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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None ABK None
  HIG  
  HOG  
  MBI  
  MICC  
  PRGO  
  RL  
  TFX  

Play Editor's Note: The market's oversold bounce failed right at resistance and most of the indices and stocks I examined this weekend have already produced a short-term bearish reversal. I was honestly expecting the rally to last a little longer before rolling over but we can only play what the market gives us. There is a growing chorus of analysts suggesting that we will see the market retest and potentially break last week's low. However, with so many people still bearish if the market can breakout over Friday's resistance levels then we could see a huge short squeeze. Monitor your stop losses carefully. We are adding a number of new bearish candidates. Don't try to play them all. Just pick the ones you like.

FYI: A few more stocks that look like bearish candidates...SPG, LTM, ICE, and CELG under $50.


New Calls

None today.
 

New Puts

Ambac Fincl. - ABK - cls: 11.54 change: +0.21 stop: n/a

Company Description:
Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. (source: company press release or website)

Why We Like It:
It looks like the handwriting is on the wall for the future of ABK and MBI. It's only a matter of time before these companies have their credit downgraded, which would effectively put them out of business. There is the diminishing chance that a bailout does occur but we are going to speculate that it will not happen. There is no stop loss on this play. This is more of a lottery ticket. It should either win big or it's gone. We will have to play it by ear when it comes to exiting but we're looking for a decline to $5.00 or less.

Suggested Options:
We can choose February, March, May or August options. We do not know the time frame that ABK will go under so we're suggesting Mays.

BUY PUT MAY 5.00 GIY-QA open interest=1357 current ask $1.40
BUY PUT MAY 2.50 GIY-QZ open interest=2474 current ask $0.50

Picked on January 27 at $ 11.54
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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Hartford Fin. - HIG - close: 75.13 chg: -4.76 stop: 81.01

Company Description:
The Hartford, a Fortune 100 company, is one of the nation's largest diversified financial services companies, with 2006 revenues of $26.5 billion. The Hartford is a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. (source: company press release or website)

Why We Like It:
HIG recently turned in a good quarter but guidance was a little less than expected. We're not excited about playing HIG with such a wide stop loss but the stock's bearish reversal on Friday has shares poised to hit new lows. At the very least we suspect that HIG will retest last week's lows near $69. We are suggesting puts now but a failed rally under $80 would be more attractive as an entry point. Our short-term target is the $70.50-70.00 zone.

Suggested Options:
We are suggesting the February or March puts.

BUY PUT FEB 75.00 HIG-NO open interest= 481 current ask $3.10
BUY PUT FEB 70.00 HIG-NN open interest= 375 current ask $1.45

BUY PUT MAR 75.00 HIG-OO open interest=1118 current ask $4.90
BUY PUT MAR 70.00 HIG-ON open interest= 188 current ask $2.90

Picked on January 27 at $ 75.13
Change since picked: + 0.00
Earnings Date 01/24/08 (confirmed)
Average Daily Volume = 2.4 million

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Harley-Davidson - HOG - cls: 37.96 chg: -2.16 stop: 42.51

Company Description:
Harley-Davidson Motor Company, the only major U.S.-based motorcycle manufacturer, produces heavyweight motorcycles and a complete line of motorcycle parts, accessories and general merchandise. (source: company press release or website)

Why We Like It:
HOG recently reported earnings and missed expectations. Management then warned that sales would not meet prior guidance as the consumer is cutting back. That is not what investors want to hear. The oversold bounce has reversed and bears look like they could be back in control. We have two targets. Our first target is the $35.25-35.00 range. Our second, more aggressive target is the $32.50-30.00 zone.

Suggested Options:
We are suggesting the February or March puts.

BUY PUT FEB 40.00 HOG-NH open interest=21786 current ask $3.00
BUY PUT FEB 37.50 HOG-NU open interest= 7504 current ask $1.60
BUY PUT FEB 35.00 HOG-NG open interest= 5970 current ask $0.75

BUY PUT MAR 40.00 HOG-OH open interest= 365 current ask $3.90
BUY PUT MAR 35.00 HOG-OG open interest=1710 current ask $1.55

Picked on January 27 at $ 37.96
Change since picked: + 0.00
Earnings Date 01/25/08 (confirmed)
Average Daily Volume = 2.4 million

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MBIA Inc. - MBI - close: 14.20 change: -0.20 stop: n/a

Company Description:
MBIA Inc. is a premier financial guarantor and a leading provider of fixed-income investment management services. The Companys core business is credit enhancement of municipal bonds and asset-and mortgage-backed transactions in the new issue and secondary markets. (source: company press release or website)

Why We Like It:
MBI is another one of the trouble bond insurers that looks like it's head for bankruptcy. The recent bounce on hopes of a bailout is a gift of an entry point to buy puts. There is the risk that a bailout does get accomplished but that risk is wilting more every day. We're not listing a stop loss. This is a lottery ticket play. We'll win big or it's gone. This is one of the few times that we will hold over earnings. MBI reports earnings on Thursday morning before the bell. We will have to play it by ear when it comes to exiting but we're looking for a decline to $5.00 or less.

