Option Investor
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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None HIG GOOG
  TFX  

New Calls

None today.
 

New Puts

Hartford Fincl. - HIG - cls: 78.55 chg: -0.87 stop: 81.75

Why We Like It:
We added HIG to the play list as a put candidate on Sunday but we were a couple of days early. The stock spike higher and hit our stop loss this afternoon as the market rallied on the fed news. However, the market, and HIG, reversed again before the closing bell. This looks like a new entry point for puts. We're putting the stop loss just above today's high. We have two targets. Our first target is the $75.15-75.00 range. Our second target is the $71.00-70.00 range.

Suggested Options:
We are suggesting the February puts.

BUY PUT FEB 80.00 HIG-NP open interest=301 current ask $3.50
BUY PUT FEB 75.00 HIG-NO open interest=476 current ask $1.50

Picked on January 30 at $ 78.55
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 2.6 million

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Teleflex Inc. - TFX - close: 57.65 chg: -0.42 stop: 60.01

Why We Like It:
TFX is another candidate from the Sunday newsletter that hit our stop this afternoon following the fed decision on interest rates. Today's late day bearish reversal and failed rally under the 50-dma looks like another entry point to try again. We're suggesting a stop loss at $60.01 but you could try a stop at $59.21 just above today's high. Our target is the $54.00-52.50 zone.

Suggested Options:
We are suggesting the February puts.

BUY PUT FEB 60.00 TFX-NL open interest=10 current ask $3.20
BUY PUT FEB 55.00 TFX-NK open interest= 5 current ask $0.90

Picked on January 30 at $ 57.65
Change since picked: + 0.00
Earnings Date 02/28/08 (unconfirmed)
Average Daily Volume = 408 thousand
 

New Strangles

Google - GOOG - close: 548.27 chg: -2.25 stop: n/a

Company Description:
Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices throughout the Americas, Europe and Asia. (source: company press release or website)

Why We Like It:
GOOG is set to report earnings after the closing bell tomorrow, January 31st. Expectations have come down quite a bit. In addition to market weakness there have been multiple analyst firms issue cautious or bearish comments about GOOG's earnings report due tomorrow and this has contributed to the stock's sell-off. If these analysts are right and GOOG has negative news then the stock could really crash in this environment. If they're wrong and GOOG really surpasses expectations or comes out with some new exciting product then there could be a big rush higher. Shares closed right near the $550 level, which offers a great opportunity for a neutral strategy. A straddle is too expensive. Buying both a $550 call and $550 put would cost $51.50. GOOG would have to move more than $52 and before we came close to making any money. However, if we buy a strangle and GOOG moves $50, which it could easily do, then we have a greater chance of making a profit. Our biggest risk is that GOOG merely bounces around the $525-575 zone and doesn't see any big directional moves. Fortunately, the stock has a stronger history of big post-earnings volatility.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put option. It's a neutral strategy. We don't care what direction the equity moves as long as it moves big. We're suggesting the February options. Our estimated cost is $17.00. We want to sell if either option hits $27.00 or more.

BUY CALL FEB 600 GOO-BT open interest=7019 current ask $8.00
-and-
BUY PUT FEB 500 GOP-NO open interest=3129 current ask $9.00

Picked on January 30 at $548.27
Change since picked: + 0.00
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 5.6 million
 

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