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New Option Plays

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ARA None None
BHP    
KMT    

New Calls

Aracruz Celulose - ARA - cls: 76.89 chg: +0.78 stop: 72.49

Company Description:
Aracruz Celulose is a Brazilian company, the world's leading producer of bleached eucalyptus pulp. It is responsible 27% of the global supply of the product, used to manufacture printing and writing, tissue, and high value added specialty papers. (source: company press release or website)

Why We Like It:
After consolidating sideways for most of October shares of ARA now look poised to begin a new leg higher. Traders have been buying the dips near $75.00 and today's intraday bounce is a bullish entry point. We're suggesting a stop loss at $72.49 but readers might be able to get away with a more conservative stop loss near $74 or near $75. Our short-term target is the $79.90-80.00 range. Our more aggressive target is the $82.50-85.00 range. The P&F chart points to a $93 target.

Suggested Options:
We are suggesting the December calls. If you want more open interest try the January strikes.

BUY CALL DEC 75.00 ARA-LO open interest= 0 current ask $5.30
BUY CALL DEC 80.00 ARA-LP open interest= 4 current ask $2.75

Picked on October 31 at $ 76.89
Change since picked: + 0.00
Earnings Date 10/09/07 (confirmed)
Average Daily Volume = 427 thousand

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BHP Billiton - BHP - cls: 87.26 chg: +3.03 stop: 82.49

Company Description:
BHP Billiton is a global leader in the resources industry.
Formed from a merger between BHP and Billiton, we bring together an exceptional mix of quality, low-cost resource assets, complemented by a strong management team determined to operate our assets in an efficient manner. (source: company press release or website)

Why We Like It:
BHP has been a big momentum stock this year and we have been looking for a new entry point. Now after consolidating sideways for much of October the stock looks poised to breakout. We're suggesting a trigger to buy calls at $87.55, which should be hit tomorrow. If triggered our target is the $97.50-100.00 range. The P&F chart points to a $104 target. FYI: More conservative traders could try a higher stop loss near $84.00.

Suggested Options:
We are suggesting the December calls. Our trigger is at $87.55.

BUY CALL DEC 85.00 BHP-LQ open interest=547 current ask $7.10
BUY CALL DEC 90.00 BHP-LR open interest=603 current ask $4.70
BUY CALL DEC 95.00 BHP-LS open interest=386 current ask $2.90

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/06/08 (unconfirmed)
Average Daily Volume = 4.0 million

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Kennametal - KMT - close: 91.21 change: +3.28 stop: 86.90

Company Description:
Kennametal Inc. is a leading global supplier of tooling, engineered components and advanced materials consumed in production processes. (source: company press release or website)

Why We Like It:
It has been a very bullish couple of weeks for KMT. The company reported better than expected earnings and announced a 2-for-1 stock split for mid December. The news helped propel KMT toward resistance at the $90.00 level. Shares bounced around resistance near $90-88 for the last couple of days and now today's market rally has pushed the stock to a new high and on above average volume. This looks like a new entry point for call positions. Our target is the $99.00-100.00 range. The P&F chart has a triple-top breakout buy signal with a $102 target. We're suggesting a stop at $86.90 but more conservative traders might try a tighter stop near $87.50 or near $88.00.

Suggested Options:
We're suggesting the December calls.

BUY CALL DEC 90.00 KMT-LR open interest= 32 current ask $5.00
BUY CALL DEC 95.00 KMT-LS open interest= 20 current ask $2.00

Picked on October 31 at $ 91.21
Change since picked: + 0.00
Earnings Date 10/24/07 (confirmed)
Average Daily Volume = 404 million
 

New Puts

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New Strangles

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