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New Option Plays

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Call Options Plays
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Strangle Options Plays
FPL None None
FLR    
RAI    

New Calls

FPL Group - FPL - close: 62.60 chg: +0.19 stop: 59.49

Company Description:
FPL Energy is a competitive energy supplier utilizing clean fuels such as natural gas, wind, solar, hydro and nuclear to generate electricity. It is the nations leader in wind energy, with 56 projects currently in operation in 16 states. (source: company press release or website)

Why We Like It:
Shares of FPL look poised to breakout higher from their four-week trading range. The stock was upgraded yesterday but shares have not yet pushed through technical resistance at its 200-dma. We see additional resistance at the 50-dma near 63.45 so we're suggesting readers buy calls at $63.55. Now normally, when a stock's 50-dma crosses under its 200-dma, it's a very bearish signal but that tends to be a longer-term trend change. FPL could still put in a significant rally although we would expect a lower high compared to where it traded in January. We're setting our first target in the $67.00-67.50 zone. This is not the most attractive risk/reward set up with a wide stop loss under Friday's low but if FPL can close above its 50-dma we'll tighten the stop. FYI: An alternative entry point would be another dip or bounce near $60.00.

Suggested Options:
Our suggested trigger to buy calls is at $63.55. We are suggesting the May calls.

BUY CALL MAY 60.00 FPL-EL open interest= 29 current ask $4.60
BUY CALL MAY 65.00 FPL-EM open interest= 59 current ask $2.00

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/30/08 (unconfirmed)
Average Daily Volume = 2.6 million

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Fluor - FLR - close: 141.77 chg: +4.11 stop: 134.45

Company Description:
Fluor Corporation provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management. Headquartered in Irving, Texas, Fluor is a FORTUNE 500 company with revenues of $16.7 billion in 2007. (source: company press release or website)

Why We Like It:
It's been a while since we've played FLR. The stock has spent months consolidating in a bearish pattern of lower lows and lower highs. The last few weeks have seen FLR trade more sideways and now the stock is on the verge of a breakout higher. The recent rally has lifted the stock to its five-month trendline of resistance. The P&F chart is already bullish with a $184 target. We need to see FLR breakout so we're suggesting a trigger to buy calls at $146.50. The biggest challenge is controlling our risk. The stock can see huge intraday swings, which makes this a more aggressive trade. We're going to try and play it with a stop at $134.45. That might be too tight. We're setting two targets. Our first target is the $159.00-160.00 zone. Our second target is the $168.00-170.00 zone. We do not want to hold over earnings in early May.

Suggested Options:
Our suggested entry point is $146.50. We are suggesting the May calls.

BUY CALL MAY 140 FLR-EH open interest= 0 current ask $12.50
BUY CALL MAY 145 FLR-EI open interest= 4 current ask $ 9.90
BUY CALL MAY 150 FLR-EJ open interest=16 current ask $ 7.90
BUY CALL MAY 155 FLR-EK open interest=52 current ask $ 6.10
BUY CALL MAY 160 FLR-EL open interest=14 current ask $ 4.60

Picked on March xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/07/08 (unconfirmed)
Average Daily Volume = 2.3 million

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Reynolds American - RAI - close: 61.32 chg: +0.76 stop: 59.65

Company Description:
Reynolds American Inc. is the parent company of R.J. Reynolds Tobacco Company; Conwood Company, LLC; Santa Fe Natural Tobacco Company, Inc; and R.J. Reynolds Global Products, Inc. (source: company press release or website)

Why We Like It:
It seems a bit counter intuitive to be buying calls on RAI when the stock has such a clear pattern of lower highs over the past few weeks. However, the stock has significant support at $60.00 and if shares are going to bounce this should be the spot for it to rally. The action over the last few days shows how traders have been buying the dips. We're suggesting a stop loss under the recent low. There is a lot of congestion in the $64 region but our target is the $65.50-66.00 zone. We do not want to hold over the late April earnings. FYI: The P&F chart is bearish and points lower.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 60.00 RAI-EL open interest= 295 current ask $3.30
BUY CALL MAY 65.00 RAI-EM open interest=1317 current ask $1.00

Picked on March 25 at $ 61.32
Change since picked: + 0.00
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 1.6 million
 

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