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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None BSC AMZN
  HOG DCX
  RYAAY LXK

New Calls

None today.
 

New Puts

Bear Stearns - BSC - cls: 134.72 chg: -4.21 stop: 142.55

Company Description:
The Bear Stearns Companies Inc. is the parent company of Bear, Stearns & Co. Inc., a leading global investment banking, securities trading and brokerage firm. Since 1923, we have helped corporations, institutions, governments and individuals reach their financial objectives. (source: company press release or website)

Why We Like It:
We are labeling this an aggressive, higher-risk play. BSC has already fallen from $143 in just the last couple of sessions. Granted that move looks like a bearish failed rally/reversal but it's still a decent move. Chart readers will note that volume was pretty big on Friday's decline and BSC closed at new relative lows. There doesn't appear to be any support until BSC hits the $127-125 region. The financials and the brokers have been suffering as investors fret over exposure to the sub-prime meltdown. It doesn't help BSC that the company has had two hedge funds focused on the sub-prime area virtually disintegrate. We are suggesting puts with BSC under $140. Our target is the $125.50-125.00 range. FYI: Be aware that while the technicals have turned bearish on the XBD broker-dealer index it did bounce from its 200-dma on Friday.

Suggested Options:
We are suggesting the August puts, which expire in about four weeks.

BUY PUT AUG 140 BSC-TH open interest=3754 current ask $8.30
BUY PUT AUG 135 BSC-TG open interest=8277 current ask $5.70
BUY PUT AUG 130 BSC-TF open interest=4883 current ask $3.70

Picked on July 22 at $134.72
Change since picked: 0.00
Earnings Date 09/13/07 (unconfirmed)
Average Daily Volume = 3.4 million

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Harley Davidson - HOG - cls: 58.21 change: -1.16 stop: 60.26

Company Description:
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company, the only major U.S.-based motorcycle manufacturer, produces heavyweight motorcycles and offers a complete line of motorcycle parts, accessories, apparel, and general merchandise. Buell Motorcycle Company produces sport motorcycles. Harley-Davidson Financial Services provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and customers. (source: company press release or website)

Why We Like It:
HOG recently reported earnings and profits were up but investors sold the news anyway. The stock had already developed a bearish trend of lower highs. The post-earnings reaction sent shares under round-number support at $60.00. Friday's short-term oversold bounce failed near $60.00 and HOG closed near its lows of the session. We considered jumping in now. More aggressive traders may want to open positions here. However, HOG may have support near the March 2007 low. We are suggesting that readers wait for a new low so our suggested trigger to buy puts is at $57.75. If triggered our target is the $52.50-50.00 range. The P&F chart already points to $42.00.

Suggested Options:
We are suggesting the August puts. Our trigger to open positions is at $57.75.

BUY PUT AUG 60.00 HOG-TL open interest=6826 current ask $2.50
BUY PUT AUG 55.00 HOG-TK open interest=6708 current ask $0.50

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

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Ryanair Holdings - RYAAY - cls: 38.13 change: -0.62 stop: 40.15

Company Description:
Ryanair was Europe's original low fares airline and is still Europe's largest low fares carrier. In the current year Ryanair will carry 52m passengers on 499 low fare routes across 26 European countries. We have 20 European bases and by the end of March 2008 Ryanair will operate a fleet of 163 new Boeing 737-800 aircraft with firm orders for a further 99 new aircraft (all net of planned disposals), which will be delivered over the next 5 years. Ryanair currently employs a team of 4,500 people, comprising over 25 different nationalities. (source: company press release or website)

Why We Like It:
The trend in RYAAY is bearish. However, when crude oil finally peaks and begins the end of summer correction we would expect airline stocks to rally. This means we only have a couple of weeks for this put play to work on RYAAY (give or take a few days - whenever crude oil reverses). Shares of RYAAY gapped down back in June and spent almost the whole month consolidating sideways. The rebound in July failed multiple times at technical resistance at the 200-dma. Now that bounce is reversing and daily chart technicals are turning bearish. We are suggesting puts with RYAAY under $40.00. However, there is support in the $37.50 region and more conservative traders may want to wait for a new relative low (under $37.40) before initiating positions. Our target is the $35.05-34.00 range, which is near the November 2006 gap. The P&F chart is already bearish with a $26 target.

Suggested Options:
We are suggesting the August puts, which expire in four weeks.

