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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
BHI None None
CRS    
FFIV    
GSF    
MO    
TSO    

Play Editor's Note: The S&P 500, DJIA, Dow Jones Transportation average and Russell 2000 are hitting new all-time highs. Investors don't seem to care that the markets are overbought and way overdue for a correction. We are adding new bullish positions given the trend but we continue to urge caution for traders. We could see a correction at any time and the correction is so overdue it will be painful when it appears. Watch your stop losses carefully and make sure they are in place.


New Calls

Baker Hughes - BHI - cls: 83.17 change: +0.69 stop: 79.95

Company Description:
Baker Hughes is a leading provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry. (source: company press release or website)

Why We Like It:
Shares of BHI produced a huge move higher in April and the stock has spent the last month digesting those gains. Now it looks like the sideways consolidation is about to end as BHI coils more tightly under resistance near $84.00. We are suggesting a trigger to buy calls at $84.26, which is above the May 4th high. If triggered we'll aim for the $89.00-90.00 range near its 2006 highs. FYI: The P&F chart is still bearish and points to a $73 target.

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

BUY CALL JUL 80.00 BHI-GP open interest=2949 current ask $5.40
BUY CALL JUL 85.00 BHI-GQ open interest=6271 current ask $2.55
BUY CALL JUL 90.00 BHI-GR open interest=5721 current ask $0.95

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 4.3 million

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Carpenter Tech - CRS - cls: 135.67 chg: +3.10 stop: 129.90

Company Description:
Carpenter Technology produces and distributes specialty alloys, including stainless steels, titanium alloys, and super alloys, and various engineered products. (source: company press release or website)

Why We Like It:
There has been a lot of speculation in the metals sector that the industry will continue to see more mergers and acquisitions. This has produced an underlying bid for a lot of stocks. Traders were quick to buy the dip in CRS near $130 this past week. We like Friday's bounce (+2.3%) back above the $135 level and its 10-dma. We are suggesting call positions now although traders might want to consider alternative entry points above $138 or on a dip above $130. The P&F chart shows a triple-top breakout buy signal that points to a $170 target. Our target is the $147.50-150.00 range although we would expect some resistance near its all-time high around $142. Traders should note that after the closing bell on Friday it was announced that the S&P will add CRS to the S&P midcap 400 index, replacing OSI. This news should produce another positive move on Monday as funds who track the midcap index adjust their positions and buy CRS. We would not open positions if CRS gaps open above $140.00.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 135 CRS-GG open interest= 63 current ask $7.40
BUY CALL JUL 140 CRS-GH open interest= 59 current ask $5.00
BUY CALL JUL 145 CRS-GI open interest= 38 current ask $3.30

Picked on June 03 at $135.67
Change since picked: + 0.00
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume = 429 thousand

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F5 Networks - FFIV - close: 81.54 chg: +0.28 stop: 74.95

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:
This past week saw the NWX networking index breakout to new three-year highs. Meanwhile shares of FFIV broke out to new all-time highs with its rally past resistance at the $80.00 level. Thursday's session also marked a breakout from its six-week trading range. Technicals are positive and the P&F chart points to a $93 target. We are suggesting calls with FFIV above $80.00. Readers can choose to buy them here of wait for a dip towards $80 again. More conservative traders might want to use a tighter stop loss in the $78.00 or $77.50 zone. Our target is the $89.00-90.00 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 80.00 FLK-GP open interest=2265 current ask $5.70
BUY CALL JUL 85.00 FLK-GQ open interest=2592 current ask $3.30

Picked on June 03 at $ 81.54
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 1.3 million

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Global SantaFe - GSF - cls: 68.86 chg: +0.56 stop: 65.90

Company Description:
GlobalSantaFe is one of the largest offshore oil and gas drilling contractors and the leading provider of drilling management services worldwide. The company owns or operates a contract drilling fleet of 37 premium jackup rigs; six heavy-duty, harsh environment jackups; 11 semisubmersibles and three dynamically positioned, ultra-deepwater drillships, as well as two semisubmersibles owned by third parties and operated under a joint venture agreement. In addition, an ultra-deepwater semisubmersible is under construction and scheduled for delivery in early 2009. (source: company press release or website)

