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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ACH None None
EXM    
RIMM    

Play Editor's Note: Hopefully by now you have read the wrap for this weekend's newsletter. Jim is concerned that we will see a "sell the news" reaction to the FOMC decision on interest rates this Tuesday. He makes a valid argument but I didn't find a lot of bearish candidates this weekend and we can only trade what we see not what we expect. Furthermore the market is likely to trade sideways for the next day and a half as we wait for the Fed's decision on Tuesday afternoon. Readers may be better off just waiting until after the Fed meeting and waiting until after the knee-jerk reaction to the news occurs before initiating any new positions. I am adding some bullish candidates but want to reiterate that readers should consider waiting until after the Fed meeting before placing any new bets. FYI: We found plenty of bullish candidates and a couple we considering adding today was AMZN above $95.00, LVS above $120.00 and DRYS on a pull back.


New Calls

Aluminum Corp. of China - ACH - cls: 60.12 chg: -0.99 stop: 54.45

Company Description:
Headquartered in Bejing, China, Aluminum Corporation of China Limited manufactures and markets aluminum and related materials.

Why We Like It:
Many of the metal and mining-related stocks have turned bullish again. ACH is one of them after testing support near $50.00. The stock has now broken through technical resistance at its 100-dma and the $60.00 mark. It would be very tempting to buy calls on the stock now. However, given our cautious stance on the market right now we would rather try and buy a dip. We're suggesting readers buy a dip in ACH in the $56.50-55.00 zone. This way traders could aim for the 10-dma or short-term support near $55.00. Our official entry will be $56.50 for now. If triggered our target is the $64.50-65.00 range but we might adjust that as the 50-dma ($66.20) continues to slide lower. FYI: The Point & Figure chart has a $75 target.

Suggested Options:
We are suggesting readers use the January calls although February calls would also work. Our trigger to buy calls is at $56.50.

BUY CALL JAN 55.00 ACH-AK open interest=262 current ask $7.80
BUY CALL JAN 60.00 ACH-AL open interest=620 current ask $5.00
BUY CALL JAN 65.00 ACH-AM open interest=335 current ask $3.00

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/08/08 (unconfirmed)
Average Daily Volume = 1.8 million

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Excel Maritime - EXM - close: 50.16 change: +2.69 stop: 46.45

Company Description:
The Company is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. The Company's current fleet consists of 16 vessels (ten Panamax and six Handymax vessels) with a total carrying capacity of 965,249 dwt. (source: company press release or website)

Why We Like It:
Is this round two for the dry-shippers/water transportation stocks? This industry group saw its stocks soar to new all-time highs over the summer. Now the sector is recovering from a vicious month of profit taking in November. The initial oversold bounce is over and we're starting to see investors nibble at it again. Shares of EXM have been holding near short-term support at the rising 10-dma. We're going to suggest call positions now or on a dip in the $49-47 region. We'll try and limit our risk with a stop loss under last week's low. Stocks in this group can be volatile and we would consider this a higher-risk, more aggressive play. Our target is the $57.50-60.00 range but we might have to adjust it for the 50-dma (currently at $59.29). The Point & Figure chart is bullish with a $98 target. FYI: Another stock in this group that looks like a potential play is DRYS but it is even more volatile than EXM.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 50.00 EXM-AJ open interest=358 current ask $6.60
BUY CALL JAN 55.00 EXM-AK open interest=358 current ask $4.50

Picked on December 09 at $ 50.16
Change since picked: + 0.00
Earnings Date 03/13/08 (unconfirmed)
Average Daily Volume = 1.5 million

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Research In Motion - RIMM - cls: 103.65 chg: -0.23 stop: 96.75

Company Description:
Research In Motion (RIM) is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. (source: company press release or website)

Why We Like It:
Jim mentioned RIMM in the market wrap this weekend. The stock produced a bearish reversal on November 30th and most of the technical indicators on both the daily and weekly charts are bearish. The P&F chart is also bearish and points to a $72 target. However, while the "trend" may have changed that doesn't mean a nimble trader couldn't buy a bounce and capture a multi-point move in the mean time. Please note that RIMM is a volatile stock and not for the faint hearted. Traders have been buying dips near the $100 region and odds are good RIMM will see another dip. We're suggesting readers buy calls on a pull back into the $100.00-97.00 zone. We'll try and limit our risk with a stop loss at $96.75, just under the rising 100-dma, which should be technical support. If triggered our target is the $109.50-110.00 range. More aggressive traders could aim for the 50-dma, currently near $113.40.

Suggested Options:
We are suggesting the January calls. Our suggested trigger to buy calls is at $100.00. FYI: Normally a January 105 call would end with an -AA but due to the split this past summer the symbols are off. Double check with your broker.

BUY CALL JAN 100 RUL-AT open interest=12275 current ask $12.95
BUY CALL JAN 105 RUL-AL open interest= 8986 current ask $10.45
BUY CALL JAN 110 RUL-AB open interest=11177 current ask $ 8.40

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 12/20/07 (confirmed)
Average Daily Volume = 32.2 million
 

New Puts

None today.
 

New Strangles

None today.
 

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