BUY PUT AUG 40.00 QRX-TH open interest= 97 current ask $2.55
BUY PUT AUG 35.00 QRX-TG open interest= 62 current ask $0.35

Picked on July 22 at $ 38.13
Change since picked: 0.00
Earnings Date 06/05/07 (confirmed)
Average Daily Volume = 812 thousand
 

New Strangles

Amazon.com - AMZN - cls: 71.63 chg: -1.72 stop: n/a

Company Description:
Amazon.com, Inc., a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com, Inc. seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as health and personal care, jewelry and watches, gourmet food, sports and outdoors, apparel and accessories, books, music, DVDs, electronics and office, toys and baby, and home and garden. (source: company press release or website)

Why We Like It:
AMZN is due to report earnings on Tuesday, July 24th, after the closing bell. The stock has been a big winner this past quarter and odds are rising that investors will use the earnings news as an excuse to lock in profits. Shares already have something of a bearish double-top formed over the last several weeks. We are suggesting a $68.00-72.00 entry zone to open strangle positions. However, the closer to $70.00 the better. Furthermore you'll want to try and keep your dollar amounts balanced on both sides of the trade to keep the strategy neutral. Option prices seem a bit expensive so we're labeling this a higher-risk, more aggressive play. We only have Monday and Tuesday to open positions.

Suggested Options:
A strangle play requires buying an out of the money call and an out of the money put. At current levels our estimated cost is $4.75. We want to sell if either option rises to $7.45.

BUY CALL AUG 75.00 ZQN-HO open interest=10110 current ask $3.00
-and-
BUY PUT AUG 65.00 ZQN-TM open interest=33055 current ask $1.75

FYI: There is an August $67.50 put (ZQN-TC) available if you prefer it. Just try and keep your dollar amounts relatively equal on both sides of the trade.

Picked on July 22 at $ 71.63
Change since picked: 0.00
Earnings Date 07/24/07 (confirmed)
Average Daily Volume = 10.7 million

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DaimlerChrysler - DCX - cls: 89.75 chg: -2.34 stop: n/a

Company Description:
DaimlerChrysler was created in November 1998 through the merger of Daimler-Benz AG and Chrysler Corporation. The Group can look back on a tradition that stretches back over more than a hundred years and is marked by the pioneering achievements of both predecessor companies. Today, DaimlerChrysler is a leading supplier of superior passenger cars, SUVs, sports tourers, minivans and pickups, as well as the world's largest manufacturer of commercial vehicles. (source: company press release or website)

Why We Like It:
Shares of DCX have pulled back toward support near $90.00 and its rising 50-dma. The trend is still bullish but shares could truly go either way at this spot. We suspect that the stock will trade sideways for a couple of sessions as investors wait for DCX's preliminary Q2 earnings results due out on July 25th (unconfirmed). We're suggesting a $88.00-92.00 entry zone to open strangle positions and take advantage of any volatility on the news. The closer to $90.00 the better the entry point.

Suggested Options:
A strangle play requires buying an out of the money call and an out of the money put. At current levels our estimated cost is $3.70. We want to sell if either option rises to $6.45.

BUY CALL AUG 95.00 DCX-HS open interest=1400 current ask $1.90
-and-
BUY PUT AUG 85.00 DCX-TQ open interest= 412 current ask $1.80

Picked on July 22 at $ 89.75
Change since picked: 0.00
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 1.3 million

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Lexmark - LXK - cls: 45.43 change: -0.71 stop: n/a

Company Description:
Lexmark International, Inc. provides businesses and consumers in more than 150 countries with a broad range of printing and imaging products, solutions and services that help them to be more productive. In 2006, Lexmark reported $5.1 billion in revenue. (source: company press release or website)

Why We Like It:
LXK has been sliding for months but the downtrend stalled a couple of weeks ago. Shares have been consolidating in a narrow range. We think LXK is going to break out one way or the other on its earnings news. Earnings are due out on Tuesday morning. That means Monday is our only day to open positions. We're suggesting an entry range in the $46.00-44.00 zone. The closer to $45.00 the better the entry point.

Suggested Options:
A strangle play requires buying an out of the money call and an out of the money put. At current levels our estimated cost is $0.75. We want to sell if either option rises to $1.50.

BUY CALL AUG 50.00 LXK-HJ open interest=1548 current ask $0.45
-and-
BUY PUT AUG 40.00 LXK-TU open interest=1389 current ask $0.30

Picked on July 22 at $ 45.43
Change since picked: 0.00
Earnings Date 07/24/07 (confirmed)
Average Daily Volume = 1.9 million
 

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