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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ETR LCAPA None
GENZ PCLN  
MCD SHLD  
ZMH    

Play Editor's Note: Just a publishing note, I am going to be out of the office on Wednesday, January 16th so there will be no play updates that evening.

FYI: Stocks I'm watching... PCP and TGI look like put candidates.


New Calls

Entergy - ETR - cls: 124.39 chg: +0.08 stop: 119.95

Company Description:
Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. (source: company press release or website)

Why We Like It:
Safe haven stocks have been out performing and this electric company with a 2.4% dividend yield continues to look bullish. Traders bought the dip twice near $121 last week and Friday's rebound looks like a new entry point to buy calls. We've only got a couple of weeks before earnings come out. Our short-term target is $129.50-130.00. More aggressive traders may want to aim higher. We're suggesting a stop loss at $119.95 but more conservative traders could try a stop just under Friday's low.

Suggested Options:
We are suggesting the February calls. We plan to exit by the end of January.

BUY CALL FEB 120 ETR-BD open interest=180 current ask $7.70
BUY CALL FEB 125 ETR-BE open interest=141 current ask $4.40

Picked on January 13 at $124.39
Change since picked: + 0.00
Earnings Date 01/29/08 (confirmed)
Average Daily Volume = 1.6 million

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Genzyme - GENZ - close: 78.56 change: +0.48 stop: 74.95

Company Description:
One of the world's leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Since 1981, the company has grown from a small start-up to a diversified enterprise with more than 10,000 employees in locations spanning the globe and 2006 revenues of $3.2 billion. (source: company press release or website)

Why We Like It:
This past week was a strong one for anything healthcare related. Shares of biotech company GENZ broke through resistance near $77.00 to hit new all-time highs. GENZ managed to hold on to those gains in the face of Friday's market sell-off. We are suggesting calls here at current levels or on a dip back toward $77.00. If you're worried about resistance at $80.00 then wait for a breakout. Our target is the $84.00-85.00 range. The P&F chart looks very bullish with a $94 target. Readers should note that rival Genentech (DNA) is due to report earnings after the bell on Monday night. DNA's results and their conference call could have a big impact on the biotech sector. More conservative traders will want to think about waiting until we see the market's reaction on Tuesday morning before opening new positions here in GENZ. We're putting our stop loss at $74.95. Conservative traders might want to put theirs closer to $77.00. FYI: Any time we play a biotech company it is always a high-risk play due to headline risk. You never know what news might come out concerning an important FDA decision or clinical trial that could dramatically move the stock price and see shares gap one way or the other.

Suggested Options:
We are suggesting the February calls but plan to exit ahead of the February earnings report.

BUY CALL FEB 75.00 GAA-BO open interest= 353 current ask $5.80
BUY CALL FEB 80.00 GAA-BP open interest=2775 current ask $2.70

Picked on January 13 at $ 78.56
Change since picked: + 0.00
Earnings Date 02/13/08 (unconfirmed)
Average Daily Volume = 2.5 million

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McDonalds - MCD - cls: 54.32 chg: -3.85 stop: 53.25

Company Description:
McDonald's is the leading global foodservice retailer with more than 30,000 local restaurants in more than 100 countries. More than 75% of McDonald's restaurants worldwide are owned and operated by franchisees and affiliates. (source: company press release or website)

Why We Like It:
Recession fears and negative analyst comments sent shares of MCD to a 6.6% decline on Friday. Volume was HUGE at close to four times the norm. The breakdown under technical support at the 100-dma and the $55.00 level is bearish. However, traders did buy the dip at MCD's rising 200-dma. We suspect that the move down was an over reaction. This is a speculative, higher-risk play since it's a counter-intuitive move. We're suggesting a stop under Friday's low. Our very short-term target is the $57.90-58.00 range. More aggressive traders could aim higher (maybe $60-62). We do not want to hold over the late January earnings report.

Suggested Options:
We are suggesting the February calls. Remember, it is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL FEB 50.00 MCD-BJ open interest=181 current ask $5.40
BUY CALL FEB 52.50 MCD-BX open interest=210 current ask $3.70
BUY CALL FEB 55.00 MCD-BK open interest=504 current ask $2.25
BUY CALL FEB 57.50 MCD-BY open interest=1784 current ask $1.25

Picked on January 13 at $ 54.32
Change since picked: + 0.00
Earnings Date 01/28/08 (confirmed)
Average Daily Volume = 8.6 million

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Zimmer Holdings - ZMH - cls: 69.95 chg: +1.44 stop: 67.49

Company Description:
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer is the worldwide #1 pure-play orthopaedic leader in designing, developing, manufacturing and marketing reconstructive and spinal implants, trauma and related orthopaedic surgical products. (source: company press release or website)

Why We Like It:
It looks like ZMH has put in a bottom following the October 2007 crash. The big gap down was from an earnings warning. Shares have since consolidated sideways and now look poised to breakout over resistance near $70.00. We're suggesting a trigger to buy calls at $70.51. If triggered our short-term target is the $74.85-75.00 range. Broken support near $75.00 should be new resistance. We do not want to hold over the late January earnings report.

