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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CYT None None
HBC    
IWM    
IYT    
NKE    
TXT    

Play Editor's Note: After dipping under support at $50.00 on Thursday ASH is on the rebound. This might be another bullish entry point. MER has rallied to resistance near $50.00. Traders might want to consider buying calls if MER can breakout over $50 or its 100-dma. I've been listing FCX and PCU in my Play Editor's notes for days. I would have added PCU this weekend but it looks like earnings are due out in the next day or two. FCX looks strong but I didn't want to chase Friday's $7.00 bounce.


New Calls

Cytec Ind. - CYT - close: 60.64 change: +1.28 stop: 57.95

Company Description:
Cytec Industries Inc. is a global specialty chemicals and materials company focused on developing, manufacturing and selling value-added products. Our products serve a diverse range of end markets including aerospace, adhesive, automotive and industrial coatings, chemical intermediates, inks, mining and plastics. (source: company press release or website)

Why We Like It:
Traditionally petroleum has been a big ingredient and thus cost for the chemical companies but it doesn't seem to be affecting shares of CYT. The stock has been rebounding. The company's recent earnings report was a lot better than expected. Broken resistance is now acting as new support so the Thursday-Friday bounce looks like a new entry point to buy calls. We're starting the play with a stop loss at $57.95 but you could probably try a stop at $58.45 instead. We have to label this a more aggressive play because the spreads on the options are pretty wide. There isn't much we as traders can do about that except try to minimize its impact with good entry and exit strategy. The P&F chart is bullish with an $83 target but CYT is trying to push through resistance on its P&F chart and hasn't quite done it yet. We think that could happen this week. We're listing two targets. Our first target is the $64.75-65.00 range. Our second target is the $68.00-70.00 zone.

Suggested Options:
Remember, this is an aggressive, higher-risk play because the option spreads are so wide! We're suggesting the June calls but August ones could work. The August strikes have more open interest.

BUY CALL JUN 55.00 CYT-FK open interest= 0 current ask $7.00
BUY CALL JUN 60.00 CYT-FL open interest=34 current ask $3.50
BUY CALL JUN 65.00 CYT-FM open interest=22 current ask $1.25

Picked on April 27 at $ 60.64
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 556 thousand

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HSBC - HBC - close: 85.78 change: +0.99 stop: 83.90

Company Description:
Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world. HSBC's international network comprises over 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. (source: company press release or website)

Why We Like It:
If investors believe the worst is over for the financials then this group should continue to lead the market higher. One stock that has been very strong in its recovery is HBC. The rally stalled about a month ago and shares have been consolidating sideways and resting up for its next leg higher. HBC rallied toward resistance near $86 and its 200-dma on Friday. A breakout higher looks imminent. We are suggesting a trigger to buy calls at $86.15. If triggered we have two targets. Our short-term target is the $89.75-90.00 range. Our more aggressive, longer-term target is the $94.00-95.00 zone. The P&F chart is bullish with a $113 target.

Suggested Options:
We are suggesting the June calls. Our trigger is at $86.15.

BUY CALL JUN 85.00 HBC-FQ open interest=8816 current ask $3.30
BUY CALL JUN 90.00 HBC-FR open interest=3842 current ask $1.20

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/08/08 (confirmed)
Average Daily Volume = 1.7 million

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iShares Russ.2000 - IWM - cls: 71.90 chg: +0.67 stop: 69.49

Company Description:
The IWM is an exchange traded fund (ETF) on the Russell 2000 Index.

Why We Like It:
The IWM has produced a bullish double bottom with the low in January and March. Now the rally is slowly building with a series of higher lows. The IWM is flirting with a breakout over resistance near $72.00-72.50. We are suggesting two different entry points depending on what happens next week. If the markets breakout then we are suggesting readers buy calls at $72.55. If the markets correct then we are suggesting readers buy calls in the $70.50-70.00 zone. We're listing the stop at $69.49. Our four to six-week target is the $77.50-80.00 zone. The P&F chart is bullish with an $87 target.

Suggested Options:
We have two different entry points. One at $72.55 or $70.50.
We're suggesting the June calls. Strikes are available at $1.00 increments.