Why We Like It:
GSF is another oil service stock that is trading near record highs. Shares broke out over significant resistance at the $65.00 level days ago and have since slowly marched higher. The bullish trend of higher lows looks ready to push GSF past round-number resistance at the $70.00 level. The P&F chart displays a triple-top breakout buy signal with an $87 target. We are suggesting call positions now in the $67.50-70.00 zone. Our target is the $74.50-75.00 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 65.00 GSF-GM open interest=10729 current ask $5.60
BUY CALL JUL 70.00 GSF-GN open interest=33491 current ask $2.80
BUY CALL JUL 75.00 GSF-GO open interest=11559 current ask $1.20

Picked on June 03 at $ 68.86
Change since picked: + 0.00
Earnings Date 08/01/07 (unconfirmed)
Average Daily Volume = 4.8 million

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Altria Group - MO - cls: 71.82 change: +0.72 stop: 69.90

Company Description:
Altria Group, Inc. is the parent company of Philip Morris USA, Philip Morris International and Philip Morris Capital Corporation. Altria Group owns 100% of the outstanding stock of Philip Morris USA, Philip Morris International and Philip Morris Capital Corporation. Philip Morris USA is the largest tobacco company in the United States, with approximately half of the U.S. cigarette market. Philip Morris International is a leading international tobacco company with seven of the top 20 global cigarette brands. Philip Morris Capital Corporation maintains a portfolio of leverages and direct finance leases. In addition, Altria Group has a 28.6% economic and voting interest in SABMiller, plc., the world's second-largest brewer. (source: company press release or website)

Why We Like It:
A couple of weeks ago shares of MO managed to breakout to new all-time highs. The stock hit resistance near $72.00 but traders were quick to buy the dip near $70.00, which was a clear case of broken resistance acting as new support. MO has regained its bullish pattern of higher lows and we suspect shares are about to hit new highs again. We are aiming for the $76.00-77.00 range, which would coincide with the $77.00 target on the P&F chart. More conservative traders may want to wait for a new high first before opening positions.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 70.00 MO-GN open interest=4140 current ask $2.70
BUY CALL JUL 75.00 MO-GO open interest=4098 current ask $0.50

Picked on June 03 at $ 71.82
Change since picked: + 0.00
Earnings Date 07/19/07 (unconfirmed)
Average Daily Volume = 11.7 million

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Tesoro - TSO - close: 63.74 change: +1.96 stop: 57.99

Company Description:
Tesoro Corporation, a Fortune 150 Company, is an independent refiner and marketer of petroleum products. Tesoro operates seven refineries in the western United States with a combined capacity of approximately 660,000 barrels per day. Tesoro's retail-marketing system includes 881 branded retail stations, of which 464 are company owned retail stations. (source: company press release or website)

Why We Like It:
Oil refining stocks have been super hot. Given the rising demand and the onset of the summer driving season we don't see any reason for them to slow down. TSO just spent the last four-week digesting its previous gains so it looks rested and ready for another leg higher. The MACD on the daily chart has produced a new buy signal. Meanwhile the P&F chart shows a triple-top breakout buy signal with a $74 target. We are suggesting call positions now although a dip back toward $62.00 would be a very tempting entry point. Our target is the $69.00-70.00 range.

Suggested Options:
We are suggesting the July calls although August strikes would also work well.

BUY CALL JUL 60.00 TSO-GL open interest= 751 current ask $6.30
BUY CALL JUL 62.50 TSO-GU open interest=1968 current ask $4.70
BUY CALL JUL 65.00 TSO-GM open interest= 599 current ask $3.40
BUY CALL JUL 67.50 TSO-GT open interest= 362 current ask $2.40
BUY CALL JUL 70.00 TSO-GN open interest= 117 current ask $1.65

Picked on June 03 at $ 63.74
Change since picked: + 0.00
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume = 6.2 million
 

New Puts

None today.
 

New Strangles

None today.
 

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