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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
COP None ECA
SYNT    

Play Editor's Note: There were several stocks that caught my eye as potential bullish candidates. A few to watch are: RIG, DO, BG, APA, DVN, and NEU. I also thought that PCU looked like an aggressive bullish candidate with a bounce from the $100 region but I would only aim for $110 or the 100-dma near $113.


New Calls

ConocoPhillips - COP - close: 85.23 chg: +1.04 stop: 81.85

Company Description:
ConocoPhillips centers its business on one core purpose: to responsibly deliver energy to the world. To do this, the company finds, produces, refines, markets and ultimately supplies energy resources to individuals and businesses worldwide. (source: company press release or website)

Why We Like It:
Oil stocks have been showing strength and oil titan COP just broke out from a two-week consolidation phase. Today's rally over $85.00 is a bullish entry point to buy calls. Our short-term target is the $89.50-90.00 zone just under resistance at $90.00. The P&F chart is bullish with a $106 target.

Suggested Options:
We are suggesting the January calls. January options expire in four weeks.

BUY CALL JAN 85.00 COP-AQ open interest=68176 current ask $2.90
BUY CALL JAN 90.00 COP-AR open interest=66381 current ask $0.95

Picked on December 20 at $ 85.23
Change since picked: + 0.00
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 11.4 million

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Syntel Inc. - SYNT - close: 38.00 chg: +0.68 stop: 35.75

Company Description:
Syntel is a leading global provider of integrated information technology and Business Process Outsourcing (BPO) solutions. (source: company press release or website)

Why We Like It:
It looks like shares of SYNT have found a bottom. The October-November sell-off found support near its August lows. Now after five weeks of consolidation the stock is breaking out higher. Aggressive traders may want to buy calls now. We see potential resistance at the 50-dma and 100-dma near $38.70. Therefore we're suggesting a trigger to buy calls at $38.75. If triggered our target is the $44.00-45.00 range. The P&F chart has just produced a new buy signal with a $47 target.

Suggested Options:
We are suggesting the January calls. Our suggested trigger to open positions is $38.75. Readers may also want to consider the January $45 call.

BUY CALL JAN 40.00 DUB-AH open interest= 0 current ask $1.20

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/27/07 (unconfirmed)
Average Daily Volume = million
 

New Puts

None today.
 

New Strangles

Encana - ECA - close: 67.52 chg: +0.27 stop: n/a

Company Description:
With an enterprise value of approximately US$60 billion, EnCana is a leading North American unconventional natural gas and integrated oilsands company. (source: company press release or website)

Why We Like It:
ECA is part of the oil sector and we're fundamentally bullish on the group. However, shares of ECA have been trading sideways for almost five weeks and in a very narrow range for the last two weeks. Odds are good the stock will see a break out one way or the other pretty soon. My personal bias is bullish but shares could truly go either way so we're suggesting a strangle. Let me be up front here. This is pure speculation. I could not find any specific event or catalyst in the near future to spark a move and ECA could easily trade sideways for the next month. We're listing the $60 put and $75 calls but you could easily do a strangle with the $65 put and $70 calls. I repeat, this is an aggressive, high-risk, lottery-ticket style of play. We'd use the $68.50-66.50 zone as an entry point. FYI: The P&F chart is bullish with a $92 target.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. We're suggesting January options, which expire in four weeks. Our estimated cost is $0.65. We want to sell if either option hits $1.85 or higher.

BUY CALL JAN 75.00 ECA-AO open interest=3679 current ask $0.35
-and-
BUY PUT JAN 60.00 ECA-ML open interest=10918 current ask $0.30

Picked on December 20 at $ 67.52
Change since picked: + 0.00
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million
 

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