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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
GMRK None CHAP
JOYG   DNA
TTC    

New Calls

GulfMark - GMRK - cls: 54.05 change: +1.33 stop: 52.45

Company Description:
GulfMark Offshore, Inc. provides marine transportation services to the energy industry through a fleet of sixty-one (61) offshore support vessels, primarily in the North Sea, offshore Southeast Asia, and the Americas. (source: company press release or website)

Why We Like It:
We remain bullish on the oil sector. Crude oil futures broke out past resistance and hit multi-month highs last week. This helped fuel a rise to new record highs in the oil and oil service sectors. Shares of GMRK are nearing new record highs. The stock has been consolidating sideways the past couple of months and one could argue it has produced an inverse or bullish version of the head-and-shoulders pattern. Aggressive traders may want to jump in now. We're going to suggest a trigger to buy calls at $55.05. If triggered our target is the $59.50-60.00 range. This is somewhat aggressive because time is growing short. We don't want to hold over the late July earnings report.

Suggested Options:
We are suggesting the August calls. Our trigger is at $55.05.

BUY CALL AUG 50.00 GIU-HJ open interest= 59 current ask $5.60
BUY CALL AUG 55.00 GIU-HK open interest= 97 current ask $2.45
(we don't see any AUG 60 calls yet)

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume = 284 thousand

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Joy Global - JOYG - cls: 60.96 chg: +1.36 stop: 57.99

Company Description:
Joy Global Inc. is a worldwide leader in manufacturing, servicing and distributing equipment for surface mining through P&H Mining Equipment and underground mining through Joy Mining Machinery. (source: company press release or website)

Why We Like It:
The world economies are humming and that means rising demand for commodities, which means big business for JOYG as it provides mining equipment to companies around the globe. The stock has a bullish trend of higher lows and we're tempted to buy the Thursday-Friday bounce from last week. More aggressive traders may want to jump in now. We are suggesting readers wait. There is some resistance at $62.00 so we're suggesting a trigger to buy calls at $62.05. If triggered our target is the $68.00-70.00 range. Our time frame is six to eight weeks. The Point & Figure chart is forecasting an $81 target.

Suggested Options:
We are suggesting the August or October calls. We do not want to hold over the late August earnings report. Our trigger is $62.05.

BUY CALL AUG 60.00 JQY-HL open interest=842 current ask $3.80
BUY CALL AUG 65.00 JQY-HM open interest=571 current ask $1.65

BUY CALL OCT 60.00 JQY-JL open interest=2430 current ask $6.00
BUY CALL OCT 65.00 JQY-JM open interest=4831 current ask $3.70
BUY CALL OCT 70.00 JQY-JN open interest=1604 current ask $2.15

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/30/07 (unconfirmed)
Average Daily Volume = 1.9 million

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Toro Co. - TTC - cls: 59.85 change: +0.67 stop: 57.95

Company Description:
The Toro Company is a leading worldwide provider of outdoor beautification products, support services and integrated solutions. With sales of $1.8 billion in 2006, Toro is committed to providing environmentally responsible products of customer-valued quality and innovation. (source: company press release or website)

Why We Like It:
TTC surged back in May after beating earnings and guiding higher. The stock has spent the last six weeks digesting those gains. The recent strength suggests that TTC may be ready for the next leg higher. It's summer time and investors might want to position themselves ahead of TTC's next earnings report, which should be a strong one for the company. We are suggesting a trigger to buy calls at $60.75. If triggered our target is the $64.95-65.00 range. More aggressive traders may want to aim higher. The P&F chart points to a $77 target.

Suggested Options:
We are suggesting the August or September calls. Our trigger to open plays is at $60.75.

BUY CALL AUG 60.00 TTC-HL open interest=31 current ask $2.05
BUY CALL AUG 65.00 TTC-HM open interest= 0 current ask $0.45

BUY CALL SEP 60.00 TTC-IL open interest=126 current ask $2.90
BUY CALL SEP 65.00 TTC-IM open interest= 30 current ask $1.05

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/23/07 (unconfirmed)
Average Daily Volume = 354 thousand
 

New Puts

None
 

New Strangles

Chaparral Steel - CHAP - cls: 75.72 chg: +0.54 stop: n/a

Company Description:
Chaparral Steel Company, headquartered in Midlothian, Texas, is the second largest producer of structural steel beams in North America. The Company is also a supplier of steel bar products. In addition, Chaparral is a leading North American recycling company. (source: company press release or website)

Why We Like It:
CHAP's earnings are coming up and the stock is presenting us with an opportunity to play a strangle. Actually, you could play a straddle, where you buy both a call and a put at the same strike, which in this case would be the $75 strike, but we find it's cheaper to play a strangle. CHAP is due to report earnings on July 11th after the market's closing bell. Wall Street expect earnings of $1.37 a share. We are suggesting positions in the $76.00-74.00 range and the closer to $75.00 the better. We're going to play the July options, which expire in two weeks, because we're looking for the quick post-earnings pop.

Suggested Options:
A strangle requires that investors buy both an out of the money call and an out of the money put. We're suggesting the July $80 calls and the July $70 puts. Our estimated cost is $1.60. We will plan to sell if either option hits $3.20 or higher.

BUY CALL JUL 80 ZHQ-GP open interest=2497 current ask $1.00
-and-
BUY PUT JUL 70 ZHQ-SN open interest= 522 current ask $0.60

Picked on July 08 at $ 75.72
Change since picked: + 0.00
Earnings Date 07/11/07 (confirmed)
Average Daily Volume = 1.0 million

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Genentech - DNA - cls: 75.10 change: -1.60 stop: n/a

Company Description:
Founded more than 30 years ago, Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. (source: company press release or website)

Why We Like It:
Biotech giant DNA has been in a bearish trend for months. The stock has a bearish pattern of lower highs dating back to the January 2007 peak. With so much pessimism in the stock DNA might surprise to the upside with its upcoming earnings report. We're suggesting a strangle to capture any post-earnings reaction. The company is due to report on July 11th after the closing bell. Wall Street expects a profit of 71 cents a share. We are suggesting positions in the $76.00-74.00 range but the closer to $75.00 the better. We're going to play the July options, which expire in two weeks, because we're looking for the quick post-earnings pop.

Suggested Options:
A strangle requires that investors buy both an out of the money call and an out of the money put. We're suggesting the July $80 calls and the July $70 puts. Our estimated cost is $0.45. We will plan to sell if either option hits $0.90 or higher.

BUY CALL JUL 80 DWN-GP open interest=11891 current ask $0.25
-and-
BUY PUT JUL 70 DWN-SN open interest= 7747 current ask $0.20

Picked on July 08 at $ 75.10
Change since picked: + 0.00
Earnings Date 07/11/07 (confirmed)
Average Daily Volume = 3.5 million
 

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