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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CSR AMZN None
MBT DNA  

Play Editor's Note: Our market bias is bearish but we are adding a couple of call plays on some foreign companies that may be able to stand up on their own strengths. It wasn't hard to find bearish candidates. A few stocks we are keeping an eye on as potential plays are: SYNA, BOOM, BEN, CLF, MAC, REG, NIHD, MAN, JLL, FDX and KMT.


New Calls

China Security - CSR - close: 23.25 change: +1.85 stop: 19.99

Company Description:
Based in Shenzhen, China, China Security manufactures, distributes, installs and maintains security and surveillance systems throughout the PRC. China Security has manufacturing facilities located in China and a R&D facility which maintains an exclusive collaboration agreement with Beijing University. (source: company press release or website)

Why We Like It:
CSR displayed a lot of relative strength on Friday. Shares rallied more than 8% and did so on strong volume. The stock appears to have put in a bottom and Friday's rally is a breakout over short-term resistance near $23.00. We are suggesting call positions now even though we hate to chase a big percentage move like Friday's gain. If you're patient then consider waiting for a dip back toward the $22.50-22.00 zone. This is an aggressive play due to the stock's volatility. We're using a very wide stop loss at $19.99. More conservative traders may want to use a stop closer to $21.00. We have two targets. Our first target is the $26.00 level. Our second target is the $29.00 level. The P&F chart is bullish with a $34 target.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 22.50 CSR-AX open interest=384 current ask $2.70
BUY CALL JAN 25.00 CSR-AE open interest= 12 current ask $1.50

Picked on December 16 at $ 23.25
Change since picked: + 0.00
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 525 thousand

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Mobile Telsys - MBT - cls: 95.22 change: +1.26 stop: 91.75

Company Description:
Mobile TeleSystems OJSC (MTS) is the largest mobile phone operator in Russia and the CIS. Together with its subsidiaries, the Company services over 79.12 million subscribers. The regions of Russia, as well as Armenia, Belarus, Turkmenistan, Ukraine, and Uzbekistan, in which MTS and its associates and subsidiaries are licensed to provide GSM services, have a total population of more than 230 million. (source: company press release or website)

Why We Like It:
Broken resistance near $92.50 turned into support on Thursday and Friday this past week. Traders were ready to buy the dip and MBT out performed the U.S. market on Friday. The stock has a bullish trend and continues to look like a tempting candidate to buy calls in spite of its bearish engulfing candlestick (reversal) pattern on Tuesday last week. We see Friday's rally back above $95 as a new entry point for calls. Our short-term target is the $99.50-100.00 range. We are considering the possibilities of a more aggressive target in the $104-105 zone. FYI: The P&F chart is actually bearish following last week's weakness.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 95.00 MBT-AS open interest=155 current ask $6.70
BUY CALL JAN 100.0 MBT-AT open interest=195 current ask $4.40

Picked on December 16 at $ 95.22
Change since picked: + 0.00
Earnings Date 03/08/08 (unconfirmed)
Average Daily Volume = 1.6 million
 

New Puts

Amazon.com - AMZN - cls: 89.08 chg: -3.32 stop: 95.05

Company Description:
Amazon.com, Inc., a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as health and personal care, jewelry and watches, gourmet food, sports and outdoors, apparel and accessories, books, music, DVDs, electronics and office, toys and baby, and home and garden. (source: company press release or website)

Why We Like It:
It looks like AMZN is in the process of building a bearish double-top pattern. The stock ran out of steam near the $95 level and now the stock has broken round-number support near $90.00. Friday's decline in AMZN combined with the bearish mood in the markets looks like a new entry point for puts. We do have a wider than normal stop loss and AMZN does have potential support at the 50-dma and 100-dma so we would probably consider this a more aggressive play. We are listing two targets. Our first target is the $85.25-85.00 zone. Our second target is the $81.50-80.00 zone. The P&F chart is bearish and points to $84.00.

Suggested Options:
We are suggesting the January puts.

BUY PUT JAN 90.00 ZQN-MR open interest=14002 current ask $5.00
BUY PUT JAN 85.00 ZQN-MQ open interest= 7942 current ask $2.85

Picked on December 16 at $ 89.08
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 8.8 million

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Genentech - DNA - close: 68.43 chg: -1.31 stop: 70.85

Company Description:
Founded more than 30 years ago, Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. (source: company press release or website)

Why We Like It:
In early December shares of DNA crashed after news hit that the FDA had voted against approving DNA's Avastin drug. The oversold bounce is now beginning to fade and the stock can easily retest its lows or worse. The P&F chart points to a $54 target. We're suggesting puts now with DNA under $70.00. Our target is the $62.50-60.00 range. The main hurdle for the bears is support near $65.50. More conservative traders could do some profit taking near $65.00.

Suggested Options:
We are suggesting the January puts.

BUY PUT JAN 70.00 DWN-MN open interest=24924 current ask $3.10
BUY PUT JAN 65.00 DWN-MM open interest=12455 current ask $1.00

Picked on December 16 at $ 68.43
Change since picked: + 0.00
Earnings Date 01/10/08 (unconfirmed)
Average Daily Volume = 4.3 million
 

New Strangles

None today.
 

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