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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ESRX None None
FWLT    
GR    

Play Editor's Note: After Friday's big rally higher we found a lot of bullish candidates but odds are we may get a better entry point on Monday or Wednesday next week. A few bullish candidates we would keep an eye on are: UTX, SLB, WFT, MCD, and PEG. We came very close to adding PEG tonight especially given the stock's recent consolidation along support near $95.00. A bearish candidate we would strongly consider is ATHN.


New Calls

Express Scripts - ESRX - cls: 71.09 chg: +1.27 stop: 67.99

Company Description:
Express Scripts provides integrated PBM services, including network-pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, disease management, and medical- and drug-data analysis services. The Company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients or their physicians, and provides extensive cost-management and patient-care services. (source: company press release or website)

Why We Like It:
This is our entry point to catch the next leg higher in ESRX. The stock has been channeling higher and shares just bounced from the bottom edge of its bullish channel (see chart). The stock is near its all-time highs and could benefit from any window dressing this week. We're suggesting a stop loss under last week's low. Our target is the $77.50-80.00 range. The P&F chart is very bullish with a $97 target.

Suggested Options:
We are suggesting the January or February calls. January strikes expire in four weeks so our preference would be for Februarys but we would not want to hold over the earnings announcement. It is always up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL JAN 70.00 XTQ-AN open interest=4759 current ask $3.10
BUY CALL JAN 75.00 XTQ-AO open interest=2571 current ask $0.90

BUY CALL FEB 75.00 XTQ-BO open interest= 619 current ask $2.35

Picked on December 23 at $ 71.09
Change since picked: + 0.00
Earnings Date 02/07/08 (unconfirmed)
Average Daily Volume = 2.5 million

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Foster Wheeler - FWLT - cls: 165.15 chg: +6.57 stop: 154.99

Company Description:
Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of engineering, procurement, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the upstream oil and gas, LNG and gas-to-liquids, refining, petrochemicals, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. (source: company press release or website)

Why We Like It:
FWLT is riding the current boom in oil. The stock has a steady trend of higher lows. Shares just broke out from a bull flag pattern that suggests a $190 price target. Aggressive traders may want to chase Friday's move. We would rather wait. Odds are good that the market might see some profit taking after Friday's pop higher. We're suggesting that readers look for a dip into the $162.00-160.00 range on FWLT and buy calls there. Our stop loss at $154.99 might seem pretty wide but the stock can be volatile and we need to give it some room. If we are triggered we will have two targets. Our first target will be the $169.00-170.00 range. Our second target is the $179.00-180.00 range.

Suggested Options:
We are suggesting the January or February calls. Januarys expire in four weeks but the Februarys are definitely getting expensive. Our preferred entry point is a dip into the $162-160 range.

BUY CALL JAN 160 UFG-AL open interest=1364 current ask $11.50
BUY CALL JAN 165 UFG-AM open interest= 458 current ask $ 8.50
BUY CALL JAN 170 UFG-AN open interest=2546 current ask $ 6.00
BUY CALL JAN 175 UFG-AO open interest= 667 current ask $ 4.20

BUY CALL FEB 165 UFG-BM open interest= 944 current ask $13.30
BUY CALL FEB 170 UFG-BN open interest= 684 current ask $10.70
BUY CALL FEB 175 UFG-BO open interest= 390 current ask $ 8.70

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/27/08 (unconfirmed)
Average Daily Volume = 1.7 million

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Goodrich - GR - close: 72.57 change: +0.92 stop: 69.95

Company Description:
Goodrich Corporation, a Fortune 500 company, is a global supplier of systems and services to aerospace, defense and homeland security markets. With one of the most strategically diversified portfolios of products in the industry, Goodrich serves a global customer base with significant worldwide manufacturing and service facilities. (source: company press release or website)

Why We Like It:
The DFI defense index is bouncing off support and this looks like a good spot to buy the dip in GR's rising bullish channel. The stock has been consolidating near its rising 50-dma and Friday's move looks like our entry point. More conservative traders may want to wait for a rise past the 10-dma so look for a trade over $73.00 to buy calls. Our target is the $77.50-80.00 range. We're suggesting a stop loss under round-number support at $70.00. The P&F chart is bullish with a $99 target.

Suggested Options:
We are suggesting the January or February calls. Our preference would be for February strikes but we do not want to hold over the late January earnings report.

BUY CALL JAN 70.00 GR-AN open interest=151 current ask $3.80
BUY CALL JAN 75.00 GR-AO open interest=337 current ask $1.05

BUY CALL FEB 75.00 GR-BO open interest=997 current ask $2.25

Picked on December 23 at $ 72.57
Change since picked: + 0.00
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 1.2 million
 

New Puts

None today.
 

New Strangles

None today.
 

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