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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
FDG BA None
HOC    
ITRI    
JASO    

Play Editor's Note: The general trend for tonight's play section of the newsletter is cautiously bullish. One could easily argue that the recent strength in the markets is just an oversold bounce inside a bearish trend. While that may be the case I suspect that the market will trade higher by year-end. However, after last week's big bounce I would count on a pull back first before any further rally. Most of these new plays are suggesting an entry point on some sort of dip.

FYI: A few more stocks we are considering are: NOV - buy calls over $70.55, TEX - we would consider buying calls on a dip near $62.50, TSL - we would consider buying calls on a dip near $40.00, CELG - we would consider buying puts on a breakdown under $60.00. WSO - we would consider buying puts on a breakdown under $36.00.


New Calls

Fording Candn. Coal - FDG - cls: 34.09 chg: -0.10 stop: 29.95

Company Description:
Fording Canadian Coal Trust is an open-ended mutual fund trust and one of the largest royalty trusts in Canada. The Trust makes quarterly distributions to unitholders using royalties received from its 60% interest in the metallurgical coal operations of the Elk Valley Coal Partnership. (source: company press release or website)

Why We Like It:
Coal stocks have been rebounding sharply this past week. FDG is one stock were we would be tempted to just buy calls on the stock right here. However, we suspect the market is overdue for a dip and that should afford us a better entry point in FDG. Besides, the stock has run into resistance near $35.00 and its 100-dma. We are suggesting that readers buy calls on a dip into the $32.50-32.00 range. More aggressive traders might want to jump in now or near $33.00. Our suggested stop loss is at $29.95 but more conservative types could try and get away with a stop closer to $32.00. If triggered our target is the $37.00-37.50 zone. The P&F chart is still bullish in spite of the big sell-off, which was sparked by FDG's latest earnings report.

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. Our suggested entry point to buy calls on FDG is at $32.50.

BUY CALL JAN 30.00 FDG-AF open interest=2125 current ask $4.80
BUY CALL JAN 35.00 FDG-AG open interest=3145 current ask $1.45

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 770 thousand

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Holly Corp. - HOC - close: 48.45 change: +1.39 stop: 44.95

Company Description:
Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries a 85,000 barrels per stream day ("bpsd") refinery located in Artesia, New Mexico and a 26,000 bpsd refinery in Woods Cross, Utah. Holly also currently owns a 45% interest (including the general partner interest) in Holly Energy Partners, L.P. (source: company press release or website)

Why We Like It:
Shares of HOC have really been under performing both oil sector and the oil service sector. Shares have pretty much been in free fall since its disappointing earnings report on November 6th. We suspect that the stock has bottomed following last week's bounce from the $45.00 mark. We are suggesting that readers buy calls on HOC on a dip in the $47.00-46.00 range. If HOC does not dip we would buy a breakout over $50.00 (entry 50.05). Our initial target is the $54.75-55.00 range. FYI: The P&F chart is still very bearish following the November sell-off.

Suggested Options:
We are suggesting the January calls. Our entry point will be at $47.00 or at $50.05.

BUY CALL JAN 45.00 HOC-AI open interest= 33 current ask $5.40
BUY CALL JAN 50.00 HOC-AJ open interest=242 current ask $2.70
BUY CALL JAN 55.00 HOC-AK open interest=149 current ask $1.20

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 859 thousand

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Itron Inc. - ITRI - close: 77.55 change: -0.34 stop: 73.35

Company Description:
Itron is a leading technology provider and critical source of knowledge to the global energy and water industries. Itron operates in two divisions; as Itron in North America and as Actaris outside of North America. (source: company press release or website)

Why We Like It:
The big gap down you see in ITRI's chart in early November was due to the company's earnings miss. Investors stepped in to buy the "dip" near support around $73-74. The stock appears to have produced a new bottom and is now challenging resistance near $80 and its 200-dma. We suspect that ITRI can rebound higher. We're suggesting a trigger to buy calls on ITRI in the $76.00-74.00 zone (our "official" entry will be $76.00). If ITRI does not pull back our alternative entry point will be the $80.26 mark. If triggered our target is the $86.00-87.00 range near its 100-dma. The P&F chart is more encouraging with a $92 target.

Suggested Options:
We are suggesting the January calls although the February strikes would also work. Our suggested entry point is at $76.00 or $80.26.

BUY CALL JAN 75.00 IUP-AO open interest=153 current ask $7.20
BUY CALL JAN 80.00 IUP-AP open interest=619 current ask $4.50
BUY CALL JAN 85.00 IUP-AQ open interest=338 current ask $2.65

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/13/08 (unconfirmed)
Average Daily Volume = 824 thousand

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JA Solar - JASO - close: 59.34 change: +1.86 stop: 52.49

Company Description:
Based in Hebei, China, JA Solar Holdings Co., Ltd. is an emerging and fast-growing manufacturer of high-performance solar cells. The Company sells its products to solar module manufacturers who assemble and integrate its solar cells into modules and systems that convert sunlight into electricity. (source: company press release or website)

Why We Like It:
If you study the intraday chart on JASO it would be very tempting to buy the afternoon bounce from last Friday. The stock does appear to have produced a double-bottom with the lows in November and shares are on the verge of breaking out from its $47.50-60.00 trading range. More aggressive traders might just want to buy calls on JASO now. However, we're expecting a dip in the markets. Thus we would prefer to buy a dip in JASO. Our suggested entry point is $56.25 but readers could probably use anything in the $57.00-55.00 range. We're not listing an alternative entry but a new relative high over $62.00 might work. Our target is the $69.00-70.00 range. The P&F chart is very bullish with an $88 target. FYI: More conservative traders may want to use a tighter stop loss near $55.00.

Suggested Options:
We are suggesting the January calls. Our suggested entry point is at $56.25.

BUY CALL JAN 55.00 QJP-AK open interest=309 current ask $10.60
BUY CALL JAN 60.00 QJP-AL open interest=176 current ask $ 7.90
BUY CALL JAN 65.00 QJP-AM open interest=127 current ask $ 5.90

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/31/08 (unconfirmed)
Average Daily Volume = 3.0 million
 

New Puts

Boeing - BA - close: 92.54 change: -0.67 stop: 95.01

Company Description:
Boeing is the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. Additionally, Boeing designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. (source: company press release or website)

Why We Like It:
You're probably not alone if you get confused looking at BA's chart. There are a lot of different signals. The easiest to see is the huge, bearish double-top pattern with the peak in July and then September-October. That pattern eventually produced a bearish breakdown under support near $92.50-90.00. Yet that bearish breakdown reversed thanks to the market's big bounce and now the three-day candlestick pattern on the weekly chart is a bullish reversal signal. This past Friday saw the bounce stall and shares of BA produced a bearish engulfing candlestick pattern, which is usually considered a bearish reversal signal, and it did so under round-number resistance near $95.00. If there is any follow through on Friday's failed rally we are suggesting readers jump in with puts. Our suggested trigger to buy puts is at $91.50. If triggered our target is the $85.50-85.00 zone, just under the November lows. FYI: The P&F chart points to a $75 target although it's also suggesting a potential bullish reversal in progress. In summary, buy puts at $91.50 and aim for $85.00.

Suggested Options:
We are suggesting the January puts. Our suggested trigger is at $91.50.

BUY PUT JAN 95.00 BA-MS open interest=12185 current ask $4.60
BUY PUT JAN 90.00 BA-MR open interest=28259 current ask $2.30
BUY PUT JAN 85.00 BA-MQ open interest=15055 current ask $1.10

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 7.0 million
 

New Strangles

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