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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ASH QCOM None
AVY    
FXI    
GD    
LFC    

Play Editor's Note: We are extremely leery of the market at this point. Yes, the trend is still up. However, the Wednesday-Thursday sell-off last week did a lot of technical damage. We are reluctantly bullish. Most of the candidates we found this weekend were for bullish positions. Yet we strongly suggest that readers hesitate to open new bullish plays and if you have bullish positions open you may want to double check your stop losses and keep your finger near the sell button.


New Calls

Ashland - ASH - cls: 61.49 change: +0.94 stop: 59.95

Company Description:
Ashland Inc., a diversified, global chemical company, provides quality products, services and solutions to customers in more than 100 countries. (source: company press release or website)

Why We Like It:
ASH looks like a tempting call candidate thanks to the recent turnaround. Shares have built a new base or bottom over the last several weeks and the stock broke out above its trendline of resistance in early June. The pull back and bounce near the $60 level is our entry point to buy calls. There is potential resistance at the falling 100-dma near $64 but we're going to aim for the 200-dma near $64.50. More aggressive traders may want to aim higher. FYI: The P&F chart is still bearish with a $54 target.

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

BUY CALL JUL 60.00 ASH-GL open interest=301 current ask $2.90
BUY CALL JUL 65.00 ASH-GM open interest=485 current ask $0.65

Picked on June 10 at $ 61.49
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 657 thousand

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Avery Dennison - AVY - cls: 65.64 chg: +1.13 stop: 64.19

Company Description:
Avery Dennison is a global leader in pressure-sensitive labeling materials, office products and retail tag, ticketing and branding systems. Based in Pasadena, Calif., Avery Dennison is a FORTUNE 500 company with 2006 sales of $5.6 billion. (source: company press release or website)

Why We Like It:
AVY looks bullish here. The stock is bouncing from a five-week trendline of support. Shares are also rising past its 200 and 100-dma. Friday's session produced a bullish engulfing candlestick pattern, which is usually seen as a bullish reversal. We want to see some confirmation first so we're suggesting a trigger to buy calls at $66.05. If triggered our target is the $69.75-70.00 range. FYI: The P&F chart is still bearish and points to a $55 target but the stock is bouncing from P&F support.

Suggested Options:
We are suggesting the July calls. Our trigger to open positions is at $66.05.

BUY CALL JUL 65.00 AVY-GM open interest=1103 current ask $2.30
BUY CALL JUL 70.00 AVY-GN open interest= 411 current ask $0.30

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/24/07 (unconfirmed)
Average Daily Volume = 728 thousand

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FTSE/Xinhau China Index - FXI - cls: 115.70 chg: +2.86 stop: 111.90

Company Description:
The FXI index is the FTSE/Xinhau China 25 iShares index. It is an exchanged traded fund or ETF focused on the Chinese markets.

Why We Like It:
The FXI has recovered quickly from the Chinese market's recent volatility. The index is poised to breakout over resistance at the $116 level. Friday's 2.5% rally was fueled by strong volume. We want to see a new relative high before jumping in so we're suggesting a trigger to buy calls at $116.75. If triggered our target is the $124.00-125.00 range. We would expect some temporary resistance near $120. FYI: The Chinese markets are long-term overbought even after the recent correction. We would consider this a more aggressive, higher-risk play.

Suggested Options:
We are suggesting the July calls. Our suggested trigger is at $116.75. FYI: FXI has strikes at every dollar. Feel free to pick the one you like best.

BUY CALL JUL 115 FJJ-GK open interest=769 current ask $5.30
BUY CALL JUL 117 FAH-GM open interest=135 current ask $4.20
BUY CALL JUL 120 FAH-GP open interest=369 current ask $2.85

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 2.4 million

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General Dynamics - GD - cls: 80.58 change: +0.96 stop: 78.35

Company Description:
Headquartered in Falls Church, Virginia, General Dynamics employs approximately 82,600 people worldwide and had 2006 revenues of $24.1 billion. The company is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. (source: company press release or website)

Why We Like It:
GD is still stuck in a short-term sideways trading range but the stock is bouncing from its long-term trendline of support. We're suggesting calls now with shares above $80.00. More conservative traders may want to wait for a rally past $81.00 or even a new high over $82.41. Short-term technicals are improving and the P&F chart is still bullish with a $96 target. We do have concerns with the DFI defense index, which looks overbought and poised for more profit taking. We'll try and limit our risk with a stop loss under last week's low. We have two targets. Our first target is the $84.50-85.00 range. Our second target is the $87.50-90.00 range. We do not want to hold over the mid July earnings report. FYI: GD will be presenting at an investor conference on June 14th.

Suggested Options:
We are suggesting the July calls although August strikes would work. Just remember that we want to exit ahead of earnings.

BUY CALL JUL 80.00 GD-GP open interest=626 current ask $2.50
BUY CALL JUL 85.00 GD-GQ open interest=716 current ask $0.65

Picked on June 10 at $ 80.58
Change since picked: + 0.00
Earnings Date 07/18/07 (unconfirmed)
Average Daily Volume = 1.3 million

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China Life - LFC - cls: 47.66 chg: +1.44 stop: 45.75

Company Description:
The China Life Insurance Company Limited provides life insurance and annuity products within China. The company was founded in 1949 and is headquartered in Beijing.

Why We Like It:
It would appear that the Chinese market is recovering from its recent swoon. We're starting to see some interest in shares of LFC, which are bouncing from its recent test of support near $45 and its 100-dma. Short-term technicals are improving. However, we want to see a breakout over $48.00 before anyone opens bullish positions. Aggressive traders might be tempted to jump in now. We are suggesting a trigger at $48.25. If triggered our target is the $54.00-55.00 range. We do expect some temporary resistance near $51.00.

Suggested Options:
We are suggesting the July calls. Our suggested trigger to open positions is at $48.25.

BUY CALL JUL 45.00 LFC-GI open interest=4922 current ask $3.80
BUY CALL JUL 50.00 LFC-GJ open interest=4490 current ask $1.10

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/25/07 (unconfirmed)
Average Daily Volume = 1.0 million
 

New Puts

QUALCOMM - QCOM - cls: 41.87 change: +0.85 stop: 44.05

Company Description:
QUALCOMM Incorporated is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. (source: company press release or website)

Why We Like It:
QCOM is headed for trouble. The news was all over the wires on Friday and we're surprised the stock managed any sort of rebound. If you missed the headlines QCOM is on the losing end of a patent infringement dispute with Broadcom (BRCM). The International Trade Commission (ITC) has banned the sale of all phones in the U.S. with QCOM's new 3G chips in them. QCOM says it will seek an emergency stay of this decision and potentially seek Presidential intervention, which isn't likely to happen. If shares of QCOM can bounce from here we would look for a failed rally under $44 and its 50-dma, which could be used as a new entry point. However, we're not going to wait for a bounce so we're suggesting puts now. QCOM can be a volatile stock so this should be considered a higher-risk, more aggressive play. Shares should see some support near $40.00 and its 200-dma but we're aiming for the $37.00-36.00 range. FYI: The P&F chart is still bullish

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 45.00 AAO-RI open interest=50440 current ask $3.20
BUY PUT JUL 42.50 AAO-RV open interest=75407 current ask $1.05
BUY PUT JUL 40.00 AAO-RH open interest=62148 current ask $0.25

Picked on June 10 at $ 41.87
Change since picked: + 0.00
Earnings Date 07/18/07 (unconfirmed)
Average Daily Volume = 18.0 million
 

New Strangles

None today.
 

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