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New Option Plays

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Call Options Plays
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Strangle Options Plays
ENR APOL None
FLS CELG  
SYNA    

Play Editor's Note: The trend for the major indices is bearish but the bounce may not be over yet. Thus our bias is bearish but we need to be patient with our entry points. We are adding a few bullish candidates thanks to their relative strength but we would favor bearish plays at this time. A few stocks we are watching would be GRMN, BA, CAM, and CLF, which all look bullish. ETR, HOG, and SHLD look bearish.


New Calls

Energizer - ENR - close: 112.11 chg: +2.31 stop: 104.99

Company Description:
Energizer Holdings, Inc., headquartered in St. Louis, Missouri, is one of the world's largest manufacturers of primary batteries, battery-powered devices and flashlights. (source: company press release or website)

Why We Like It:
Friday's market-wide rally was fueled by a short squeeze, which doesn't inspire a lot of confidence in buying the bounce. However, ENR was already looking bullish prior to Friday's move. The stock gapped down back in October thanks to an earnings miss but investors quickly bought the dip. Shares have now broken the multi-week trend of lower highs and broken through potential resistance near $110 and its 50-dma. We are suggesting a trigger to buy calls at $112.75. If triggered our target is the $119.00-120.00 range. We'll use a stop loss at $104.99 but more conservative traders could probably get away with a tighter stop near $107.50 or 109. The P&F chart points to a $157 target.

Suggested Options:
We are suggesting the January or February calls. Our suggested trigger to open positions is at $112.75.

BUY CALL JAN 115 ENR-AC open interest=20 current ask $4.20

BUY CALL FEB 115 ENR-BC open interest= 71 current ask $6.40
BUY CALL FEB 120 ENR-BD open interest=129 current ask $4.40

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/28/08 (unconfirmed)
Average Daily Volume = 511 thousand

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Flowserve - FLS - cls: 93.04 change: +2.77 stop: 88.45

Company Description:
Flowserve Corp. is one of the world's leading providers of fluid motion and control products and services. Operating in more than 55 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. (source: company press release or website)

Why We Like It:
That big spike higher you see on FLS chart back in early November is investor reaction to FLS blowing away the earnings estimates with its latest earnings report. Profits were soaring, which is probably why the stock price has been so resilient the last few weeks. Shares look like they've been trading in a bull flag pattern. While the strength of Friday's rally is suspect the move on Friday still looks like a bullish entry point. Readers can choose to wait for more confirmation (like a rally over $94 or $95) or you could try and time a dip back near $91-90. Our target is the $99.50-100.00 range.

Suggested Options:
We are suggesting the 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 JAN 90.00 FLS-AR open interest= 673 current ask $7.60
BUY CALL JAN 95.00 FLS-AS open interest= 563 current ask $4.90
BUY CALL JAN 100.0 FLS-AT open interest= 10 current ask $3.00

Picked on November 25 at $ 93.04
Change since picked: + 0.00
Earnings Date 02/28/08 (unconfirmed)
Average Daily Volume = 724 thousand

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Synaptics Inc. - SYNA - close: 55.28 chg: +2.27 stop: 50.95

Company Description:
Synaptics is a leading developer of interface solutions for the mobile computing, communications and entertainment industries. The company creates interface solutions for a variety of devices including notebook PCs, PC peripherals, digital music players and mobile phones. (source: company press release or website)

Why We Like It:
Shares of SYNA have had a consistent bullish trend for months. Investors have been buying dips near the 40 and 50-dma's for weeks. The spike higher you see in early November was a reaction to SYNA's better than expected earnings report. The stock has been fairly resistant to any profit taking in spite of a rough slide lower in the market. If the stock continues to march higher we want to jump in. Our suggested trigger to buy calls is at $56.55. Our short-term target is the $61.50-62.00 range. The P&F chart is bullish with a $65 target. FYI: If the stock reverses and breaks support at the 50-dma or the $50.00 mark readers could use it as a bearish entry point.

Suggested Options:
We are suggesting the January calls. Our suggested trigger is at $56.55.

BUY CALL JAN 55.00 QYG-AK open interest= 950 current ask $5.10
BUY CALL JAN 60.00 QYG-AL open interest=1372 current ask $2.85

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 1.1 million
 

New Puts

Apollo Group - APOL - close: 71.10 change: +0.08 stop: 73.01

Company Description:
Apollo Group, Inc. has been an education provider for more than 30 years, operating the University of Phoenix, the Institute for Professional Development, the College for Financial Planning, Western International University and Insight Schools. (source: company press release or website)

Why We Like It:
The rally in APOL ran into a wall near $80.00 resistance. The first round of profit taking pulled APOL back down to $70. The stock saw a sharp oversold bounce but that failed just under $77. Now shares look poised to breakdown under support at $70.00. The P&F chart is bearish and suggests a $61 target. We are suggesting a trigger to buy puts at $69.75. If triggered our target is the $65.25-65.00 range. More aggressive traders may want to aim lower.

Suggested Options:
We are suggesting the January puts. Our suggested trigger to buy puts is at $69.75.

BUY PUT JAN 70.00 OAQ-MN open interest=1315 current ask $4.30
BUY PUT JAN 65.00 OAQ-MM open interest=1025 current ask $2.40

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/07/08 (unconfirmed)
Average Daily Volume = 2.4 million

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Celgene - CELG - close: 62.35 change: -0.19 stop: 63.01

Company Description:
Celgene Corporation, based in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of novel therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. (source: company press release or website)

Why We Like It:
CELG has a long-term bullish trend and we are tempted to buy the dip near support at $60 and its rising 200-dma. However, we don't trust the bounce in the markets on Friday. Plus, the BTK biotech index doesn't look very healthy. On top of it all CELG did not bounce with the market on Friday. The P&F chart is bearish and points to a $50 target. We need to see a breakdown under support so we're suggesting a trigger to buy puts at $59.90. If triggered our target is the $55.25-55.00 zone. FYI: should CELG rebound sharply a rise past $66.00 would be bullish. Please note that any time you play a biotech company there is a higher level of risk. You never know when there will be a positive or negative press release about some drug, some clinical trial or some news from the FDA or a rival that could send shares of a biotech stock gapping either direction.

Suggested Options:
We are suggesting the January puts. Our suggested trigger to open positions is at $59.90.

BUY PUT JAN 60.00 LQH-ML open interest=11887 current ask $2.85
BUY PUT JAN 55.00 LQH-MK open interest=16670 current ask $1.40

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 4.3 million
 

New Strangles

None today.
 

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