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Call Options Plays
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Strangle Options Plays
FXE COF None
  EBAY  
  IYF  
  IYG  

Play Editor's Note: Earnings season begins to hit full steam this week. GOOG reports later this week and we'll probably try and play a strangle over the announcement. RIG might be tempting on a dip near $140 as a bullish play. The dip in MTL on Friday looks like a potential entry point. We're still watching PCU and FCX but probably want to see another $5.00 pull back before considering calls in those two. We strongly considered bullish positions in UNP tonight. UNP looks poised to rally again. VMC could be a call play over $72.00. If you are interested in some higher-risk, speculative strangles over earnings this consider playing April options on strangles for these stocks, which report earnings early this week: FRX, INFY, PII, RF, and WM. Remember, April options expire in five days.


New Calls

CurrencyShares Euro - FXE - cls: 158.57 chg: +0.81 stop: 156.45

Company Description:
This is an Exchange Traded Fund (ETF) on the price of the Euro currency.

Why We Like It:
As the U.S. dollar continues to sink the European Union's Euro continues to rise. This is a clear cut momentum trade. Bears will argue that the FXE is overbought and due for a correction. They're right but until the trend changes we're going to try and ride it. Shares have been following a strict trendline of higher lows so we can use a relatively tight stop loss at $156.45. We're suggesting call positions now. However, there is some resistance in the $159 region and more conservative traders may want to wait for a new high to launch positions. Our target is the $164.00-165.00 range. Our time frame is three to five weeks.

Suggested Options:
We are suggesting the May calls. Strikes are available at $1.00 increments. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL MAY 155 FXE-EY open interest=1001 current ask $4.50
BUY CALL MAY 157 FXE-EA open interest= 84 current ask $3.10
BUY CALL MAY 160 FLN-ED open interest= 128 current ask $1.55
BUY CALL MAY 162 FLN-EF open interest= 30 current ask $0.95

Picked on April 13 at $158.57
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 307 thousand
 

New Puts

Capital One - COF - close: 48.30 chg: -1.32 stop: 52.55

Company Description:
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries collectively had $83.0 billion in deposits and $151.4 billion in managed loans outstanding as of December 31, 2007. (source: company press release or website)

Why We Like It:
No one is expecting good news out of the financial sector this earnings season. Normally when everyone is leaning against the same side of the boat it raises the odds of an upset or a surprise. However, this time we suspect that the news will be worse than expected. COF is likely to sell-off into its earnings report due April 17th after the closing bell. That gives us four days to ride any selling pressure and we're strongly considering the strategy of holding over COF's earnings report. Normally we do not want to hold over an earnings announcement. Our target is the $41.50-40.00 zone. The Point & Figure chart is bearish with a $38 target.

Suggested Options:
We are suggesting the May puts.

BUY PUT MAY 50.00 COF-QJ open interest=11872 current ask $5.00
BUY PUT MAY 45.00 COF-QI open interest= 7703 current ask $2.80
BUY PUT MAY 40.00 COF-QH open interest=19680 current ask $1.45

Picked on April 13 at $ 48.30
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 9.0 million

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eBay Inc. - EBAY - close: 30.87 chg: -1.09 stop: 32.26

Company Description:
Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce, payments and communications. (source: company press release or website)

Why We Like It:
Shares of EBAY have broken their multi-week up trend and look poised for more profit taking. The company's earnings report is coming up and we don't believe the results are going to please the street. Normally we do not hold over an earnings report. This is an exception to that rule and we're betting on a post-earnings sell-off. This does raise our risk since an earnings surprise could obviously send shares higher. Because of this unknown risk variable (earnings, whisper number, etc) we're labeling this an aggressive play. EBAY reports earnings on April 16th after the closing bell. Our initial target is the $26.00 mark.

Suggested Options:
We are suggesting the May puts.

BUY PUT MAY 32.50 XBA-QZ open interest=4370 current ask $2.62
BUY PUT MAY 30.00 XBA-QF open interest=5707 current ask $1.31
BUY PUT MAY 27.50 QXB-QY open interest=1424 current ask $0.58

Picked on April 13 at $ 30.87
Change since picked: + 0.00
Earnings Date 04/16/08 (confirmed)
Average Daily Volume = 14.9 million

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iShares Financial - IYF - close: 82.51 chg: -1.40 stop: 85.55

Company Description:
This is the iShares Dow Jones U.S. Financial Sector exchange traded fund (ETF).

Why We Like It:
Wall Street is going to see a lot of earnings reports out of the financial sector this week and we suspect that the news will be worse than predicted. Our biggest risk is one of the larger banks comes out with significantly better news and it sparks a short squeeze. Fortunately, the trend, which is bearish, is in our favor and by playing the IYF we don't have quite as much exposure as playing a specific company. We're also adding the IYG so you may want to pick the IYF or the IYG instead of both. Our target is the $76.00-75.00. We're adding a second target in the $71.50-70.00 zone.

Suggested Options:
We are suggesting the May puts.

BUY PUT MAY 85.00 IYF-QQ open interest= 75 current ask $5.30
BUY PUT MAY 80.00 IYF-QP open interest=185 current ask $2.75
BUY PUT MAY 75.00 IYF-QO open interest= 57 current ask $1.40

Picked on April 13 at $ 82.51
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 3.6 million

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iShares Fincl.Servcs. - IYG - cls: 87.26 chg: -1.72 stop: 92.26

Company Description:
This is the iShares Dow Jones U.S. Financial Services exchange traded fund.

Why We Like It:
The financial services sector is seeing the same selling and same troubles as the rest of the financial sector. The group just rolled over and we expect earnings to push this toward its lows. We're suggesting positions with the IYG under $90.00. We have two targets. Our first target is the $82.00-80.00 zone. Our second, more aggressive target is the $76.00-75.00 zone.

Suggested Options:
We are suggesting the May puts. At this time we don't see any strikes under $85.00 for May.

BUY PUT MAY 90.00 IYG-QR open interest= 3 current ask $8.10
BUY PUT MAY 85.00 IYG-QQ open interest=16 current ask $4.70

Picked on April 13 at $ 87.26
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 344 thousand
 

New Strangles

None today.
 

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