Option Investor
New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
AAPL None None
BPT    
FWLT    

Play Editor's Note: The market's breakdown under the November lows is very bearish. There is a growing chorus of market pundits who believe we are in a bear market. I agree with the view that the stock market is headed for the August lows. However, stocks just don't move in a straight line very long. We are way overdue for a bounce and the rebound will probably last for more than a day. I'm adding a few plays with a trigger to buy these on a dip.

FYI: A few more stocks we are watching as potential bullish candidates are MON, PBR, POT, and VMI.


New Calls

Apple Inc. - AAPL - cls: 171.25 chg: -6.39 stop: 159.90

Company Description:
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone. (source: company press release or website)

Why We Like It:
Shares of AAPL have been getting crushed the last few days as investors take profits after an outstanding 2007. We suspect that the stock will bounce soon especially as we near AAPL's Mac world conference that begins next Monday. We are suggesting that readers buy a dip into the $166.50-165.00 range, which is where the stock should meet technical support at its 100-dma. The stock is volatile and options are not cheap so mind your stop losses. We're suggesting a stop loss at $159.90. We will have two targets. Our first target is $179.00-180.00. Our second target is $188.00-190.00.

Suggested Options:
We are suggesting the February calls. Our suggested entry point is the $166.50-165.00 range.

BUY CALL FEB-160 APV-BL open interest=1011 current ask $21.55
BUY CALL FEB 165 APV-BM open interest= 786 current ask $18.70
BUY CALL FEB 170 APV-BN open interest=1941 current ask $16.05

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/22/08 (confirmed)
Average Daily Volume = 38 million

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BP Prudhoe - BPT - cls: 82.61 chg: +1.34 stop: 77.90

Company Description:
BP Prudhoe Bay Royalty Trust is a trust on the Prudhoe Bay oil field in Alaska.

Why We Like It:
We are still bullish on oil even as the commodity struggles with the $100 a barrel level. Investors could be buying BPT for both the rise in oil and the stock's dividend yield. The stock is paying close to 10% a year in dividends. Technically the breakout over resistance near $80.00 is bullish. We are suggesting a trigger to buy calls in the $80.50-79.00 range. If triggered our target is the $89.00-90.00 zone.

Suggested Options:
We are suggesting the March calls. Our suggested trigger is $80.50.

BUY CALL MAR 75.00 BPT-CO open interest=278 current ask $8.40
BUY CALL MAR 80.00 BPT-CP open interest=498 current ask $4.10
BUY CALL MAR 85.00 BPT-CQ open interest=183 current ask $1.70

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/08 (unconfirmed)
Average Daily Volume = 84 thousand

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Foster Wheeler - FWLT - cls: 143.49 chg: -6.45 stop: 137.95

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:
We are going to speculate that shares of FWLT will find support near $140 and its rising 100-dma. After a $30 drop the stock looks oversold and due for a bounce. We're suggesting readers buy calls in the $140.50-140.00 range. We'll try and limit our risk with a relatively tight stop at $137.95. That might be too tight. If triggered we will have two targets. Our first target is the $149.50-150.00 range. Our second target is the $158.00-160.00 zone. FYI: FWLT is due to split 2-for-1 on January 22nd.

Suggested Options:
We are suggesting the February calls. Our suggested entry point is $140.50. Remember, it's up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL FEB 135 UFB-BU open interest= 796 current ask $16.90
BUY CALL FEB 140 UFB-BV open interest= 569 current ask $13.80
BUY CALL FEB 145 UFB-BY open interest= 526 current ask $11.10
BUY CALL FEB 150 UFB-BZ open interest= 871 current ask $ 9.10

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

New Puts

None today.
 

New Strangles

None today.
 

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