BUY CALL JUN 70.00 DIW-FR open interest=5838 current ask $3.85
BUY CALL JUN 72.00 IOW-FT open interest=2843 current ask $2.61
BUY CALL JUN 75.00 IOW-FW open interest=2633 current ask $1.22
BUY CALL JUN 77.00 IOW-FY open interest=6359 current ask $0.62

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 84.6 million

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iShares DJ Transports - IYT - cls: 91.48 chg: +1.13 stop: 87.79

Company Description:
The IYT is an exchange traded fund (ETF) on the Dow Jones Transportation average.

Why We Like It:
It is an amazing show of strength that the transports can rally the way that they are in the face of $120 oil. High oil means high fuel prices, which is killing the airlines and is also hurting the truckers. UPS warned a few weeks ago. The airlines are announcing horrendous losses. Yet strength in the railroads and the shipping stocks has been impressive. Even YRCW, a trucker, offered some positive comments this past week. The IYT has produced an inverse or the bullish version of a head-and-shoulders pattern. The breakout over $90.00 is a new entry point to buy calls. This isn't a fast-moving equity but the trend is pretty clear. We'll try and limit our risk with a stop loss under $88.00. We have two targets. Our short-term target is the $94.85-95.00 range. Our longer-term eight-week target is the $98.00-100.00 zone.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 85.00 IYT-FQ open interest=107 current ask $8.60
BUY CALL JUN 90.00 IYT-FR open interest=334 current ask $5.10
BUY CALL JUN 95.00 IYT-FS open interest=105 current ask $2.55

Picked on April 27 at $ 91.48
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 1.4 million

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Nike Inc. - NKE - close: 68.74 chg: +0.68 stop: 66.74

Company Description:
NIKE, Inc., based near Beaverton, Oregon, is the worlds leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. (source: company press release or website)

Why We Like It:
There are just over 100 days left until the 2008 summer Olympics begin in China. While many may believe the impact of the Olympics is already baked into NKE's share price, especially after the March 20th earnings report and rally, we suspect that Olympic fever will continue to carry the stock higher. The hype and the press for the Olympics is only going to pick up steam over the next three months. We're suggesting call positions now although traders could wait for a rise past short-term resistance at $69.00 or the $70.00 mark. We're going to try and use a relatively tight stop loss at $66.74. More aggressive traders may want to use a stop under true support near $65.00. Our target is the $74.00-75.00 range. The P&F chart is bullish with an $83 target.

Suggested Options:
We are suggesting the June or July calls.

BUY CALL JUN 65.00 NKE-FM open interest= 20 current ask $5.20
BUY CALL JUN 70.00 NKE-FN open interest= 477 current ask $2.25
BUY CALL JUN 75.00 NKE-FO open interest=2207 current ask $0.70

BUY CALL JUL 70.00 NKE-GN open interest=2357 current ask $3.20
BUY CALL JUL 75.00 NKE-GO open interest=2553 current ask $1.40

Picked on April 27 at $ 68.74
Change since picked: + 0.00
Earnings Date 06/26/08 (unconfirmed)
Average Daily Volume = 4.0 million

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Textron - TXT - cls: 61.39 change: +0.65 stop: 58.90

Company Description:
Textron Inc. is a $13.2 billion multi-industry company operating in 34 countries with approximately 44,000 employees. The company leverages its global network of aircraft, defense and intelligence, industrial and finance businesses to provide customers with innovative solutions and services. (source: company press release or website)

Why We Like It:
Shares of TXT are definitely recovering. The stock has put in a bullish double-bottom in 2008 and shares are stair-stepping higher. TXT cleared resistance near $60.00 and its 200-dma several days ago but has spent the last week digesting those gains. We now think TXT is poised for the next step higher. Our short-term target is the $64.85-65.00 zone. Our secondary, more aggressive target is the $68.00-70.00 range. The Point & Figure chart is bullish with an $83 target.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 60.00 TXT-FL open interest=1068 current ask $3.90
BUY CALL JUN 65.00 TXT-FM open interest=5497 current ask $1.60

Picked on April 27 at $ 61.39
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 2.1 million
 

New Puts

None today.
 

New Strangles

None today.
 

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