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Play Editor's Note: I think LLTC, a semiconductor stock, is poised to rally back to $30.00. Unfortunately, the company reports earnings on Tuesday night and we don't like to hold a directional play over an earnings report, especially a bullish position. You might want to consider some sort of straddle or strangle but I didn't like what it would cost for a February position. I would not play Januarys. FYI: Intel also reports on Tuesday night.


New Calls

None today.
 

New Puts

Precision Castparts - PCP - cls: 124.50 ch: +0.97 stop: 130.25

Company Description:
Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power generation, automotive, and general industrial and other markets. (source: company press release or website)

Why We Like It:
The aerospace and defense market was a huge winner in 2007 but the tide may be turning, especially for PCP. The stock appears to have produced a top over the last few months and the breakdown under support near $130 and its 200-dma is very bearish. The stock has been unable to rally back. The recent oversold bounce back to the $126-128 zone looks like a new entry point to buy puts. We have two targets. Our first target is near the recent low in the $115.50-115.00 range. Our second target is the $110-105 zone but this is aggressive target and PCP will probably not hit our second target before we have to exit ahead of its January 22nd earnings report. FYI: The P&F chart is bearish with an $88 target.

Suggested Options:
We are suggesting the February puts.

BUY PUT FEB 130 PCP-NF open interest=226 current ask $10.30
BUY PUT FEB 125 PCP-NE open interest= 64 current ask $ 7.40
BUY PUT FEB 120 PCP-ND open interest=175 current ask $ 5.10

Picked on January 14 at $124.50
Change since picked: + 0.00
Earnings Date 01/22/08 (confirmed)
Average Daily Volume = 1.1 million
 

New Strangles

None today.
 

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