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Call Options Plays
Put Options Plays
Strangle Options Plays
CVD None None
HES    
HUM    
IMA    

Play Editor's Note: Here's the plan. Monday could still see some follow through lower as retail investors read the weekend headlines and decide to sell. This could provide a short-term wash-out and a temporary bottom. Note that I said "could" provide. However, after such a sharp sell-off all the major indices look oversold and due for a bounce. We think it will be a bounce we can trade for a few days. We're listing some bullish candidates below but most have triggers to try and catch a dip on Monday.

FYI: Two more stocks we are strongly considering as bullish candidates are MUR and RIMM. Look for a dip in MUR toward support near $80.00. Watch RIMM for a dip into the $100-98.50 zone as a potential entry point for calls. I would suggest a stop loss on RIMM under $97.40.


New Calls

Covance - CVD - cls: 90.09 change: +1.92 stop: 84.99

Company Description:
Covance, with headquarters in Princeton, New Jersey, is one of the world's largest and most comprehensive drug development services companies with revenues over the last twelve months of approximately $1.5 billion, global operations in more than 20 countries, and approximately 8,700 employees worldwide. (source: company press release or website)

Why We Like It:
There has been no slow down in CVD's rally. The stock continues to stair step higher. CVD completely ignored the market's meltdown on Friday. Currently the stock is testing resistance near $90.00. We're expecting the market to dip again Monday morning so our plan is try and buy a dip in CVD. We're suggesting a trigger to buy calls on CVD in the $88.00-87.00 range. If the stock does not dip then momentum traders may want to buy a breakout over $90.50. We'll start the play with a stop loss under support near $85.00 and its 50-dma. Our target is the $94.50-95.00 range. We do not want to hold over the late January earnings report.

Suggested Options:
We are suggesting the February calls. Our suggested trigger is the $88.00-87.00 range.

BUY CALL FEB 85.00 CVD-BQ open interest=254 current ask $7.00
BUY CALL FEB 90.00 CVD-BR open interest=188 current ask $3.70

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/23/08 (unconfirmed)
Average Daily Volume = 395 thousand

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Hess Corp. - HES - cls: 93.35 chg: -4.52 stop: 89.90

Company Description:
Hess Corporation, with headquarters in New York, is a global integrated energy company engaged in the exploration, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. (source: company press release or website)

Why We Like It:
HES has seen some pretty steep profit taking in the last few days but we think it's about over. The stock bounced almost perfectly from round-number support at $90.00 and its 38.2% Fibonacci retracement level (see chart). We're going to try and enter on a dip. We're suggesting readers buy calls on a move into the $92.00-90.00 zone. We'll attempt to limit our risk with a stop loss under support. Our target is the $99.00-100.00 range. We do not want to hold over the late January earnings report.

Suggested Options:
We are suggesting the February calls. Our suggested entry point is the $92.00-90.00 zone. Remember, it is up to the individual trader to decide which month and which strike price best suits your personal style of trading and risk.

BUY CALL FEB 90.00 IGG-BR open interest=1408 current ask $8.90
BUY CALL FEB 95.00 IGG-BS open interest=1231 current ask $6.20
BUY CALL FEB 100.0 IGG-BT open interest=1444 current ask $4.30

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 4.5 million

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Humana Inc. - HUM - cls: 79.47 chg: -1.15 stop: 75.99

Company Description:
Humana Inc., headquartered in Louisville, Kentucky, is one of the nation's largest publicly traded health benefits companies, with approximately 11.3 million medical members. (source: company press release or website)

Why We Like It:
There has been no slow down in HUM's rally. Shares traded near all-time highs on Friday. There is some resistance near $81.00 but we suspect that HUM will breakout past it. Healthcare stocks can been seen as safe haven plays in times of market volatility. Plus, there is a huge healthcare conference this coming week and HUM will be presenting. We are suggesting that readers buy a dip into the $78.50-77.50 zone. We'll start the play with a stop loss at $75.99. Our initial target is the $84.50-85.00 range. More aggressive traders may want to aim higher. The Point & Figure chart is bullish with a $96 target.

Suggested Options:
We are suggesting the February calls. Please note that we do not want to hold over the early February earnings report. Our suggested entry point is the $78.50-77.50 range.

BUY CALL FEB 75.00 HUM-BO open interest=1216 current ask $7.10
BUY CALL FEB 80.00 HUM-BP open interest=1603 current ask $4.00

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/04/08 (unconfirmed)
Average Daily Volume = 1.3 million

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Inverness Medical - IMA - cls: 57.52 chg: +2.83 stop: 54.49

Company Description:
By developing new capabilities in near-patient diagnosis, monitoring and health management, Inverness Medical Innovations enables individuals to take charge of improving their health and quality of life. (source: company press release or website)

Why We Like It:
IMA is another healthcare-related stock that was bucking the trend on Friday. Shares bounced from its 100-dma and the bottom of its wide, rising channel. Volume came in above average on the rally, which is positive. We're suggesting two alternative entry points. One entry point is $58.15 should IMA breakout past its 50-dma and the $58.00 level. Our second entry point would be a pull back into the $56.00-55.00 zone. We'll start the play with a stop loss at $54.49, just under Friday's low. Our target is the $64.00-65.00 range near its highs. FYI: IMA will be presenting at the huge healthcare/drug/biotech conference this coming week.

Suggested Options:
We are suggesting the February calls. See play details for entry points.

BUY CALL FEB 55.00 IMA-BK open interest=1932 current ask $5.20
BUY CALL FEB 60.00 IMA-BL open interest=1785 current ask $2.50

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 857 thousand
 

New Puts

None today.
 

New Strangles

None today.
 

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