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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CLF None None
IWM    
MA    
PEIX    

Play Editor's Note: We are not adding a lot of new plays to the newsletter this weekend. The major market indices look like they have built a bearish double-top pattern. Yet we hesitate to open a bunch of bearish positions as we move into the last week of June, which could see window dressing. Plus, there is a host of potentially market-moving economic reports and a FOMC meeting this week. There is no way to know if stocks will continue to sell-off, surge back to test the highs or just trade sideways as investors wade through the economic reports and wait for the fourth of July weekend and the beginning of second quarter earnings.


New Calls

Cleveland Cliffs - CLF - cls: 79.46 chg: +1.30 stop: 74.99

Company Description:
Cleveland-Cliffs Inc, headquartered in Cleveland, Ohio, is the largest producer of iron ore pellets in North America and sells the majority of its pellets to integrated steel companies in the United States and Canada. (source: company press release or website)

Why We Like It:
There has been a ton of speculation that CLF is a takeover candidate. This speculation drove shares to a $92 high. Bidders haven't materialized yet but traders may have been moving into position on Friday in anticipation of an announcement this Monday. We're not expecting any M&A news Monday but on a technical basis the bounce on Friday looks like a potential entry point. Shares are rebounding from a testing of round-number support near $75 and technical support at its rising 50-dma. Aggressive traders may want to buy calls here. We are suggesting that readers wait and use a trigger at $80.55. If triggered our target is the $89.00-90.00 range. We plan to exit ahead of the late July earnings report.

Suggested Options:
Our trigger to buy calls is at $80.55. We're suggesting the August calls.

BUY CALL AUG 75.00 CLF-HO open interest=194 current ask $8.00
BUY CALL AUG 80.00 CLF-HP open interest=426 current ask $5.30
BUY CALL AUG 85.00 CLF-HQ open interest=512 current ask $3.30

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 1.6 million

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Russell 2000 iShares - IWM - cls: 82.85 chg: -0.57 stop: 81.35

Company Description:
The IWM is an exchange traded fun (ETF) that mimics the performance of the Russell 2000 index.

Why We Like It:
Now that the Russell re-balancing is over we would expect those funds that waited to buy the new additions to start buying the new components. Plus all the deletions may have temporarily deflated the index. We're suggesting calls now with IWM above $82.00. Conservative traders might want to use a tighter stop loss just under $82.00. We're going to set our stop under the June low. There is some resistance in the $84.50-85.00 zone but the Point & Figure chart forecasts a $95 target. We are aiming for the $86.50-87.50 range. The RUT doesn't move very quickly so September calls might work better.

Suggested Options:
We are suggesting the August or September calls. The IWM has strikes at $1.00 increments. Pick the strikes you like best.

BUY CALL AUG 80.00 IOW-HB open interest= 11075 current ask $4.65
BUY CALL AUG 82.00 IOW-HD open interest= 59865 current ask $3.35
BUY CALL AUG 84.00 IOW-HF open interest= 47591 current ask $2.19
BUY CALL AUG 86.00 IOW-HH open interest=121490 current ask $1.32

BUY CALL SEP 80.00 IQQ-IB open interest= 12045 current ask $5.75
BUY CALL SEP 84.00 IQQ-IF open interest= 29306 current ask $3.25
BUY CALL SEP 86.00 IQZ-IH open interest= 8556 current ask $2.26

Picked on June 24 at $ 82.85
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 71.6 million

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Mastercard - MA - close: 168.43 chg: +3.74 stop: 157.99

Company Description:
MasterCard Incorporated advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. (source: company press release or website)

Why We Like It:
This is an aggressive, higher-risk play. Shares of MA look very overbought but traders willing to ride the momentum might be able to catch the next leg higher. The stock has been showing relative strength and definitely ignored the market weakness on Friday. Contributing to MA's strength on Friday were some positive analyst comments. One firm raised their price target from $160 to $190. We think MA is a prime candidate for some window dressing next week before the quarter ends. We're sticking a stop loss under last week's low. Our target is the $179.50-185.00 range.

Suggested Options:
We are suggesting the August calls although Julys would work. FYI: July strikes expire in four weeks.

BUY CALL AUG 165 MAL-HM open interest=451 current ask $13.60
BUY CALL AUG 170 MAL-HN open interest=653 current ask $11.10
BUY CALL AUG 175 MAL-HO open interest=255 current ask $ 9.00

Picked on June 24 at $168.43
Change since picked: + 0.00
Earnings Date 08/01/07 (unconfirmed)
Average Daily Volume = 3.7 million

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Pacific Ethanol - PEIX - cls: 12.83 chg: +0.58 stop: 11.90

Company Description:
Pacific Ethanol is the largest West Coast-based marketer and producer of ethanol. Pacific Ethanol has an ethanol plant in Madera, California, and has four additional plants under construction in Boardman, Oregon; Burley, Idaho; in the Imperial Valley near Calipatria, California; and in Stockton, California. Pacific Ethanol also owns a 42% interest in Front Range Energy, LLC which owns an ethanol plant in Windsor, Colorado. (source: company press release or website)

Why We Like It:
Congress passed the energy bill on Thursday night and ethanol companies were the big winners. The news fueled an industry-wide rally on Friday. Shares of PEIX rose 4.7% on huge volume on what looks like a bullish reversal. We're playing the story on this stock because the technicals are still pretty bearish and the P&F chart points to a $9.50 target. We are suggesting call positions now or on a dip back toward $12.00. This does feel like an aggressive, higher-risk entry point given Friday's failure to close over $13.00. More conservative traders may want to wait for a rise past $13.35 or $13.50 before initiating new positions. There is potential resistance near $14.00, the 100-dma and the 200-dma. We're going to aim for the 200-dma, which means we'll use a $15.50-15.75 exit range for now. FYI: We cannot find a future earnings date for PEIX but suspect it will be in August or September.

Suggested Options:
We're suggesting the August calls although Septembers would work and have more open interest.

BUY CALL AUG 12.50 PFQ-HV open interest=186 current ask $1.30
BUY CALL AUG 15.00 PFQ-HC open interest= 55 current ask $0.40

Picked on June 24 at $ 12.83
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 892 thousand
 

New Puts

None today
 

New Strangles

None today
 

New Play Archives