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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
PCU None NUE

Play Editor's Note: Keep an eye on OSG and BRP. OSG has been showing relative strength compared to the market and the rest of the shipping sector. Today's bounce might be an entry point. BRP is bouncing from its 200-dma. Nimble traders might consider positions here with a tight stop.


New Calls

Southern Copper - PCU - close: 110.87 chg: +1.30 stop: 107.45

Company Description:
Southern Copper Corporation, based in Phoenix AZ is a mining operation. Its main product is copper followed by molybdenum, zinc, silver, lead and gold.

Why We Like It:
PCU broke through its trendline of resistance a few days ago. It doesn't hurt that the stock has a 3-for-1 split coming up on July 11th. We are tempted to buy today's bounce. However, futures are down in after hours tonight so the market could pull back Thursday morning. We're suggesting that readers buy calls in PCU on a pull back to the $109.00-108.00 zone. If triggered our target is the $119.00-120.00 zone. Post-split that will be $39.66-40.00. Remember that post split your option values will be reduce to 1/3 their previous value but you'll have three times as many contracts.

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

BUY CALL JUL 110.00 PCU-GB open interest= 862 current ask $6.00
BUY CALL JUL 115.00 PCU-GC open interest=1455 current ask $3.60
BUY CALL JUL 120.00 PCU-GD open interest=1832 current ask $2.00

BUY CALL AUG 110.00 PCU-HB open interest= 32 current ask $8.60
BUY CALL AUG 115.00 PCU-HC open interest= 91 current ask $6.20
BUY CALL AUG 120.00 PCU-HD open interest= 152 current ask $4.20

Annotated Chart:

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 1.8 million
 

New Puts

None today.
 

New Strangles

Nucor - NUE - close: 77.18 change: +0.05 stop: n/a

Company Description:
Headquartered in Charlotte, N.C., Nucor makes more steel in America than any other company. Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. (source: company press release or website)

Why We Like It:
NUE has been edging closer to the conclusion of its neutral pennant pattern. Normally when the stock breaks out it resumes the previous trend, which would be up, but there is no guarantee. NUE produce a breakout relatively soon. We're suggesting that readers launch a strangle in the $77.00-78.00 zone.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. We don't care what direction the stock goes as long as it moves one direction. If it moves far enough one side of our trade will rise enough to pay for the entire trade and make a profit.

We are suggesting the July $85 calls and July $70 puts. You could try this same strategy with the July $80 calls and $75 puts but it would cost about $5.45. If you want more time consider this strategy with the August calls.

Our estimated cost is $2.50. We want to sell if either option hits $3.50.

BUY CALL JUL 85.00 NUE-GQ open interest=7456 current ask $1.15
-and-
BUY PUT JUL 70.00 NUE-SN open interest=5431 current ask $1.35

Picked on June 25 at $ 77.18
Change since picked: + 0.00
Earnings Date 07/17/08 (unconfirmed)
Average Daily Volume = 6.6 million
 

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