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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
AAPL AYI None
CVX    
IBM    
IWM    
MSTR    
RIG    

New Calls

Apple Inc. - AAPL - cls: 135.30 change: 4.23 stop: 127.75

Company Description:
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone. (source: company press release or website)

Why We Like It:
Now that the market is bouncing it looks like the momentum traders are pouring back into shares of AAPL. The stock is blasting through potential resistance levels like they don't exist. The last couple of days investors have been buying dips near $130 and its 50-dma. If the market can keep the bullish tone alive then AAPL could try and retest the July highs. We're suggesting call positions now but another dip toward $130-131 would also work as an entry point. We're using a stop loss at $127.75 but you could also try a tighter stop just under $130.00. There is potential resistance at $140.00. Our target is the $145.00-148.00 range. The P&F chart has already turned positive again with a $180 target. FYI: AAPL has been volatile and the options are not cheap!

Suggested Options:
We are suggesting the September calls although October calls would also work well. As with all of our plays it is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL SEP 130 APV-IF open interest=20188 current ask $ 8.80
BUY CALL SEP 135 APV-IG open interest=32285 current ask $ 5.70
BUY CALL SEP 140 APV-IH open interest=31467 current ask $ 3.50

Picked on August 26 at $135.30
Change since picked: 0.00
Earnings Date 10/18/07 (unconfirmed)
Average Daily Volume = 37.9 million

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Chevron - CVX - cls: 87.22 change: 1.74 stop: 82.45

Company Description:
Chevron is one of the largest integrated energy companies in the world. Headquartered in San Ramon, California, and conducting business in approximately 180 countries, the company is engaged in every aspect of the oil and natural gas industry, including exploration and production; refining, marketing and transportation; chemicals manufacturing and sales; geothermal and power generation. (source: company press release or website)

Why We Like It:
We realize that the correction in crude oil futures may not be over. Yet we can't deny the bullish reversal in shares of CVX. The stock has produced a bullish double-bottom pattern and broken through resistance near $85 and its 50-dma. Technicals have turned bullish again and its P&F chart has reversed back into a buy signal that now points to a $104 target. Our only complaint would be the declining volume on the rally. We are suggesting call options here near $87 but a dip back toward $85 would definitely be an attractive entry. Our target is the $94.00-95.00 range.

Suggested Options:
We are suggesting the September calls although October strikes would also work well.

BUY CALL SEP 85.00 CVX-IQ open interest=9196 current ask $4.00
BUY CALL SEP 90.00 CVX-IR open interest=8698 current ask $1.20

Picked on August 26 at $ 87.22
Change since picked: 0.00
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 12.3 million

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Intl. Bus. Mach.- IBM - cls: 113.24 chg: 1.79 stop: 107.49

Company Description:
IBM is one of the largest information technology hardware and services provider on the planet.

Why We Like It:
The hardware index is bouncing sharply and IBM looks poised to lead the way higher. The stock is breaking out from its recent consolidation pattern and technical indicators are turning bullish again. We are suggesting calls with IBM above $112 (actually above $110) and readers can choose to open positions now or look for a dip between here and $110. We're suggesting a stop loss at $107.49 but more conservative traders may want to use a tighter stop loss. Our target is the $118.00-120.00 range. We're also setting a secondary, more aggressive target in the $124-125 range but we suggest everyone take some money off the table in the $118-120 zone. The P&F chart is much more optimistic with a forecasted $177 target for IBM.

Suggested Options:
We are suggesting the September calls although October strikes would also work well.

BUY CALL SEP 110 IBM-IB open interest=3291 current ask $5.00
BUY CALL SEP 115 IBM-IC open interest=5938 current ask $1.85

Picked on August 26 at $113.24
Change since picked: 0.00
Earnings Date 10/17/07 (unconfirmed)
Average Daily Volume = 9.5 million

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Russell 2000 ishares - IWM - cls: 79.63 chg: 1.02 stop: 77.49

Company Description:
The IWM is the iShares exchange traded fund designed to track the small cap Russell 2000 index.

Why We Like It:
The Russell 2000 index, and thus the IWM, has been very volatile the last few weeks. The index produced an ugly-looking bullish double-bottom pattern in August but is struggling with resistance near $80.00 and its 200-dma. We are suggesting a trigger to buy calls at $80.25. If triggered our target is the $84.50-85.00 range.

