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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ESRX None None
GILD    
XOM    

Play Editor's Note: Everyone was expecting an oversold bounce early this week. The question is whether or not there will be any follow through. A lot of the market pundits are suggesting that investors sell into strength and/or look for the bounce to fail and use it as a shorting opportunity. That is definitely a real possibility and we remain very skeptical of the rebound. However, we have found a couple of relatively lower-risk bullish candidates for you to consider. We are calling them "low-risk" because they're bouncing from support after a significant correction and we can play with a relatively tight stop loss.


New Calls

Express Scripts - ESRX - close: 64.67 chg: +1.29 stop: 61.14

Company Description:
Express Scripts, Inc. is one of the largest PBM companies in North America, providing PBM services to over 50 million members. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, and union-sponsored benefit plans. (source: company press release or website)

Why We Like It:
We like ESRX because shares have been displaying some relative strength. The recent pull back was orderly and not like the violent sell-offs we have seen so much lately in the market. Traders have continued to buy the dips and the stock now looks poised to begin another leg higher. We're suggesting a stop loss under Monday's low. While we're opening the play here more conservative traders might want to wait for a rise past $65.00 or $66.00 (both potential resistance) before opening call positions. The P&F chart is bullish with a $97 target. Our short-term target is the $69.50-70.00 range. FYI: ESRX is also on the newsletter as a current strangle play.

Suggested Options:
We are suggesting the December or January calls. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL DEC 65.00 XTQ-LM open interest=12287 current ask $2.40
BUY CALL DEC 70.00 XTQ-LN open interest= 1121 current ask $0.75

BUY CALL JAN 65.00 XTQ-AM open interest=3107 current ask $3.70
BUY CALL JAN 70.00 XTQ-AN open interest=1348 current ask $1.65

Picked on November 13 at $ 64.67
Change since picked: + 0.00
Earnings Date 02/07/08 (unconfirmed)
Average Daily Volume = 2.4 million

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Gilead Sciences - GILD - cls: 43.11 change: +0.55 stop: 41.74

Company Description:
Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Australia. (source: company press release or website)

Why We Like It:
GILD has a long-term bullish trend but it looks like the stock got ahead of itself in late October and early November. Now the recent market correction has pulled GILD back toward support near $42.00. Traders bought the dip near $42 and its 50-dma. This looks like a relatively lower-risk entry point. We're suggesting a stop just under today's low. Our target is the $47.00-48.00 range. There might be some resistance near $44.00 and its 10-dma near $45.00.

Suggested Options:
We are suggesting the December or January calls. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk. The $42.50 and $47.50 strikes would also work.

BUY CALL DEC 45.00 GDQ-LI open interest=1960 current ask $1.00

BUY CALL JAN 45.00 GDQ-AI open interest=9121 current ask $1.70

Picked on November 13 at $ 43.11
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 7.6 million

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ExxonMobil - XOM - close: 86.75 chg: +2.21 stop: 82.99

Company Description:
We are the world's largest publicly traded international oil and gas company, providing energy that helps underpin growing economies and improve living standards around the world. (source: company press release or website)

Why We Like It:
Crude oil has seen a sharp correction recently and the oil stocks fell in tandem. Yet now it looks like traders are buying the dip. If you look at XOM's daily chart investors have been consistently buying the dip to its rising 200-dma for months. They did it again today. Not only was today a bounce from the 200-dma but a bullish engulfing candlestick pattern. There is short-term resistance near the 10-dma and 100-dma and XOM will probably see some resistance near $90.00 as well. However, our target is the $92.50-95.00 range. More conservative traders may want to lock in some gains near $90.00.

Suggested Options:
We are suggesting the December or January calls. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL DEC 85.00 XOM-LQ open interest=1652 current ask $4.80
BUY CALL DEC 90.00 XOM-LR open interest=5370 current ask $2.20

BUY CALL JAN 85.00 XOM-AQ open interest=38243 current ask $6.00
BUY CALL JAN 90.00 XOM-AR open interest=46390 current ask $3.40

Picked on November 13 at $ 86.75
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 24.2 million
 

New Puts

None today.
 

New Strangles

None today.
 

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