivalent and a track record of increasing production and reserves, with a compound annual growth rate of about 24% and 30% respectively since going public in 1993. (source: company press release or website)

Why We Like It:
We are still bullish on energy stocks. XTO pulled back from its highs last week but traders bought the dip on Friday near the 10-dma and broken resistance (now support). We want to jump on this entry point. More conservative traders may want to wait for more confirmation and look for a rise over $58.50 before initiating positions. The P&F chart is very bullish with a $76 target. We are aiming for the $62.50-65.00 range. More conservative traders may want to use a tighter stop loss under the 50-dma or under $56.00. FYI: Readers should note that XTO is due to present at a conference on May 31st. It's an opportunity for news to move the stock.

Suggested Options:
We are suggesting the July calls although August strikes have more open interest.

BUY CALL JUL 55.00 XTO-GK open interest= 68 current ask $4.30
BUY CALL JUL 60.00 XTO-GL open interest=139 current ask $1.55

BUY CALL AUG 55.00 XTO-HK open interest=3513 current ask $5.00
BUY CALL AUG 60.00 XTO-HL open interest=5281 current ask $2.25

Picked on May 27 at $ 57.63
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 3.2 million
 

New Puts

Anixter Intl. - AXE - cls: 70.00 chg: +0.70 stop: 72.05

Company Description:
Anixter International is the world's leading distributor of communication products, electrical and electronic wire & cable and a leading distributor of fasteners and other small parts ("C" Class inventory components) to Original Equipment Manufacturers. (source: company press release or website)

Why We Like It:
The overall trend for AXE on its daily and P&F charts is still bullish. However, trading in the stock over the last few weeks has turned bearish with a failed rally on May 7th and another bearish reversal on May 23rd. Now shares look poised to breakdown under technical support at the 50-dma. Nimble traders may want to buy puts on a drop below $69.30 (near Friday's low). We want to see a new relative low so we're suggesting a trigger at $68.49. If triggered we have two targets. Our conservative target is the $65.15-65.00 range. Our more aggressive target is the $62.00-60.00 range.

Suggested Options:
July puts are available but we're suggesting the August strikes.

BUY PUT AUG 75.00 AXE-TO open interest=210 current ask $6.70
BUY PUT AUG 70.00 AXE-TN open interest= 63 current ask $3.70
BUY PUT AUG 65.00 AXE-TM open interest= 64 current ask $1.85

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/24/07 (unconfirmed)
Average Daily Volume = 520 thousand

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Gilead Sciences - GILD - cls: 81.74 chg: -0.59 stop: 82.55

Company Description:
Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Australia. (source: company press release or website)

Why We Like It:
GILD has struggled with resistance in the $84.00-85.00 range for the last several weeks. Now the stock is nearing a potential breakdown from the trading range. If GILD breaks support near $80.00 it could easily free fall toward $75.00 or even $70.00. We are suggesting a trigger to buy puts at $79.90. If triggered we will have two targets. Our conservative target is $75.25-75.00. Our aggressive target is the $72.50-70.00 range. Readers should note that GILD is due to present at a conference on May 30th. Plus. the stock is set to split 2-for-1 on June 25th. FYI: The P&F chart is still bullish with a $97 target but a drop under $80 should reverse it into a new sell signal.

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

BUY PUT JUL 85.00 GDQ-SQ open interest= 490 current ask $5.30
BUY PUT JUL 80.00 GDQ-SP open interest=1181 current ask $2.75
BUY PUT JUL 75.00 GDQ-SO open interest= 238 current ask $1.30

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume = 4.1 million
 

New Strangles

None today.
 

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