Suggested Options:
We are suggesting the September or October calls. Strikes are available at $1.00 increments. Feel free to pick alternative strikes.

BUY CALL SEP 78.00 IOW-IZ open interest=32028 current ask $3.45
BUY CALL SEP 80.00 IOW-IB open interest=88275 current ask $2.13
BUY CALL SEP 82.00 IOW-ID open interest=94021 current ask $1.12

BUY CALL OCT 78.00 IOW-JZ open interest= 2434 current ask $4.35
BUY CALL OCT 80.00 IOW-JB open interest= 8474 current ask $3.10
BUY CALL OCT 82.00 IOW-JD open interest= 4935 current ask $2.01

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

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MicroStrategy - MSTR - cls: 76.05 chg: 3.68 stop: 68.99

Company Description:
Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. (source: company press release or website)

Why We Like It:
MSTR spent the last two weeks consolidating sideways. Friday's rally was a bullish breakout from its trading range and on improving volume. This looks like an entry point to jump on the next rebound higher. There is potential resistance at the 50-dma so we're listing two targets. Our first target is the $82.50-85.00 range. Our second target is the $87.50-90.00 range. The Point & Figure chart has already reversed back into a bullish pattern with a $91 target.

Suggested Options:
We are suggesting the September calls although October strikes would also work well.

BUY CALL SEP 75.00 EOU-IO open interest=673 current ask $4.40
BUY CALL SEP 80.00 EOU-IP open interest=583 current ask $2.10
BUY CALL SEP 85.00 EOU-IQ open interest=303 current ask $0.90

Picked on August 26 at $ 76.05
Change since picked: 0.00
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 358 thousand

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Transocean - RIG - cls: 103.94 change: 0.36 stop: 99.50

Company Description:
Transocean Inc. is the world's largest offshore drilling contractor with a fleet of 82 mobile offshore drilling units. The company's mobile offshore drilling fleet, consisting of a large number of high-specification deepwater and harsh environment drilling units, is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. (source: company press release or website)

Why We Like It:
This is another aggressive play in the oil services sector. We're calling it aggressive because the correction in crude oil prices may not be over yet. Shares of RIG have rebounded strongly and are currently challenging resistance near $105.00 and its 50-dma near $105.60. We want to catch a breakout higher so we're suggesting a trigger to buy calls at $105.75. However, we will also be watching for an alternative entry on a dip and bounce near $100.00. If this secondary entry point occurs we'll make a note of it here in the newsletter. If we are triggered at $105.75 then we'll aim for the $114.00-115.00 range. Be aware that RIG will probably hit some resistance near $110. If the stock can trade over $106.00 it will produce a new P&F chart buy signal.

Suggested Options:
We are suggesting the September calls although October strikes would also work well.

BUY CALL SEP 100 RIG-IT open interest=2736 current ask $5.90
BUY CALL SEP 105 RIG-IA open interest=3474 current ask $2.80
BUY CALL SEP 110 RIG-IB open interest=8418 current ask $1.10

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 10/31/07 (unconfirmed)
Average Daily Volume = 7.3 million
 

New Puts

Acuity Brands - AYI - cls: 52.80 change: -0.88 stop: 57.11

Company Description:
Acuity Brands, Inc., with fiscal year 2006 net sales of approximately $2.4 billion, is comprised of Acuity Brands Lighting and Acuity Specialty Products. (source: company press release or website)

Why We Like It:
The trend has definitely changed for AYI. The stock peaked near $67 in July and then promptly crashed to an intraday low of $46.95. What followed was a massive rebound that turned into a bearish failed rally pattern near $60 and its 50-dma. Now the stock is trending down again. Needless to say the stock can be volatile but we'll try and limit our risk with a stop loss above its 200-dma at $57.11. We have two targets. Our first target is the $47.75-47.50 range. Our second target is the $45.25-45.00 zone.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 55.00 AYI-UK open interest= 70 current ask $3.60
BUY PUT SEP 50.00 AYI-UJ open interest= 58 current ask $1.30

Picked on August 26 at $ 52.80
Change since picked: 0.00
Earnings Date 10/04/07 (unconfirmed)
Average Daily Volume = 536 thousand
 

New Strangles

None today.
 

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