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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CELG None None
DO    
GS    
PCAR    
TEX    

Play Editor's Note: The short-term trend for the major market averages is now down but stocks look oversold and due for a bounce. We are adding a few bullish positions to the newsletter but readers should consider them more speculative and higher risk in this environment.


New Calls

Celgene - CELG - cls: 60.20 change: 1.45 stop: 57.49

Company Description:
Celgene Corporation, headquartered in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of novel therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. (source: company press release or website)

Why We Like It:
CELG displayed some relative strength today after reporting better than expected earnings this morning. The stock broke out over technical resistance at its 50-dma but stalled under resistance at the $61.00 mark. We suspect that if the markets can stage a rebound then CELG may be able to breakout from its trading range. We're suggesting a trigger to buy calls on the stock at $61.25. If triggered our target is the May highs in the $66.50-67.00 range. FYI: A move over $61.00 would produce a brand new P&F buy signal.

Suggested Options:
We are suggesting the September calls. Our suggested trigger to open positions is at $61.25.

BUY CALL SEP 60.00 LQH-IL open interest=1647 current ask $3.60
BUY CALL SEP 65.00 LQH-IM open interest=2000 current ask $1.50

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 07/26/07 (confirmed)
Average Daily Volume = 4.1 million

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Diamond Offshore - DO - cls: 106.36 chg: -3.89 stop: 99.90

Company Description:
Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling. (source: company press release or website)

Why We Like It:
We believe the short-term sell-off in oil service stocks is overdone. Don't misunderstand us. We've been saying that oil and oil stocks are likely to see a significant correction in mid August. However, DO could still rebound back toward its highs before the correction occurs. This should be considered a higher-risk, aggressive play given the volatile environment we're in. We're suggesting call positions now. More conservative traders may want to use a trigger over $107.50 before jumping in. We're going to set two targets. Our conservative target is the $114.00-115.00 range. Our more aggressive target is the $119.00-120.00 range. The P&F chart points to a $137 target. FYI: More conservative traders may want to use a tighter stop loss around $102.50.

Suggested Options:
We are suggesting the September calls. As with all of our plays the listed options below are only suggestions. It is up to the individual trader to decide what month and which strike price best suits your trading style and risk level.

BUY CALL SEP 105 DO-IA open interest=11651 current ask $7.10
BUY CALL SEP 110 DO-IB open interest= 6028 current ask $4.70
BUY CALL SEP 115 DO-IC open interest= 8414 current ask $2.85

Picked on July 26 at $106.36
Change since picked: 0.00
Earnings Date 07/26/07 (confirmed)
Average Daily Volume = 2.6 million

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Goldman Sachs - GS - cls: 195.12 change: -8.04 stop: 188.99

Company Description:
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net-worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world. (source: company press release or website)

Why We Like It:
This play is for the brave traders out there! Concerns about the sub-prime fallout has been plaguing the banks and brokers. Additionally news about a credit crunch slowing the leveraged-buyout deals has slammed the brokerage stocks. Yet a lot of the markets fears might (we repeat "might") be priced into shares of GS. The stock has fallen from its highs near $233 and shares have plunged more than $30 in just the last couple of weeks. GS is very short-term oversold and due for a bounce. Speaking of bounces the stock bounced near its March 2007 low near round-number support at $190. If nothing else this might be a good spot to catch several points in an oversold bounce before it rolls over again. The 200-dma, near $208, should now be overhead resistance. We're suggesting speculative call positions now with a $205.00-208.00 target. FYI: The P&F chart is incredibly bearish with a $144 target.

Suggested Options:
We do not expect to be in this play very long so we're suggesting the August calls. Septembers would also work.

BUY CALL AUG 190 GPY-HR open interest= 743 current ask $10.80
BUY CALL AUG 195 GPY-HS open interest= 604 current ask $ 7.90
BUY CALL AUG 200 GPY-HT open interest=6105 current ask $ 5.50

Picked on July 26 at $195.12
Change since picked: 0.00
Earnings Date 09/12/07 (unconfirmed)
Average Daily Volume = 6.9 million

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PACCAR - PCAR - cls: 82.87 change: -4.99 stop: 79.70

Company Description:
PACCAR is a global technology leader in the design, manufacture and customer support of high-quality light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF nameplates. It also provides financial services and information technology and distributes truck parts related to its principal business. (source: company press release or website)

Why We Like It:
Here is another buy the dip play or it might be more correctly called buy the bounce play. PCAR reversed sharply on July 24th and promptly sank from the $98 level down to under $80 during today's session. That's a huge move in just three days. PCAR is very short-term oversold and due for an oversold bounce. Traders bought the dip near $80.00 twice today and volume really began to pick up on the afternoon rebound. We suspect that PCAR could run toward $90 again before hitting trouble. We're suggesting readers buy the afternoon bounce today. We'll put the stop loss under today's low. Our target is the $89.50-90.00 range. Yes, given the volatility, we would qualify this as a higher-risk, more aggressive play. FYI: The P&F chart is very bearish and points to a $61 target.

Suggested Options:
We do not expect to be in this play very long so we're suggesting the August calls. Septembers would also work.

BUY CALL AUG 80.00 PAQ-HP open interest= 581 current ask $5.00
BUY CALL AUG 85.00 PAQ-HQ open interest= 668 current ask $2.25
BUY CALL AUG 90.00 PAQ-HR open interest=1230 current ask $0.90

Picked on July 26 at $ 82.87
Change since picked: 0.00
Earnings Date 07/24/07 (confirmed)
Average Daily Volume = 1.8 million

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Terex - TEX - cls: 83.87 change: -4.43 stop: 79.49

Company Description:
Terex Corporation is a diversified global manufacturer with 2006 net sales of $7.6 billion. Terex operates in five business segments: Aerial Work Platforms, Construction, Cranes, Materials Processing & Mining, and Roadbuilding, Utility Products and Other. (source: company press release or website)

Why We Like It:
Last night TEX reported better than expected results but still sold off thanks to the market's meltdown on Thursday. While many of the technicals have turned bearish on TEX we suspect that shares will bounce from the $80.00 level and its rising 100-dma. We're suggesting call positions now. If you want to wait and see if the markets dip again tomorrow it might pay off to wait and look for another dip near the $80 region. If you prefer to buy on strength then consider waiting for a rise past $86.50 or over $87.50. We do expect some resistance near $90.00. However, our first target is the $94.00-95.00 range. More conservative traders may want to take profits in the $89.50-90.00 zone.

Suggested Options:
We are suggesting the September calls. August calls would work but August options expire in about three weeks.

BUY CALL SEP 80.00 TEX-IP open interest= 0 current ask $8.30
BUY CALL SEP 85.00 TEX-IQ open interest=10 current ask $5.60
BUY CALL SEP 90.00 TEX-IR open interest=37 current ask $3.60

Picked on July 26 at $ 83.87
Change since picked: 0.00
Earnings Date 07/25/07 (confirmed)
Average Daily Volume = 1.1 million
 

New Puts

None today.
 

New Strangles

None today.
 

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