Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
Strangle Options Plays
BUCY None ANR
RIMM   FDG
    GRMN
    HOC
    VLO

New Calls

Bucyrus - BUCY - close: 75.41 change: +2.51 stop: 71.65

Company Description:
Bucyrus International, Inc. is a world leader in the design and manufacture of high productivity mining equipment for the surface and underground mining industries. Bucyrus' surface equipment is used for mining coal, copper, iron ore, oil sands and other minerals and Bucyrus' underground equipment is used primarily for mining coal. (source: company press release or website)

Why We Like It:
The mining equipment stocks look ready to run again. Traders continue to buy the dips. Technical traders could argue that BUCY has a bearish divergence between price and its MACD on the daily chart but I suspect BUCY can tag $80 before seeing any trouble. We're suggesting readers buy calls now or on a dip in the $75.00-74.50 zone. We have two targets. Our first target is $79.85. Our second target is $83.50. The Point & Figure chart is bullish with a $92 target.

Suggested Options:
We are suggesting the July calls. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL JUL 70.00 HIK-GN open interest=5023 current ask $8.00
BUY CALL JUL 72.50 HIK-GV open interest= 833 current ask $6.30
BUY CALL JUL 75.00 HIK-GO open interest=4176 current ask $4.90
BUY CALL JUL 77.50 HIK-GW open interest=1605 current ask $3.70
BUY CALL JUL 80.00 HIK-GP open interest=1151 current ask $2.65

Picked on June 15 at $ 75.41
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 2.4 million

---

Research In Motion - RIMM - cls: 132.96 chg: +3.37 stop: 129.99

Company Description:
Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. (source: company press release or website)

Why We Like It:
This looks like a pivotal spot for RIMM. Traders could argue for a move either way. The longer-term trend is still up but the stock has been flirting with a breakdown from its bullish channel all week and RIMM has a four-week trend of lower highs. I suspect the next move will be higher but we're going to be ready if RIMM drops. Here's the plan. If RIMM trades at $136.05 buy calls. We will have two targets. Our first target is $144.00. Our second target is $154.50. If, on the other hand, RIMM breaks down then we want to buy puts if RIMM trades at $127.40. Our two targets to the downside are $120.25 and $113.50. We do not want to hold over the June 25th earnings report.

Suggested Options:
If RIMM hits our trigger to buy calls at $136.05 then we're suggesting these July calls.

BUY CALL JUL 135.00 RUL-GW open interest=3874 current ask $8.50
BUY CALL JUL 140.00 RUL-GH open interest=5032 current ask $6.40
BUY CALL JUL 145.00 RUL-GI open interest=2933 current ask $4.60

If RIMM breaks down and hits our trigger to buy puts at $127.40 then choose one of these puts.

BUY PUT JUL 130.00 RUL-SV open interest=4779 current ask $7.90
BUY PUT JUL 125.00 RUL-SE open interest=3334 current ask $5.90
BUY PUT JUL 120.00 RUL-SD open interest=3544 current ask $4.25

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/25/08 (confirmed)
Average Daily Volume = 16.7 million
 

New Puts

None today.
 

New Strangles

Alpha Nat. Res. - ANR - close: 94.25 chg: +5.61 stop: n/a

Company Description:
Alpha Natural Resources is a leading supplier of high-quality Appalachian coal to electric utilities, steel producers and heavy industry. Approximately 89 percent of the company's reserve base is high Btu coal and 82 percent is low sulfur, qualities that are in high demand among electric utilities which use steam coal. Alpha is also the nation's largest supplier and exporter of metallurgical coal, a key ingredient in steel manufacturing. (source: company press release or website)

Why We Like It:
Soaring coal prices, especially the metallurgical coal, is sending shares of ANR to the moon. While the fundamental story sounds great nothing skyrockets higher forever. Instead of calling a top and just buying puts we're suggesting a strangle. We don't care what direction ANR goes as long as it continues to really move. Options are kind of pricey due to the stock's volatility so we're being aggressive and using some wide strike price points to try and make this play more affordable. This should be considered a very speculative play but not as speculative as just buying puts or calls.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. The plan is for the stock to move in either direction so that one side of the trade appreciates enough to make the entire speculation profitable. Traders will want to try and keep their capital evenly invested on both side of the trade to keep the strategy neutral.

We are suggesting these July options. Our estimated cost is $9.40 We want to sell if either option hits $14.50.

