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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None AGU LEH
  CLF  
  GRMN  
  SHLD  

New Calls

None today.
 

New Puts

Agrium - AGU - close: 59.66 change: -2.84 stop: 65.01

Company Description:
Agrium Inc. is a major retail supplier of agricultural products and services in both North and South America and a leading global producer and marketer of agricultural nutrients and industrial products. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash as well as controlled release fertilizers and micronutrients. (source: company press release or website)

Why We Like It:
The market's post-fed sell-off came at a bad time for AGU. The stock had rallied sharply from its November lows and now the recent pull back looks like the confirmation of a bearish double top pattern with resistance near $65.00. We're suggesting puts now given today's close under $60.00 but an oversold bounce and failed rally near $62.00-62.50 could also work as a new entry point. Our target is the $55.10-55.00 zone but more aggressive traders may want to aim for the rising 100-dma closer to $52.00. FYI: The P&F chart is still bullish from the late November bounce. More conservative traders might want to use a tighter stop loss near $64.

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

BUY PUT JAN 60.00 AGU-ML open interest=572 current ask $3.90
BUY PUT JAN 55.00 AGU-MK open interest=666 current ask $1.75

Picked on December 11 at $ 59.66
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 1.6 million

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Cleveland Cliffs - CLF - close: 96.19 chg: -2.27 stop: 100.10

Company Description:
Cleveland-Cliffs Inc, headquartered in Cleveland, Ohio, is an international mining company, the largest producer of iron ore pellets in North America and a major supplier of metallurgical coal to the global steelmaking industry. (source: company press release or website)

Why We Like It:
The metal and mining stocks have been a favorite of the bulls recently but now that the market is reversing lower the metal stocks could quickly become targets for profit taking. CLF has produced a very impressive $25 rally and now shares are beginning to falter under round-number resistance at $100.00. We're suggesting puts now with a stop loss above $100. Our target will be the $90.50-90.00 zone but more aggressive trader could aim for the $87.50 region. FYI: The P&F chart is still very bullish.

Suggested Options:
We are suggesting the January puts.

BUY PUT JAN 100.0 CLF-MT open interest= 946 current ask $8.10
BUY PUT JAN 95.00 CLF-MS open interest= 313 current ask $5.30
BUY PUT JAN 90.00 CLF-MR open interest=1061 current ask $3.30

Picked on December 11 at $ 96.19
Change since picked: + 0.00
Earnings Date 02/21/08 (unconfirmed)
Average Daily Volume = 1.5 million

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Garmin - GRMN - close: 104.78 chg: -7.06 stop: 112.55

Company Description:
Through its operating subsidiaries, Garmin Ltd. designs, manufactures, markets and sells navigation, communication and information devices and applications -- most of which are enabled by GPS technology. Garmin is a leader in the consumer and general aviation GPS markets and its products serve aviation, marine, outdoor recreation, automotive, wireless and OEM applications. (source: company press release or website)

Why We Like It:
The first thing I want to say about GRMN is that the stock is volatile and this is an aggressive, higher-risk play. There is a lot of bullish expectations for the company during this holiday season and it is entirely possible that the momentum traders could keep the stock propped up through any market decline. However, I find it unlikely since the recent winners were hit hardest today. Today's move looks like a bearish reversal although the P&F chart is still bullish from the big bounce from its November lows. We're suggesting puts now but a better entry point would be a failed rally in the $108-110 zone. The stock appears to have potential support (and resistance) at $5.00 intervals ($105, 100, 95, etc.). We have two targets. Our first target is the $96.00-95.00 zone. Our second target is the $91.00-90.00 zone. Options on this stock are not cheap!

Suggested Options:
We are suggesting the January puts.

BUY PUT JAN 105 RZJ-MA open interest= 4684 current ask $7.40
BUY PUT JAN 100 RZJ-MT open interest= 6413 current ask $5.20
BUY PUT JAN 95 GQR-MC open interest= 4375 current ask $3.40

Picked on December 11 at $104.78
Change since picked: + 0.00
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 6.2 million

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Sears Holding - SHLD - cls: 110.28 chg: -4.21 stop: 117.55

Company Description:
Sears Holdings Corporation, the publicly traded parent of Kmart and Sears, Roebuck and Co., is the nation's fourth largest broadline retailer with over $50 billion in annual revenues and approximately 3,800 full-line and specialty retail stores in the United States and Canada. (source: company press release or website)

Why We Like It:
Investors are concerned about the retailers this holiday season and the bearish trend in SHLD is still very much in place. The oversold bounce from its late November gap down is failing and this looks like a good spot to buy puts to capture the next leg lower. We are suggesting puts now although a failed rally anywhere in the $112-115 zone could also work as an entry point. We have two targets. Our first target is the $100.50-100.00 range. Our second more-aggressive target is the $92.50-90.00 zone. The P&F chart is bearish with a $78 target.

Suggested Options:
We are suggesting the January puts.

BUY PUT JAN 110 KTQ-MB open interest=5737 current ask $5.80
BUY PUT JAN 105 KTQ-MA open interest=3775 current ask $3.80
BUY PUT JAN 100 KTQ-MT open interest=8156 current ask $2.45

Picked on December 11 at $110.28
Change since picked: + 0.00
Earnings Date 10/27/07 (unconfirmed)
Average Daily Volume = 3.3 million
 

New Strangles

Lehman Brothers - LEH - close: 61.14 chg: -4.51 stop: n/a

Company Description:
Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. (source: company press release or website)

Why We Like It:
Everyone is still very worried about the extent of the sub-prime problem and how much exposure the major financial institutions really have. Many investors believe that LEH still hasn't come clean yet on how much risk or losses they have and the bearish expectations for this Thursday's earnings report are growing. We would be tempted to just buy puts expecting a post-earnings sell-off in LEH but since there is a growing camp of bears that sets up for a potential upside surprise. That's why we're suggesting a strangle to capture any short-term, post-earnings move.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. We suggest strangles because it's usually cheaper than buying a straddle, which is buying both a call and a put at the same strike price.

We are suggesting the December strikes. Anywhere near the $60.00 level (61.50-58.50) would be a good spot to open a strangle. Our estimated cost is $2.35. We want to sell if either option hits $4.45. You will want to try and balance the amount you have at risk on both sides of the strangle. FYI: December options expire in less than two weeks.

BUY CALL DEC 65.00 LES-LM open interest=31546 current ask $1.40
-and-
BUY PUT DEC 55.00 LES-XK open interest=28024 current ask $0.95

Picked on December 11 at $ 61.14
Change since picked: + 0.00
Earnings Date 12/13/07 (confirmed)
Average Daily Volume = 3.3 million
 

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