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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
AAPL None None
DIA    
ESS    
ISRG    

Play Editor's Note: I don't want to overstate the obvious but the major indices are still in a bear market and the trend is still lower. The DJIA and the S&P 500 have still not broken through their four-month trendline of resistance. However, it does look like the major indices have produced a significant market bottom. At this particular moment I would be more inclined to search for short-term bullish trades but in the back of my mind this is just a bear-market rally that may have potential for more, maybe not. The recent actions by the Federal Reserve have thrown a new spin on things that has yet to be completely digested by market forces.


New Calls

Apple Inc. - AAPL - close: 133.27 chg: +3.60 stop: 121.90

Company Description:
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone. (source: company press release or website)

Why We Like It:
It's taken about eight weeks but it looks like AAPL has finally built a base big enough for shares to launch higher. With the NASDAQ poised to rally, leaders like AAPL could really out perform the pack. Given the market's recent volatility, stop loss placement is one of the biggest challenges. We're suggesting a stop at $121.90 but more conservative traders could definitely try something tighter near $125 or even $129.00 if you really want to try and limit your risk. We are suggesting bullish positions right here. However, another dip in the $129-130 zone or a breakout above its 50-dma around $134.35 could be used as alternative entry points. The bottom of the gap down from January near $140.00 should be expected to act as resistance. However, we are setting our target in the $148.00-150.00 zone. More aggressive traders could aim higher, maybe $160ish. The Point & Figure chart is bullish with a $166 target.

Suggested Options:
We are suggesting the April calls. We do not want to hold over the late April earnings report.

BUY CALL APR 130 APV-DF open interest=36663 current ask $ 7.90
BUY CALL APR 135 APV-DG open interest=24947 current ask $ 5.25
BUY CALL APR 140 APV-DH open interest=25432 current ask $ 3.35
BUY CALL APR 145 APV-DI open interest=14245 current ask $ 2.00

Picked on March 23 at $133.27
Change since picked: + 0.00
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume = 48.5 million

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DIAMONDS - DIA - close: 123.11 change: +1.97 stop: 120.75

Company Description:
The DIAMONDS trust, series 1, is an exchange-traded fund that corresponds to the price and performance of the Dow Jones Industrial Average.

Why We Like It:
If this market rally has any legs then we want to capture part of it with a bullish play on the DIA as a proxy for the Dow Jones Industrial Average. You could also use the DJX index. Please note that this is an aggressive entry point with the DJIA and the DIA still under its four-month trendline of resistance (see chart). An alternative entry point would be to wait for a breakout over $125.00 (12,500 on the DJIA). Our target is the $128.00-130.00 zone. We are going to try and play with a relatively tight stop. Odds are probably pretty good that if the market does not see any follow through higher on Monday that we will be stopped out.

Suggested Options:
We are suggesting the April calls. Strikes are available at $1.00 increments. As with all of our suggested candidates it is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL APR 120 DAW-DP open interest= 7344 current ask $5.60
BUY CALL APR 123 DAW-DS open interest=13167 current ask $3.55
BUY CALL APR 126 DAW-DV open interest= 3838 current ask $2.05
BUY CALL APR 130 DAW-DZ open interest= 3093 current ask $0.63

Picked on March 23 at $123.11
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 19.1 million

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Essex Prop. Trust - ESS - cls: 113.00 chg: +0.13 stop: 109.90

Company Description:
Essex Property Trust, Inc., located in Palo Alto, California and traded on the New York Stock Exchange (ESS), is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast communities. (source: company press release or website)

Why We Like It:
We strongly considered bullish positions in ESS right here at $113. Last week's breakout over resistance near $110 and its 200-dma is bullish and ESS performed this reversal higher on above average volume. However, we are suggesting readers use a trigger to buy calls at $115.50 for a reason. The long-term weekly chart shows a trendline of resistance near the $115 level. Aggressive traders could jump in now. We are suggesting readers wait for confirmation. ESS and the REIT stocks tend to be a volatile group. That can be great if we catch one of the trends but it is very painful if the stock doesn't cooperate. If triggered at $115.50 Our target is the $124.50-125.00 range. Traders should expect some resistance near $120 but it will probably be temporary. The Point & Figure chart is bullish with a triple-top breakout buy signal and a $132 target. FYI: Aggressive traders could also try buying calls on another dip near $111-110.

FYI: Another REIT stock we would consider a potential candidate is SPG. Readers could buy Thursday's bounce or look for a dip.

Suggested Options:
We are suggesting the April calls or May calls. Trigger is at $115.50.

BUY CALL APR 110 ESS-DB open interest=548 current ask $6.50
BUY CALL APR 115 ESS-DC open interest= 10 current ask $3.80
BUY CALL APR 120 ESS-DD open interest= 20 current ask $2.40

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/05/08 (unconfirmed)
Average Daily Volume = 408 thousand

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Intuitive Surgical - ISRG - cls: 300.69 chg: +9.03 stop: 278.00

Company Description:
Intuitive Surgical is the global leader in the rapidly emerging field of robotic-assisted minimally invasive surgery. (source: company press release or website)

Why We Like It:
We tend to shy away from playing ISRG because the options always look so expensive and the stock sees really big intraday swings. Last Thursday ISRG had a $13 range. Given these factors and the volatile market environment we have to label this an aggressive, higher-risk play. Looking at ISRG's chart the stock looks poised to rally. Traders bought the dip on Thursday near $290 (actually 288) and ISRG closed the session above round-number resistance at $300 and above technical resistance at the 100-dma. Furthermore ISRG has broken through its multi-week trendline of lower highs. Our only complaint would be the lack of volume behind the current rally. We're suggesting calls at current levels but readers could probably pick their spot anywhere in the $295-305 zone. There is likely to be some congestion in the $310-312 area and a dip back to $300 would not be a surprise. Our target is the $339.00-340.00 zone. The P&F chart is bullish with a $360 target.

Suggested Options:
We are suggesting the April calls. We do not want to hold over the April earnings report around April 17th.

BUY CALL APR 290 AXV-DZ open interest= 660 current ask $29.00
BUY CALL APR 300 AXV-DT open interest=1838 current ask $23.70
BUY CALL APR 310 AXV-DA open interest=1002 current ask $19.20
BUY CALL APR 320 AXV-DB open interest=1378 current ask $15.30
BUY CALL APR 330 AXV-DC open interest=1048 current ask $12.20

Picked on March 23 at $300.69
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 1.1 million
 

New Puts

None today.
 

New Strangles

None today.
 

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