Option Investor
New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
SGR None None
WFR    

Play Editor's Note: We are not adding a lot of new plays to the newsletter tonight. The Friday late-afternoon spike on the potential bailout of ABK is a real wildcard. No one knows if a deal will get done or not. The market looked ready to breakdown from its consolidation and now it might see a short-covering rally higher. I suggest readers step back and take a wait and see approach. One idea that readers may want to consider is some sort of straddle or strangle on the market itself. We'll be looking at the DJX, DIA, QQQQ, and the SPY on Monday to see if there is any opportunity there.


New Calls

Shaw Group - SGR - close: 64.53 change: +1.48 stop: 58.45

Company Description:
The Shaw Group Inc. is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services for government and private sector clients in the energy, chemicals, environmental, infrastructure and emergency response markets. (source: company press release or website)

Why We Like It:
In addition to having pretty sound fundamentals and a strong business outlook, shares of SGR are breaking out. Traders bought the intraday dip near $60.00 on Friday. If we get another dip in the $61-60 zone we want to jump on it but we're not going to wait. Shares have cleared their 100-dma and look poised to rally toward $70. We are listing two targets. Our first target is the $69.50-70.00 zone. We suggest closing most of your position there. Our second, more aggressive target is the $74.00-75.00 range. The Point & Figure chart is very bullish with an $81 target. FYI: More conservative traders may want to use a stop loss closer to $60.00.

Suggested Options:
We are suggesting the March or April calls. Our preference would be Aprils but Marchs still have four weeks left.

BUY CALL MAR 60.00 SGR-CL open interest=1107 current ask $6.30
BUY CALL MAR 65.00 SGR-CM open interest=2697 current ask $3.20
BUY CALL MAR 70.00 SGR-CN open interest= 746 current ask $1.30

BUY CALL APR 65.00 SGR-DM open interest=1034 current ask $5.30
BUY CALL APR 70.00 SGR-DN open interest= 680 current ask $3.20

Picked on February 24 at $ 64.53
Change since picked: + 0.00
Earnings Date 04/08/08 (unconfirmed)
Average Daily Volume = 1.8 million

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MEMC Electr. - WFR - cls: 81.55 chg: +1.30 stop: 77.45

Company Description:
MEMC is a global leader in the manufacture and sale of wafers and related intermediate products to the semiconductor and solar industries. (source: company press release or website)

Why We Like It:
Shares of WFR are flirting with a bullish breakout over resistance in the $82.00-82.50 zone. The stock has been strong the last few days and the technical picture has definitely improved. The P&F chart is bullish with a $107 target. Unfortunately, anything solar energy-related has been pretty volatile lately. That makes placing our stop loss somewhat of a challenge. We would put it under last week's low around $73.50. However, that is a bit too aggressive. We are suggesting a stop loss at $77.45. Our suggested entry point to buy calls is $82.55, which would be a breakout higher. We have two targets. Our first target is the $89.00-90.00 range and we suggest readers close out the majority of their position here. Our second, more aggressive target is the $94.00-95.00 range near its December highs.

Suggested Options:
We are suggesting the March or April calls. Our preference would be Aprils but Marchs still have four weeks left.

BUY CALL MAR 80.00 WFR-CP open interest=4132 current ask $5.70
BUY CALL MAR 85.00 WFR-CQ open interest=4089 current ask $3.20
BUY CALL MAR 90.00 WFR-CR open interest=2337 current ask $1.60

BUY CALL APR 85.00 WFR-DQ open interest=1439 current ask $5.50
BUY CALL APR 90.00 WFR-DR open interest=10258 current ask $3.60

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million
 

New Puts

None today.
 

New Strangles

None today.
 

New Play Archives