Option Investor
New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
APC None None
ICLR    
NOC    
SMH    
STLD    
TSL    
TSO    
XLF    

Play Editor's Note: We are adding several new plays to the newsletter tonight. In order to save time and space we're going to temporarily eliminate the "Company Description" paragraph.


New Calls

Anadarko Petrol. - APC - cls: 59.87 change: +2.04 stop: 55.99

Why We Like It:
Oil stocks are on the rise as crude oil continues to rally. APC is getting some attention from the analysts after reporting a solid quarter. The stock is poised to breakout over $60.00 soon. We're suggesting a trigger to buy calls above the October high. Our suggested entry point is at $60.55. If triggered our target is the $64.85-65.00 range. More aggressive traders may want to aim higher. Conservative types might want to place their stop closer to $57.50. The P&F chart points to an $86 target.

Suggested Options:
We are suggesting the December calls. Our suggested trigger is at $60.55.

BUY CALL DEC 60.00 APC-LL open interest=1126 current ask $2.95
BUY CALL DEC 65.00 APC-LM open interest=1375 current ask $1.10

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/05/07 (confirmed)
Average Daily Volume = 3.9 million

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Icon Pub. Ltd. - ICLR - close: 58.79 chg: +1.47 stop: 55.90

Why We Like It:
ICLR has been out performing its peers in the biotech and drug sectors. Shares have a relatively steady stair-step pattern higher and the stock looks poised to step up again. Broken resistance at $56.00 has become new support. We're suggesting today's bounce as an entry point to buy calls. Our target is the $63.50-65.00 range. We would consider this a higher-risk play for the simple reason that volume is so low on both the stock and the options.

Suggested Options:
We are suggesting the December calls.

BUY CALL DEC 55.00 QIQ-LK open interest=57 current ask $6.20
BUY CALL DEC 60.00 QIQ-LL open interest=62 current ask $3.20

Picked on November 06 at $ 58.79
Change since picked: + 0.00
Earnings Date 10/23/07 (confirmed)
Average Daily Volume = 107 thousand

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Northrop Gruman - NOC - cls: 84.48 chg: +1.90 stop: 79.99

Why We Like It:
Defense stocks continue to be market leaders. The DFI index has hit a string of new all-time highs. NOC hit its own all-time high today with a breakout over its $81-84 trading range. We're suggesting traders buy this momentum. After going sideways for months we suspect that NOC could rally into Christmas. Readers can choose to buy calls now or look for another dip in the $82-83 zone. We're suggesting a stop loss at $79.99 but you might be able to get away with a stop near $80.80. Our target is the $89.00-90.00 range. The P&F chart shows a bullish catapult pattern with a $92 target.

Suggested Options:
We are suggesting the December or January calls.

BUY CALL DEC 85.00 NOC-LQ open interest=137 current ask $2.60
BUY CALL DEC 90.00 NOC-LR open interest= 71 current ask $0.85

BUY CALL JAN 85.00 NOC-AQ open interest=1353 current ask $3.70
BUY CALL JAN 90.00 NOC-AR open interest= 386 current ask $1.70

Picked on November 06 at $ 84.48
Change since picked: + 0.00
Earnings Date 10/24/07 (confirmed)
Average Daily Volume = 1.4 million

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Semiconductor Holders - SMH - cls: 34.41 chg: +0.36 stop: 33.29

Why We Like It:
Big cap tech stocks are leading the rally and the semiconductors are trying hard to put in a bottom and rebound. If Intel is any guide then the group should bounce. We are suggesting call positions now although readers may want to wait for a new relative high over $34.75 before initiating positions. Our target is the $36.00-36.50 range. More aggressive traders could aim higher. Keep an eye on the SOX index.

Suggested Options:
We are suggesting the December or January calls.

BUY CALL DEC 32.50 SMH-LZ open interest= 1243 current ask $2.65
BUY CALL DEC 35.00 SMH-LG open interest=14388 current ask $1.09

BUY CALL JAN 35.00 SMH-AG open interest= 8169 current ask $1.57

Picked on November 06 at $ 34.41
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 9.4 million

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Steel Dynamics - STLD - close: 52.93 chg: +2.62 stop: 49.25

Why We Like It:
Steel and metals stocks were improving today. STLD could be a leader in the group. The stock broke through significant resistance near $50.00 back in October. The recent consolidation retested broken resistance as support. Today's bounce looks like a tempting entry point to buy calls for the next leg higher. Our target is the $57.50-60.00 range. The P&F chart is bullish with a $78 target.

