Option Investor
New Plays

New Option Plays

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Strangle Options Plays
CRR None None

Play Editor's Note: I almost added a strangle play on Amylin Pharmaceuticals (AMLN). The stock has coiled into the very tip of a pennant pattern of higher lows and lower highs so a breakout is imminent. That breakout will probably happen on Tuesday when the company presents at an investor conference in Las Vegas. I chose not to add it because the strike prices seemed too far apart to make it really work. More adventuresome traders could try a strangle with a June $30 call and the June $25 puts but you'd have to but 2 puts for every 1 call to make your investment neutral. The calls were about $1.60 and the puts were going for about 80 cents. Something to think about. If AMLN didn't move significantly by Thursday I'd probably exit.

New Calls

Carbo Ceramics - CRR - close: 47.45 change: +1.15 stop: 44.89

Company Description:
CARBO Ceramics is the worlds leading producer of ceramic proppants, which are spherical pellets used to increase productivity of oil and gas wells. CARBO and its predecessor companies have been manufacturing ceramic proppants since 1978. With four manufacturing plants in the U.S. and China. (source: company press release or website)

Why We Like It:
After a strong rally from March and April shares of CRR took a couple of weeks off to pull back and catch their breath. Now shares are bouncing again after finding new support near $45.00. We're suggesting readers buy calls on this bounce. We'll put a stop under last week's lows. There is some resistance near $50.00 but we're aiming for the $52.00-52.50 zone.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 45.00 CRR-FI open interest=168 current ask $4.10
BUY CALL JUN 50.00 CRR-FJ open interest= 86 current ask $1.45

Picked on May 11 at $ 47.45
Change since picked: + 0.00
Earnings Date 04/24/08 (confirmed)
Average Daily Volume = 303 thousand


Foster Wheeler - FWLT - close: 68.97 change: +0.09 stop: 65.99

Company Description:
Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of engineering, procurement, construction, manufacturing, project development and management, research and plant operation services. (source: company press release or website)

Why We Like It:
It was a volatile week for FWLT as the market reacted to the company's latest earnings report. Yet in spite of the rocky trading the stock has maintained its bullish trend of higher lows. Shares now look poised to breakout over resistance near 470.00. We are suggesting a trigger to buy calls at $70.51, which is above last week's high. If triggered we have two targets. Our short-term target is $74.90-75.00. Our secondary target is the $79.50-80.00 range. We're starting the play with a relatively wide (aggressive) stop loss. You may want to use a tighter stop! The P&F chart is bullish with an $84 target.

Suggested Options:
Our trigger to buy calls is at $70.51. If triggered we're suggesting the June calls.

BUY CALL JUN 65.00 UFB-FM open interest= 568 current ask $6.60
BUY CALL JUN 70.00 UFB-FN open interest=1591 current ask $3.90
BUY CALL JUN 75.00 UFB-FO open interest=1477 current ask $1.95

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/07/08 (confirmed)
Average Daily Volume = 3.4 million

New Puts

None today.

New Strangles

None today.

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