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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None ADRE TYC
  ERTS  

Play Editor's Note: If you're looking for a few extra trading ideas check these out. GILD and MDT have been showing relative strength and look like potential call plays. If you think oil is going to keep falling then PETD and APA look like put candidates.


New Calls

None today.
 

New Puts

BoEmerging Markets 50 ADR - ADRE - cls: 54.69 chg: -1.37 stop: 56.85

Company Description:
The ADRE is the BLDRS Emerging Markets 50 ADR Index exchange traded fund (ETF).

Why We Like It:
The ADRE broke through significant resistance back in April and the ETF has seen a strong run up from its March lows. However, the momentum has run out and this equity is breaking down under its trend of higher lows. Volume has started surging on the declines, which is bearish. There is potential support at the 50-dma and 200-dma. We are going to aim for the $51.00-50.00 zone. FYI: The P&F chart is still bullish.

Suggested Options:
Options are available at $1.00 increments so feel free to pick different strikes. We are suggesting July puts but they don't have much open interest yet. This could be considered a higher-risk play because the option spreads are a little wide.

BUY PUT JUL 55.00 QDF-SC open interest= 0 current ask $2.80
BUY PUT JUL 53.00 QDF-SA open interest= 0 current ask $1.75
BUY PUT JUL 51.00 QDF-SY open interest= 0 current ask $1.15

Picked on June 03 at $ 54.69
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 448 thousand

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Electronic Arts - ERTS - close: 48.57 chg: +0.46 stop: 50.25

Company Description:
Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world's leading interactive entertainment software company. Founded in 1982, the company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, cellular handsets and the Internet.
(source: company press release or website)

Why We Like It:
We were tempted to launch new put positions at current levels in ERTS, especially following the second failed rally near $50.50. Unfortunately, ERTS still has some support near $48.00. We're suggesting readers use a trigger to buy puts at $47.75, which would be a new relative low. If triggered our target is the February lows in the $44.50-44.00 zone. We do consider this a more aggressive trade because ERTS still has a trendline of support it could bounce from. The P&F chart is still bullish.

Suggested Options:
We are suggesting the July puts.

BUY PUT JUL 50.00 EZQ-SJ open interest=4366 current ask $3.20
BUY PUT JUL 45.00 EZQ-SI open interest=1577 current ask $0.95

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 3.7 million
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New Strangles

Tyco Intl. - TYC - close: 44.89 change: -0.09 stop: n/a

Company Description:
Tyco International is a diversified, global company that provides vital products and services to customers in more than 60 countries. Tyco is a leading provider of security products and services, fire protection and detection products and services, valves and controls, and other industrial products. (source: company press release or website)

Why We Like It:
The consolidation in TYC has narrowed sharply over the last several days and a breakout seems imminent. We're suggesting readers open strangle plays in the $44.50-45.50 zone. The closer to $45.00 your entry point the better. Our biggest risk is that TYC just bounces sides in a $5.00 range the next several weeks.

Suggested Options:
A strangle is a neutral strategy that involves buying an out of the money call and an out of the money put. We are suggesting the July options below. Our estimated cost is $1.30. We want to sell if either option hits $1.95 (50% gain). To keep the strategy neutral try to balance your investment on both sides, which may involve an odd number amounts of calls and puts.

BUY CALL JUL 47.50 TYC-GW open interest= 799 current ask $0.55
-and-
BUY PUT JUL 42.50 TYC-SV open interest=1094 current ask $0.75

Picked on June 03 at $ 44.89
Change since picked: + 0.00
Earnings Date 08/05/08 (unconfirmed)
Average Daily Volume = 2.9 million
 

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