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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CHRW None MER
DRYS    
ESS    
XOM    

New Calls

CH Robinson Worldwide- CHRW - cls: 58.25 chg: +0.67 stop: 56.89

Company Description:
Founded in 1905, C.H. Robinson Worldwide, Inc., is one of the worlds largest third party providers of multimodal transportation services and logistics solutions, serving over 29,000 customers through a network of 218 offices in North America, Europe, Asia, and South America. (source: company press release or website)

Why We Like It:
Fundamentally we can't imagine what is driving the stocks of the transports higher when crude oil is soaring to new record highs. You could make an argument that the railroads are doing well because clients get more bang for the transportation buck at least versus trucking companies. Our play here on CHRW is purely a technical one. The stock is in a bullish up trend and looks poised to breakout from its recent consolidation near $57-58. We'll try and limit our risk with a tight stop loss at $56.89. Our target is the $62.00-62.50 zone. We do not want to hold over the April 22nd earnings so this is a short-term play.

Note: speaking of transports we still think UNP looks tempting as a call play.

Suggested Options:
We are suggesting the May calls but plan to exit ahead of the April 22nd earnings.

BUY CALL MAY 55.00 CJQ-EK open interest=2675 current ask $5.20
BUY CALL MAY 60.00 CJQ-EL open interest=2477 current ask $2.15

Picked on April 15 at $ 58.25
Change since picked: + 0.00
Earnings Date 04/22/08 (confirmed)
Average Daily Volume = 1.9 million

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DryShips Inc. - DRYS - close: 70.32 chg: +3.21 stop: 64.99

Company Description:
DryShips Inc. is an international provider of drybulk carriers. Headquartered in Athens, Greece, DryShips currently owns and operates a fleet of 46 drybulk carriers. (source: company press release or website)

Why We Like It:
DRYS can be a volatile stock and shares just added more than 5% today. Normally we wouldn't want to chase a move this big but we might not get the chance to buy a dip. Patient traders may want to try anyway and wait for a pull back into the $67.00-66.00 region. We're suggesting a stop loss under the recent low near $65.00. DRYS is still facing potential resistance at its 100-dma and if you draw a trendline from its October 2007 peak and February 2008 peak. We're still suggesting new positions now. Our target is the $79.00-80.00 zone.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 65.00 DQR-EM open interest=1849 current ask $8.70
BUY CALL MAY 70.00 DQR-EN open interest=1602 current ask $5.80
BUY CALL MAY 75.00 DQR-EO open interest=1848 current ask $3.60

Picked on April 15 at $ 70.32
Change since picked: + 0.00
Earnings Date 05/29/08 (unconfirmed)
Average Daily Volume = 4.2 million

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Essex Prop. - ESS - close: 112.07 chg: +1.05 stop: 109.45

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 apartment communities located in highly desirable, supply-constrained markets. (source: company press release or website)

Why We Like It:
After a two-week sell-off the REIT stocks look poised to rally again. ESS has been building new support around $110 and its 50 and 200-dma. We're going to try and use a relatively tight stop at $109.45. Our target is the $119.50-120.00 zone. More aggressive traders could aim much higher, maybe $125 or $130. The P&F chart points to $154. We do not want to hold over the April 30th earnings report.

Suggested Options:
We are suggesting the May calls but plan to exit ahead of the April 30th earnings.

BUY CALL MAY 110 ESS-EB open interest= 1 current ask $6.90
BUY CALL MAY 115 ESS-EC open interest=28 current ask $4.30
BUY CALL MAY 120 ESS-ED open interest=30 current ask $2.50

Picked on April 15 at $112.07
Change since picked: + 0.00
Earnings Date 04/30/08 (confirmed)
Average Daily Volume = 411 thousand

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ExxonMobil - XOM - cls: 90.80 chg: +1.10 stop: 87.95

Company Description:
ExxonMobil (XOM) is one of the largest integrated oil, natural gas, and energy companies on the planet.

Why We Like It:
Crude oil is in breakout mode and shares of XOM are following. XOM just broke through resistance at the $90.00 mark and looks poised to make a run at its highs and resistance near $95.00. We are suggesting call positions now although a dip back toward $90.00 would be preferred. Our targe is the $94.85-95.00 range. We do not want to hold over the May 1st earnings report.

Suggested Options:
We are suggesting the May calls but plan to exit ahead of the May 1st earnings report.

BUY CALL MAY 85.00 XOM-EQ open interest=2375 current ask $6.85
BUY CALL MAY 90.00 XOM-ER open interest=7118 current ask $3.30
BUY CALL MAY 95.00 XOM-ES open interest=13468 current ask $1.10

Picked on April 15 at $ 90.80
Change since picked: + 0.00
Earnings Date 05/01/08 (confirmed)
Average Daily Volume = 26.2 million
 

New Puts

None today.
 

New Strangles

Merrill Lynch - MER - cls: 43.34 chg: +0.46 stop: n/a

Company Description:
Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies, with offices in 40 countries and territories and total client assets of almost $2 trillion. (source: company press release or website)

Why We Like It:
There is growing speculation about what MER may or may not confess when the company reports earnings this week. The reaction to the earnings news and guidance could be big. Big enough that we're suggesting a very aggressive, high-risk strangle play. MER reports earnings on Thursday morning (April 17th). Wall Street expects a loss of $1.99 a share (-1.99 EPS). We are suggesting an extremely aggressive April strangle and an May strangle. The April play is high-risk because option premiums are quickly deflating and April options expire after April 18th. You'll want to time this and buy your options at the close of business on Wednesday to avoid most of Wednesday's time decay.

Suggested Options:
A strangle involves buying both an out of the money call and out of the money put. We don't care what direction the stock moves as long as it moves enough to push one side into a profit.

April strangle - very speculative, will be worthless after this Friday. Estimated cost $0.90. Want to sell if either option hits $1.80 or more.

BUY CALL APR 47.50 MER-DW open interest=17128 current ask $0.53
-and-
BUY PUT APR 37.50 MER-PB open interest= 8102 current ask $0.37


May strangle - Estimated cost $1.76. Want to sell if either option hits $3.00 or more.

BUY CALL MAY 50.00 MER-EJ open interest=8695 current ask $0.91
-and-
BUY PUT MAY 32.50 MER-QA open interest=7705 current ask $0.85

Picked on April 15 at $ 43.34
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 30.6 million
 

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