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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
ATK None None
DIA    
USO    

Play Editor's Note: Tomorrow should be interesting. Today's failed rally is pretty bearish but I suspect the market is setting up for an oversold bounce soon. If the market does bounce I would only use it as a short-term trading rally and then we can load up on bearish plays again near resistance or a new lower high. The wild cards for tomorrow are the interpretation of the inflation beast in the CPI report and consumer confidence. You can probably bet that both will be worse than expected.

FYI: Readers might want to consider some sort of neutral strategy (like straddles or strangles using July or longer options) on GRMN, ESI and any of the high-flying coal stocks.


New Calls

Alliant Tech - ATK - close: 105.28 change: +1.69 stop: 102.95

Company Description:
ATK is a premier aerospace and defense company with more than 17,000 employees in 21 states and $4.5 billion in revenue. (source: company press release or website)

Why We Like It:
ATK is bouncing from its trendline of support (see chart). We couldn't find the catalyst behind this morning's gap higher but volume was more than double the norm, which is bullish. We are suggesting call positions here. If you're patient ATK might fill the gap from today so a dip in the $104.25-104.00 zone could be used as an entry point. We're using a stop loss under the recent low. We have two targets. The 200-dma is near $109.00. We're setting the first target at $108.75. Our second target is the $111.00 mark.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 105.00 ATK-GA open interest= 104 current ask $3.60
BUY CALL JUL 110.00 ATK-GB open interest= 61 current ask $1.40

Picked on June 12 at $105.28
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 244 thousand

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Diamonds - DIA - close: 121.63 change: +0.58 stop: 119.95

Company Description:
The DIAMONDS are an exchange-traded fund (ETF) that mimics the DJIA.

Why We Like It:
This play takes some guts. The Dow Jones Industrial Average (DJIA) is in a clear down trend. However, it looks poised to bounce from its trendline of support (see chart). Now investor reaction to the CPI number tomorrow could send the market lower again but most people expect it to be bad so stocks could see a "buy the news" move instead. We're using a stop loss at $119.95 just in case the DJIA dips toward 12,000. More conservative traders could try and play with a stop loss under today's low instead. We are trying to capture a short-term bounce. Our target is the $124.50 mark.

Suggested Options:
We are suggesting the June or July calls. This should be a very short-term move otherwise we would not play June calls this close to expiration. Strikes are available at $1.00 increments.

BUY CALL JUN 121.00 DAW-FQ open interest=10369 current ask $1.91
BUY CALL JUN 124.00 DAW-FT open interest= 8937 current ask $0.53

BUY CALL JUL 121.00 DAW-GQ open interest=1450 current ask $3.55
BUY CALL JUL 124.00 DAW-GT open interest=1569 current ask $1.94

Picked on June 12 at $121.63
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 12.9 million

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United States Oil - USO - close: 111.27 chg: +0.28 stop: 105.95

Company Description:
The USO is an exchange traded fund (ETF) that mimics trading in the spot price of West Texas Intermediate (WTI) light, sweet crude oil futures.

Why We Like It:
Crude oil options and crude oil futures expire mid to late next week. Odds are really good that crude is going to keep climbing as shorts buy to cover ahead of expiration. We are suggesting calls now or on a dip anywhere above $108.00. We would prefer to buy a dip but we may not get the chance. Our first target is the $114.90 mark. Our second target is $118.00. We strongly suggest you take some profits at the first target.

Suggested Options:
We are suggesting the June or July calls. This should be a very short-term move otherwise we would not play June calls this close to expiration. Strikes are available at $1.00 increments.

BUY CALL JUN 110.00 IYS-FF open interest= 7468 current ask $3.90
BUY CALL JUN 114.00 IYS-FJ open interest= 1970 current ask $2.10

BUY CALL JUL 110.00 IYS-GF open interest=23738 current ask $7.30
BUY CALL JUL 113.00 IYS-GI open interest= 494 current ask $5.90
BUY CALL JUL 115.00 IYS-GK open interest= 2734 current ask $5.10

Picked on June 12 at $111.27
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 11.4 million
 

New Puts

None today.
 

New Strangles

None today.
 

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