Suggested Options:
We are suggesting the February calls. Our trigger is at $70.51.

BUY CALL FEB 65.00 ZMH-BM open interest= 350 current ask $6.50
BUY CALL FEB 70.00 ZMH-BN open interest=2414 current ask $3.20
BUY CALL FEB 75.00 ZMH-BO open interest=1325 current ask $1.25

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/08 (confirmed)
Average Daily Volume = 2.0 million
 

New Puts

Liberty Media - LCAPA - cls: 109.69 chg: -0.15 stop: 111.15

Company Description:
Liberty Media Corporation owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to two tracking stock groups: the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty Capital group, which includes Liberty's interests in Starz Entertainment, News Corporation, and Time Warner. (source: company press release or website)

Why We Like It:
The trend in LCAPA looks bearish with a steady pattern of lower highs and failed rallies at resistance. This past week left LCAPA testing support near $109-108.50, which is where the stock bottomed back in August 2007. If shares continue lower we want to catch the move. Aggressive traders could use a trigger to buy puts at $108.65. We are suggesting a trigger at $107.49, which is under the August low. If triggered our target is the $100.25-100.00 range. The P&F chart is bearish with a $98 target. Warning: We cannot find an earnings report date for LCAPA but the company appears to have a history of reporting in February. Not knowing when they report is a risk since we don't want to hold over the event.

Suggested Options:
We are suggesting the February puts.

BUY PUT FEB 110 NLD-NB open interest=140 current ask $5.30
BUY PUT FEB 105 NLD-NA open interest= 47 current ask $3.30

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/00/08 (unconfirmed)
Average Daily Volume = 653 thousand

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Priceline.com - PCLN - cls: 96.24 chg: -6.54 stop: 100.51

Company Description:
Priceline.com Incorporated operates priceline.com, a leading U.S. online travel service for value-conscious leisure travelers, and Booking.com, a leading international online hotel reservation service. (source: company press release or website)

Why We Like It:
Given PCLN's longer-term up trend it would be tempting to try and buy a bounce from the stock's rising 100-dma. Investors do have a history of buying dips to the 100-dma. PCLN actually closed under its 100-dma on Friday. The intraday dip toward $94.00 looks like it was enough to "fill the gap" from last November. I'm actually expecting a short-term bounce. However, if recession fears persist then investors should worry about the consumer traveling less and that should lead shares of PCLN lower. Right now we're suggesting a trigger to buy puts at $93.99, just under Friday's low. If triggered we'll aim for the $82.50-80.00 range. More conservative traders will want to consider exiting near $85.00. Please note that PCLN can be a very volatile stock. Shares had a $10.00 range on Friday alone. Nimble traders could try and buy puts on a failed rally near $100 or $105. We do not want to hold over the mid February earnings report.

Suggested Options:
We are suggesting the February puts. Our suggested trigger is at $93.99.

BUY PUT FEB 100.0 PUZ-NT open interest=773 current ask $11.20
BUY PUT FEB 95.00 PUZ-NS open interest=282 current ask $ 8.40
BUY PUT FEB 90.00 PUZ-NR open interest=1299 current ask $6.20
BUY PUT FEB 85.00 PUZ-NQ open interest=163 current ask $4.30

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 1.6 million

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Sears Holding - SHLD - cls: 96.17 chg: -4.06 stop: 102.05

Company Description:
Sears Holdings Corporation, the publicly traded parent of Kmart and Sears, Roebuck and Co., is the nation's fourth largest broadline retailer with over $50 billion in annual revenues and approximately 3,800 full-line and specialty retail stores in the United States and Canada. (source: company press release or website)

Why We Like It:
I will be the first to admit that I was surprised by SHLD's breakdown last week. We knew the trend was bearish but it had held support at the $100 level so long that the stock looked ready to bounce back and hits its trendline of resistance. We had SHLD as a put candidate and capture a move from $110 to $100 but we had a second more aggressive target at $92.50. Last Wednesday's dip was $90.80. The oversold bounce from the $90 level looks like it's rolling over. We're suggesting puts here in the $95-100 zone. Our very short-term target is the $91.00-90.00 range but we have a second target in the $85.50-85.00 zone. FYI: SHLD is due to present at a retail conference on Monday. We're not expecting any fireworks. The P&F chart is bearish with a $78 target.

Suggested Options:
We are suggesting the February or March puts. Our preference would be March.

BUY PUT FEB 100.0 KTQ-NT open interest=3533 current ask $9.80
BUY PUT FEB 95.00 KTQ-NS open interest=1502 current ask $7.00
BUY PUT FEB 90.00 KTQ-NR open interest= 901 current ask $4.90

BUY PUT MAR 95.00 KTQ-OS open interest=1759 current ask $10.50
BUY PUT MAR 90.00 KTQ-OR open interest=2027 current ask $ 8.20

Picked on January 13 at $ 96.17
Change since picked: + 0.00
Earnings Date 02/28/08 (unconfirmed)
Average Daily Volume = 3.3 million
 

New Strangles

None today.
 

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