Suggested Options:
We are suggesting the December or January calls.

BUY CALL DEC 50.00 RQL-LJ open interest=1677 current ask $5.60
BUY CALL DEC 55.00 RQL-LK open interest=4927 current ask $2.90

BUY CALL JAN 55.00 RQL-AK open interest=5136 current ask $4.10
BUY CALL JAN 60.00 RQL-AL open interest=2802 current ask $2.30

Picked on November 06 at $ 52.93
Change since picked: + 0.00
Earnings Date 01/23/08 (unconfirmed)
Average Daily Volume = 1.7 million

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Trina Solar - TSL - close: 63.67 chg: +4.92 stop: 59.85

Why We Like It:
Solar energy stocks were strong today after FSLR jumped 20 points on some news and a bunch of positive analyst comments. TSL produced a big 8% rally and normally we would not want to chase a move that big. However, this stock looks like it has more room to rally. Currently shares are under resistance at the $65.00 mark. We're suggesting a trigger to buy calls at $65.25. If triggered our target is the $72.00-72.50 range near its July highs. We consider this a higher-risk, aggressive play because the stock can be volatile and we have a relatively wide stop loss. Plus, the options are expensive. A $5 or $6 move in the stock is not going to see a super big move in the options because there is so much premium already built in. FYI: An alternative entry point would be another dip or bounce near $60.00.

Suggested Options:
We are suggesting the December calls but we plan to exit ahead of the late November earnings. Our suggested trigger is $65.25.

BUY CALL DEC 65.00 TSL-LM open interest=1059 current ask $6.90
BUY CALL DEC 70.00 TSL-LN open interest=1113 current ask $5.10

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/22/07 (unconfirmed)
Average Daily Volume = 1.6 million

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Tesoro - TSO - close: 59.13 change: +3.43 stop: 54.59

Why We Like It:
Oil stocks were strong thanks to a rally in crude again. We think TSO looks like an attractive candidate because it has completely digested the October gap higher and is bouncing from what should be support. The gap higher was produced by news that Tracinda corp, owned and directed by Kirk Kerkorian, announced it was trying to buy shares of the company with a tender offer priced at $64.00. We're suggesting a stop loss under yesterday's low. Our target is the $64.00-65.00 range.

Suggested Options:
We're suggesting the December or January calls.

BUY CALL DEC 60.00 TSO-LL open interest=1336 current ask $4.10
BUY CALL DEC 65.00 TSO-LM open interest=4418 current ask $2.25

BUY CALL JAN 60.00 TSO-AL open interest=2823 current ask $5.40
BUY CALL JAN 65.00 TSO-AM open interest=6287 current ask $3.30

Picked on November 06 at $ 59.13
Change since picked: + 0.00
Earnings Date 01/29/08 (unconfirmed)
Average Daily Volume = 5.4 million

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Financial Sector SPDR - XLF - cls: 31.80 chg: +0.53 stop: 30.65

Why We Like It:
There is a growing expectation that the financials have put in a short-term bottom. Whether or not that's true remains to be seen but this looks like a relatively low-risk entry point to try and catch a bounce. Now this might look like we're trying to catch the proverbial "falling knife" and more conservative traders may want to avoid this play or at least wait for a rally past potential resistance in the $32.00-32.20 zone. We will target the $33.80-34.00 range.

Suggested Options:
We are suggesting the December or January calls. Strikes are at $1.00 increments so there are plenty to choose from.

BUY CALL DEC 32.00 XLF-LF open interest=35914 current ask $1.34
BUY CALL DEC 33.00 XLF-LG open interest=32291 current ask $0.85

BUY CALL JAN 32.00 XLF-AF open interest= 5619 current ask $1.70
BUY CALL JAN 34.00 XLF-AH open interest=114126 current ask $0.81

Picked on November 06 at $ 31.80
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 60.4 million
 

New Puts

None today.
 

New Strangles

None today.
 

New Play Archives