Suggested Options:
We do not know how long this will take to shake out so we're suggesting the May puts.

BUY PUT MAY 7.50 MBI-QU open interest=5307 current ask $2.00
BUY PUT MAY 5.00 MBI-QA open interest=2239 current ask $1.10
BUY PUT MAY 2.50 MBI-QZ open interest= 831 current ask $0.40

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 million

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Millicom - MICC - close: 99.33 change: -3.54 stop: 105.35

Company Description:
Millicom International Cellular S.A. is a global telecommunications group with mobile operations in Asia, Latin America and Africa. It currently has mobile operations and licenses in 16 countries. The Groups mobile operations have a combined population under license of approximately 280 million people. (source: company press release or website)

Why We Like It:
The oversold bounce in MICC failed right where it was supposed to - at resistance near $105. The stock's bearish reversal has already pulled shares under round-number support at $100. We suspect that MICC can test its lows or worse. The P&F chart is forecasting a $78 target. We are suggesting puts now with a $90.50-90.00 target. We are going to list an aggressive target in the $86.00-85.00 zone but readers should plan on taking off most of their position near $90. It looks like this aggressive target should line up with the long-term trendline of support (see chart).

Suggested Options:
We are suggesting the February puts but we do not want to hold over the February 13th earnings report.

BUY PUT FEB 105 CQD-NA open interest=270 current ask $12.30
BUY PUT FEB 100 CQD-NT open interest=289 current ask $ 8.50
BUY PUT FEB 95 CQD-NS open interest=245 current ask $ 6.00
BUY PUT FEB 90 CQD-NR open interest=344 current ask $ 4.20

Picked on January 27 at $ 99.33
Change since picked: + 0.00
Earnings Date 02/13/08 (confirmed)
Average Daily Volume = 1.0 million

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Perrigo Co - PRGO - close: 30.11 change: -1.57 stop: 32.11

Company Description:
Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes over-the-counter (OTC) and prescription pharmaceuticals, nutritional products, active pharmaceutical ingredients (API) and consumer products. The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. (source: company press release or website)

Why We Like It:
Drug stocks are not acting like the safe haven plays they used to be. PRGO has out performed the market for the first half of January and now it could see another round of serious profit taking if shares break support near $30.00. We're suggesting a trigger to buy puts at $29.85. If triggered our target is the $25.50-25.00 zone. The P&F chart has turned bearish with a $23 target.

Suggested Options:
We are suggesting the February puts. PRGO has earnings in early February and we do not want to hold over the report.

BUY PUT FEB 35.00 IQP-NG open interest=267 current ask $5.20
BUY PUT FEB 30.00 IQP-NF open interest=338 current ask $1.40
BUY PUT FEB 25.00 IQP-NE open interest= 27 current ask $0.25

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/05/08 (confirmed)
Average Daily Volume = 1.3 million

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Polo Ralph Lauren - RL - cls: 59.19 chg: -1.99 stop: 63.75

Company Description:
Polo Ralph Lauren Corporation is a leader in the design, marketing and distribution of premium lifestyle products in four categories: apparel, home, accessories and fragrances. (source: company press release or website)

Why We Like It:
Concerns over the consumer have been plaguing shares of RL for months. The stock's oversold rally failed right at resistance. The action over the last two sessions looks like a bearish reversal. We're suggesting puts now with RL back under $60.00. We're listing two targets. Our first target is the $55.50-55.00 range. Our second, more aggressive target is the $52.00-50.00 zone.

Suggested Options:
We are suggesting the February puts but we do not want to hold over the early February earnings report.

BUY PUT FEB 60.00 RL-NL open interest=3189 current ask $4.10
BUY PUT FEB 55.00 RL-NK open interest=4022 current ask $1.85

Picked on January 27 at $ 59.19
Change since picked: + 0.00
Earnings Date 02/06/08 (confirmed)
Average Daily Volume = 1.7 million

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Teleflex - TFX - close: 56.60 change: -0.65 stop: 58.51

Company Description:
Teleflex is a diversified company that designs, manufactures and distributes quality engineered products and services for the medical, commercial and aerospace markets worldwide. (source: company press release or website)

Why We Like It:
Two weeks ago TFX broke down from a sideways consolidation pattern. Now that shares have bounced back to retest prior support as resistance this could be the beginning of a new leg down. We are suggesting puts here at current levels but more conservative traders could wait for a drop under $56.00 first. We're listing two targets. Our first target is the $52.75-52.50 zone. Our second target is the $50.50-50.00 range. The Point & Figure chart is bearish with a $43 target.

Suggested Options:
We're suggesting the February or March puts.

BUY PUT FEB 60.00 TFX-NL open interest= 10 current ask $4.20
BUY PUT FEB 55.00 TFX-NK open interest= 0 current ask $1.60

BUY PUT MAR 60.00 TFX-OL open interest= 0 current ask $5.40
BUY PUT MAR 55.00 TFX-OK open interest= 0 current ask $2.60

Picked on January 27 at $ 56.60
Change since picked: + 0.00
Earnings Date 02/28/08 (confirmed)
Average Daily Volume = 390 thousand
 

New Strangles

None today.
 

New Play Archives