Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
Strangle Options Plays
None AIRM None
  ICU  

Play Editor's Note: We cautioned readers last week that our market bias was bearish for this week. So far stocks haven't disappointed us. Now after a 55-point drop in the S&P 500 and five straight days of losses in the Russell 2000 I would look for an oversold bounce. Unfortunately, tomorrow's jobs report is a wild card. Market direction tomorrow will depend on how investors choose to interpret the jobs data.

FYI: Just a heads up on some stocks I'm following. IHP may have found a bottom. OSK looks vulnerable to more selling. SINA has broken through its trendline of resistance. EXM has been trading sideways and this looks like a good spot for a strangle or straddle. Unfortunately, A straddle would be way too expensive and even a February strangle one strike out would cost about $5.00, which seems too high. I'd keep an eye on it for a move soon.


New Calls

None today.
 

New Puts

Air Methods - AIRM - close: 48.90 chg: -0.20 stop: 51.50

Company Description:
Air Methods Corporation is a leader in emergency aeromedical transportation and medical services. (source: company press release or website)

Why We Like It:
The December bounce in AIRM is struggling. The stock has failed near $51.50 for over a week. We would consider buying puts right now but with the jobs report tomorrow we're going to suggest a trigger instead. Our suggested entry point to buy puts is at $47.95. If triggered our target is the $44.10-44.00 range since the $44 level should be support. More aggressive traders may want to aim for the 200-dma near $41-42. The P&F chart is bearish with a $39 target. Something to be aware of is AIRM's high degree of short interest. The most recent data put short interest at almost 16% of the stock's very small 10.6 million-share float. We normally don't play stocks that have an average daily volume under 250,000 shares. AIRM's volume is under that amount. The combination of low volume and high short interest probably makes this a higher-risk, more aggressive play.

Suggested Options:
We are suggesting the February puts. Our suggested trigger to open positions is $47.95.

BUY PUT FEB 50.00 UDU-NJ open interest= 3 current ask $3.60
BUY PUT FEB 45.00 UDU-NI open interest=28 current ask $1.45

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/06/08 (unconfirmed)
Average Daily Volume = 149 thousand

---

ICU Medical - ICU - close: 35.39 change: -1.05 stop: 37.05

Company Description:
ICU Medical was founded in 1984 by Dr. George Lopez, a practicing internist who imagined that there must be a better way of securing I.V. lines after tragically losing a patient due to an accidental disconnect. Dr. Lopez conceived a product, later known as the Click Lock, which provided a locking mechanism for these I.V. systems. (source: company press release or website)

Why We Like It:
ICUI is another low-volume stock we would normally avoid. However, the pattern looks pretty tempting. Shares have been consolidating sideways for months and the trend has developed a bearish pattern of lower highs. Now the stock is breaking down through support in the $36-35 region. We would be tempted to buy puts now but with the jobs report tomorrow we are listing a trigger to buy puts at $34.90. If triggered our target is the $32.50-32.00 range. The P&F chart is bearish with a $31 target. Please note we are labeling this an aggressive, higher-risk play because of the stock's very low volume and its short interest. The most recent data put short interest at more than 21% of the very small 12.3 million-share float. That raises the risk of a short squeeze should the stock suddenly shoot higher.

Suggested Options:
Our suggested entry point to buy puts is at $34.90. We're suggesting the February puts. Unfortunately, we don't have a lot of choices. We'd like to see some $37.50 of $32.50 strikes but they're not listed.

BUY PUT FEB 35.00 QPD-NG open interest= 66 current ask $1.60

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/08 (unconfirmed)
Average Daily Volume = 80 thousand
 

New Strangles

None today.
 

New Play Archives