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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None ASH BSC
  FXI  
  LLL  
  WHR  

New Calls

None today.
 

New Puts

Ashland Inc. - ASH - cls: 58.84 change: -1.20 stop: 61.01

Company Description:
Ashland Inc., a diversified, global chemical company, provides quality products, services and solutions to customers in more than 100 countries. (source: company press release or website)

Why We Like It:
The oversold bounce from ASH's August lows has been struggling near the $60.50 region for the last two weeks. Now the technical indicators are starting to roll over into new bearish signals and Friday's decline saw ASH breakdown under its 10-dma. We are suggesting new put positions now. More conservative traders may want to wait for a drop under $58.00 before opening new bearish positions. We have two targets. Our first target is the $55.15-55.00 range. Our second target is the $52.65-52.50 range.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 60.00 ASH-VL open interest=568 current ask $3.10
BUY PUT OCT 55.00 ASH-VK open interest=458 current ask $1.15

Picked on September 09 at $ 58.84
Change since picked: + 0.00
Earnings Date 10/30/07 (unconfirmed)
Average Daily Volume = 796 thousand

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FTSE/Xinhau China iShares - FXI - cls: 146.78 chg: -3.74 stop: 151.51

Company Description:
The FTSE/Xinhau China 25 iShares index is an Exchange Traded Fund (ETF) designed to track the Chinese stock market.

Why We Like It:
If the market is worried about the U.S. economy falling into recession and how the U.S. consumer might pull back their spending habits then the Chinese market could be facing a big correction soon. The iShares for the Chinese market (FXI) already look overbought from their August rebound. We're suggesting put positions now although readers do have a couple of choices. You could wait to see if the FXI bounces and then produces a failed rally under $150 as a potential entry point or you could wait for a drop under $145.00 as a new entry point. Our target is the $135.50-135.00. More aggressive traders may want to aim lower. We may start looking for a bullish entry point near $130. Be aware that the Chinese markets and the FXI have been very volatile this year so readers should consider this a more aggressive play.

Suggested Options:
We are suggesting the October strikes. September options are available but they only have two weeks left. Options are available in $1.00 strikes so feel free to pick one you like.

BUY PUT OCT 150 FFP-VT open interest= 816 current ask $11.50
BUY PUT OCT 148 FFP-VR open interest= 335 current ask $10.40
BUY PUT OCT 145 FFP-VO open interest= 340 current ask $ 8.90
BUY PUT OCT 140 FAH-VH open interest=7006 current ask $ 7.10

Picked on September 09 at $146.78
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 3.2 million

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L-3 Comm. - LLL - cls: 96.95 change: -0.91 stop: 98.55

Company Description:
Headquartered in New York City, L-3 Communications employs over 63,000 people worldwide and is a prime system contractor in aircraft modernization and maintenance, C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems and government services. L-3 is also a leading provider of high technology products, systems and subsystems. The company reported 2006 sales of $12.5 billion. (source: company press release or website)

Why We Like It:
LLL has developed some bearish symptoms. Shares have a bearish pattern of lower highs and the technical indicators are rolling over. We suspect that if the markets continue lower then LLL could retest the August lows. We're suggesting a trigger to buy puts at $95.90, which is under short-term support near $96.00. We're going to try and limit our risk with a tight stop at $98.55. More aggressive traders will want to use a wider stop (maybe above $100). If triggered at $95.90 our target is the $90.75-90.00 range but we may need to adjust that as the 200-dma continues to rise.

Suggested Options:
We are suggesting the October puts. Our suggested trigger to open positions is at $95.90.

BUY PUT OCT 100 LLL-VT open interest=365 current ask $5.00
BUY PUT OCT 95 LLL-VS open interest=355 current ask $2.50
BUY PUT OCT 90 LLL-VR open interest=871 current ask $1.20

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/07 (unconfirmed)
Average Daily Volume = 936 thousand

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Whirlpool - WHR - cls: 92.77 change; -3.30 stop: 97.01

Company Description:
Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances, with 2006 annual sales of approximately $18 billion, more than 73,000 employees, and more than 70 manufacturing and technology research centers around the world. (source: company press release or website)

Why We Like It:
If the economy is headed into a recession then WHR could be in for another leg down. The stock's recent bounce attempt is rolling over and shares are developing a pattern of lower highs. Friday's move pushed shares to a new two-week low and helped the technical indicators roll over into new sell signal. We are suggesting put positions now but readers could wait and see if WHR gets a bounce and failed rally near $95 early next week. We have two targets. Our first target is the 87.75-87.50 range. Our second target is the $85.00-84.00 range.

Suggested Options:
We're suggesting the October puts.

BUY PUT OCT 95.00 WHR-VS open interest=1019 current ask $5.70
BUY PUT OCT 90.00 WHR-VR open interest= 154 current ask $3.40

Picked on September 09 at $ 92.77
Change since picked: + 0.00
Earnings Date 10/24/07 (unconfirmed)
Average Daily Volume = 1.1 million
 

New Strangles

Bear Stearns - BSC - cls: 105.37 chg: -2.30 stop: n/a

Company Description:
Founded in 1923, The Bear Stearns Companies Inc. is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The Company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. Headquartered in New York City, the company has approximately 15,000 employees worldwide. (source: company press release or website)

Why We Like It:
There could be a lot of apprehension over BSC's upcoming earnings report. Will they disclose more exposure to the subprime meltdown? Are there any more hedgefunds in trouble? Whatever they announce the news could produce some big moves in the stock price. That's why we're suggesting a strangle. We're going to play the September strikes even though they expire in two weeks. Some readers might want to adjust this strategy and play the October strikes. We're suggesting readers try and open positions in the $106.50-103.50 range. BSC is due to report earnings on Thursday morning before the market opens. Considering the price of the options and our time frame (two weeks) this should be considered a more aggressive play. One idea to reduce the amount of time premium erosion we will suffer would be to wait until Wednesday to open positions.

FYI: We will probably add a strangle on LEH, which also reports on Thursday.

Suggested Options:
A strangle requires buying both an out-of-the-money call and an out-of-the-money put. We're suggesting the September strikes below. Our estimated cost is $4.40. We want to sell if either option hits $7.85.

BUY CALL SEP 115 BVD-IC open interest=4313 current ask $2.35
-and-
BUY PUT SEP 95 BVD-US open interest=6200 current ask $2.05

Picked on September 09 at $105.37
Change since picked: + 0.00
Earnings Date 09/20/07 (confirmed)
Average Daily Volume = 8.7 million
 

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