BUY CALL JUL 105.00 ANR-GA open interest=1162 current ask $4.80
-and-
BUY PUT JUL 85.00 ANR-SQ open interest= 310 current ask $4.60

Picked on June 15 at $ 94.25
Change since picked: + 0.00
Earnings Date 08/05/08 (unconfirmed)
Average Daily Volume = 3.7 million

---

Fording Cand. Coal - FDG - close: 82.91 chg: -0.09 stop: n/a

Company Description:
Fording Canadian Coal Trust is an open-ended mutual fund trust and one of the largest royalty trusts in Canada. (source: company press release or website)

Why We Like It:
This strangle is the same strategy as the one we outlined with ANR. The coal stocks have gone stratospheric but nothing goes up this strong forever. However, we can't call a top so we're suggesting a strangle. This should be considered a risky bet but not as risky as just buying calls or just buying puts.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. The plan is for the stock to move in either direction so that one side of the trade appreciates enough to make the entire speculation profitable. Traders will want to try and keep their capital evenly invested on both side of the trade to keep the strategy neutral.

We are suggesting these July options. Our estimated cost is $5.45 We want to sell if either option hits $ 8.00.

BUY CALL JUL 90.00 FDG-GR open interest= 767 current ask $2.25
-and-
BUY PUT JUL 75.00 FDG-SO open interest= 805 current ask $3.20

Picked on June 15 at $ 82.91
Change since picked: + 0.00
Earnings Date 07/21/08 (unconfirmed)
Average Daily Volume = 1.7 million

---

Garmin Ltd. - GRMN - close: 44.91 chg: -0.29 stop: n/a

Company Description:
The global leader in satellite navigation, Garmin Ltd. and its subsidiaries have designed, manufactured, marketed and sold navigation, communication and information devices and applications since 1989 -- most of which are enabled by GPS technology. (source: company press release or website)

Why We Like It:
There are a lot of different opinions on GRMN and how they are going to weather the growing competition from the smart phone market. The long-term trend in the stock price is negative but short-term GRMN has pulled back from its recent highs. The stock is poised to move. The problem is which way? We're suggesting a strangle.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. The plan is for the stock to move in either direction so that one side of the trade appreciates enough to make the entire speculation profitable. Traders will want to try and keep their capital evenly invested on both side of the trade to keep the strategy neutral.

We are suggesting these July options. Our estimated cost is $2.55 We want to sell if either option hits $ 4.75.

BUY CALL JUL 50.00 GQR-GJ open interest=19286 current ask $1.25
-and-
BUY PUT JUL 40.00 GQR-SH open interest= 6305 current ask $1.30

Picked on June 15 at $ 44.91
Change since picked: + 0.00
Earnings Date 07/30/08 (unconfirmed)
Average Daily Volume = 4.1 million

---

Holly Corp. - HOC - close: 41.25 chg: +0.96 stop: n/a

Company Description:
Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. (source: company press release or website)

Why We Like It:
The refiners have been killed due to rising oil prices squeezing their margins. The next few weeks could be rocky for oil and that should translate into volatility for HOC. Currently the stock is bouncing form support near $40.00. We are suggesting new strangle positions now but a dip back to $40.00 would be better. There is a significant difference between prices in the calls and puts so try and balance your capital on both sides of the trade.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. The plan is for the stock to move in either direction so that one side of the trade appreciates enough to make the entire speculation profitable. Traders will want to try and keep their capital evenly invested on both side of the trade to keep the strategy neutral.

We are suggesting these July options. Our estimated cost is $2.00 We want to sell if either option hits $ 3.00.

BUY CALL JUL 45.00 HOC-GI open interest= 767 current ask $1.35
-and-
BUY PUT JUL 35.00 HOC-SG open interest= 314 current ask $0.65

Picked on June 15 at $ 41.25
Change since picked: + 0.00
Earnings Date 08/07/08 (unconfirmed)
Average Daily Volume = 1.1 million

---

Valero - VLO - close: 44.84 change: +0.42 stop: n/a

Company Description:
Valero is one of the largest oil refiners in the world.

Why We Like It:
The story is similar with VLO. Rising oil puts pressure on the margins. Shares of VLO have pulled back to support near $45.00 and oscillated back and forth around this level for days now. It looks like VLO is setting up for a move but it's tough to pick a direction. We're suggesting a strangle.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. The plan is for the stock to move in either direction so that one side of the trade appreciates enough to make the entire speculation profitable. Traders will want to try and keep their capital evenly invested on both side of the trade to keep the strategy neutral.

We are suggesting these July options. Our estimated cost is $1.89 We want to sell if either option hits $2.75.

BUY CALL JUL 50.00 VLO-GJ open interest=10322 current ask $1.01
-and-
BUY PUT JUL 40.00 VLO-SH open interest=1171 current ask $0.88

Picked on June 15 at $ 44.84
Change since picked: + 0.00
Earnings Date 07/29/08 (unconfirmed)
Average Daily Volume = 10.8 million
 

New Play Archives