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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
LMT ALEX None
TSL CEPH  

Play Editor's Note: We are only adding four new plays to the newsletter this weekend but I wanted to let you know we're keeping an eye on BCSI and MBT as potential bullish candidates and LAMR as a potential bearish candidate.


New Calls

Lockheed - LMT - cls: 103.20 change: +2.16 stop: 97.99

Company Description:
Headquartered in Bethesda, Md., Lockheed Martin employs about 140,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The corporation reported 2006 sales of $39.6 billion. (source: company press release or website)

Why We Like It:
The defense/aerospace sector has been showing a lot of relative strength. Currently the DFI index is near a new all-time high. Meanwhile shares of LMT look like they are about ready to end the sideways consolidation. Shares have developed a bullish pattern of higher lows and look ready to breakout over resistance near $103.50. We're suggesting a trigger to buy calls at $103.75. If triggered our target is the $109.50-110.00 range. More aggressive traders may want to aim higher. The P&F chart points to a $117 target. We do not want to hold over the late October earnings.

Suggested Options:
We are suggesting the October calls although you may want to consider using November strikes. October options expire in four weeks. Our trigger is at $103.75.

BUY CALL OCT 100 LMT-JT open interest=396 current ask $5.00
BUY CALL OCT 105 LMT-JA open interest=895 current ask $2.20

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/24/07 (unconfirmed)
Average Daily Volume = 2.7 million

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Trina Solar - TSL - cls: 51.89 chg: +3.70 stop: 47.49

Company Description:
Trina Solar is a well-recognized manufacturer of high quality solar PV modules and has a long history as a solar photovoltaic (PV) pioneer since it was founded in 1997 as a system installation company. (source: company press release or website)

Why We Like It:
We normally try to avoid chasing a big one-day move like Friday's 7.6% gain in TSL. However, Friday's rally was a bullish breakout over resistance at the $50.00 mark and the move was fueled by strong volume. The P&F chart is bullish with a $73 target. We suspect that Friday's gain could be the beginning of a new run towards $60.00. We're suggesting call positions now. If you're the patient type then wait for a dip back towards $50, which should be new support. Our target is the $58.00-60.00 range.

Suggested Options:
We are suggesting the October calls but readers should know that October strikes expire in four weeks. You may want to consider using November calls.

BUY CALL OCT 50.00 TSL-JJ open interest=1020 current ask $5.90
BUY CALL OCT 55.00 TSL-JK open interest= 581 current ask $3.70

Picked on September 23 at $ 51.89
Change since picked: + 0.00
Earnings Date 11/22/07 (unconfirmed)
Average Daily Volume = 1.1 million
 

New Puts

Alexander & Baldwin - ALEX - cls: 49.50 chg: -1.58 stop: 52.01

Company Description:
Alexander & Baldwin, Inc. ("A&B"), headquartered in Honolulu, Hawaii is engaged in ocean transportation and logistics services, through its subsidiaries, Matson Navigation Company, Inc. and Matson Integrated Logistics, Inc.; in real estate, through A&B Properties, Inc.; and in food products, through Hawaiian Commercial & Sugar Company and Kauai Coffee Company, Inc. (source: company press release or website)

Why We Like It:
ALEX has been showing a lot of relative weakness lately. Last week's rally on the Fed news turned into a failed rally and a bearish double-top pattern. Friday saw ALEX lose 3% and breakdown under support near $50.00 on big volume. The combination of the topping pattern and the breakdown under support looks like a good spot for a put. The P&F chart is already bearish with a $36 target. There is some support near $47.50 but we're aiming for a decline into the $45.50-45.00 range. We do not want to hold over the late October earnings.

Suggested Options:
We are suggesting the October puts although November puts would also work.

BUY PUT OCT 50.00 XQD-VJ open interest=204 current ask $2.05
BUY PUT OCT 45.00 XQD-VI open interest= 47 current ask $0.45

Picked on September 23 at $ 49.50
Change since picked: + 0.00
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 337 thousand

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Cephalon - CEPH - cls: 73.25 chg: +0.64 stop: 74.25

Company Description:
Cephalon, Inc. is an international biopharmaceutical company, recently inducted into the World Economic Forum Community of Global Growth Companies. For 20 years, the company has been dedicated to the discovery, development and commercialization of innovative products in four core therapeutic areas: central nervous system, pain, oncology and addiction. (source: company press release or website)

Why We Like It:
Shares of biotech stock CEPH have been under performing the market and its peers this past week. The oversold bounce following the September 13th sell-off ran into resistance near $75 and its 200-dma. Now shares look like they are rolling over into a new leg down. Aggressive traders may want to open put positions now. We want to see a new relative low so we're suggesting a trigger to buy puts at $71.70. Please note that any time we trade a biotech stock it should be considered higher-risk. You never know when there is going to be a surprise announcement about an FDA approval or lack thereof or a surprise announcement on some new breakthrough or clinical trial. It's tough to defend against this sort of headline risk that could send a biotech stock gapping one way or the other. If we are triggered at $71.70 our target will be the $68.00-67.00 range. More aggressive traders could aim for the $65 region. The P&F chart is very bearish with a $50 target.

Suggested Options:
We are suggesting the October puts although November puts would also work. Our trigger to open positions is at $71.70.

BUY PUT OCT 75.00 CQE-VO open interest=1782 current ask $3.60
BUY PUT OCT 70.00 CQE-VN open interest=2092 current ask $1.30

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 1.5 million
 

New Strangles

None today.
 

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