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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
BTU AVB None
GRMN KSS  

Play Editor's note: Traders need to keep an eye on crude oil. It is as much a market mover as the major indices. If crude breaks down under $125 then the oil and oil services should follow. Since energy is such a large part of the S&P 500 then it could follow oil lower as well.


New Calls

Peabody Energy - BTU - close: 73.92 change: +1.92 stop: 70.85

Company Description:
Peabody Energy is the world's largest private-sector coal company, with 2007 sales of 238 million tons and $4.6 billion in revenues. Its coal products fuel approximately 10 percent of all U.S. electricity generation and 2 percent of worldwide electricity. (source: company press release or website)

Why We Like It:
The long-term story for coal, like crude oil, is a bullish one. There are already concerns about shortages in different areas around the world. BTU has been able to maintain a bullish trend in spite of the sharp pull back from its highs. Last week's bounce near $71.00 looks like a new entry point to buy calls. We're suggesting positions now. More conservative traders could wait for a rally over $75.00 to initiate plays. Our target is the $79.75-80.00 zone.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 70.00 BTU-GN open interest= 200 current ask $7.90
BUY CALL JUL 75.00 BTU-GO open interest= 783 current ask $5.30
BUY CALL JUL 80.00 BTU-GP open interest= 441 current ask $3.40

Picked on June 01 at $ 73.92
Change since picked: + 0.00
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 5.8 million

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Garmin Ltd. - GRMN - close: 48.65 chg: +1.07 stop: 44.95

Company Description:
Garmin International Inc. is a subsidiary of Garmin Ltd., the global leader in satellite navigation. Since 1989, this group of companies has designed, manufactured, marketed and sold navigation, communication and information devices and applications -- most of which are enabled by GPS technology. (source: company press release or website)

Why We Like It:
Longer-term we think GRMN will continue to have challenges. Right now the economic slow down is probably impacting sales and the growing influence of smart phones with GPS software already installed makes many of GRMN's personal devices redundant. That's why GRMN plans to release its own smart phone in the second half of this year. While the long-term trend in the stock is down we think short-term it actually looks bullish. We're suggesting call positions now or on a dip near $47.50. Our target is the $54.00-55.00 zone or the 100-dma, whichever is hit first. FYI: The most recent data, which may be out of date, listed short interest at more than 15% of GRMN's 114 million-share float. GRMN could still see a short squeeze. GRMN's P&F chart is bullish with a $71 target.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 45.00 GQR-GI open interest= 3395 current ask $5.60
BUY CALL JUL 50.00 GQR-GJ open interest=16161 current ask $2.75
BUY CALL JUL 55.00 GQR-GK open interest= 3658 current ask $1.15

Picked on June 01 at $ 48.65
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 4.6 million
 

New Puts

Avalonbay - AVB - close: 101.20 change: -1.41 stop: 102.85

Company Description:
As of March 31, 2008, AvalonBay Communities, Inc., headquartered in Alexandria, Virginia, owned or held an ownership interest in 183 apartment communities containing 52,167 apartment homes in ten states and the District of Columbia, of which 22 communities were under construction and eight communities were under reconstruction. AvalonBay is in the business of developing, redeveloping, acquiring, and managing apartment communities in high barrier-to-entry markets of the United States. (source: company press release or website)

Why We Like It:
AVB has been struggling with resistance near $106 for months. When the stock broke down a couple of weeks ago we think it finally turned the corner and into a new bearish trend. Last week's bounce just looks like an oversold rebound and a chance for bears to load up. The rally stalled just under its 200-dma. We are suggesting put positions now with a stop loss above the 200-dma. We have two targets. Our short-term target is the 100-dma near $97.13. We'll use the $97.25-97.00 zone as our first target to take some profits. Our second target is the $92.50 zone. The Point & Figure chart is bearish with a $90 target. FYI: We do qualify this as a slightly more aggressive play because the REIT stocks like AVB can be volatile and the option spreads are a little wider than normal. Plus, the most recent data listed short interest at 16% of the 70 million-share float.

Suggested Options:
We are suggesting the June or July puts. June options expire in three weeks.

BUY PUT JUN 100.0 AVB-RT open interest= 527 current ask $2.60
BUY PUT JUN 95.00 AVB-RS open interest= 102 current ask $1.10

BUY PUT JUL 100.0 AVB-ST open interest= 113 current ask $4.60
BUY PUT JUL 95.00 AVB-SS open interest= 316 current ask $2.65
BUY PUT JUL 90.00 AVB-SR open interest= 182 current ask $1.50

Picked on June 01 at $101.20
Change since picked: + 0.00
Earnings Date 07/30/08 (unconfirmed)
Average Daily Volume = 1.0 million

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Kohls - KSS - close: 44.80 change: -0.53 stop: 45.65

Company Description:
Based in Menomonee Falls, Wis., Kohls is a family-focused, value-oriented specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment. Kohls operates 957 stores in 47 states and will celebrate the opening of its 1,000th store in the fall. (source: company press release or website)

Why We Like It:
Last week's oversold bounce in KSS looks like a new entry point to buy puts, especially as the stock rolls over under its 10-dma. We're suggesting a tight stop loss. If we're wrong we should be taken out quickly. Our target is the $40.50-40.00 zone. The P&F chart is bearish with a $35 target.

Suggested Options:
We are suggesting the June or July puts. June options expire in three weeks.

BUY PUT JUN 45.00 KSS-RI open interest=22532 current ask $1.75
BUY PUT JUN 40.00 KSS-RH open interest= 6955 current ask $0.35

BUY PUT JUL 45.00 KSS-SI open interest= 5426 current ask $2.65
BUY PUT JUL 40.00 KSS-SH open interest=41655 current ask $0.90

Picked on June 01 at $ 44.80
Change since picked: + 0.00
Earnings Date 08/14/08 (unconfirmed)
Average Daily Volume = 6.1 million
 

New Strangles

None today.
 

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