Option Investor
New Plays

New Option Plays

HAVING TROUBLE PRINTING?
Printer friendly version
Call Options Plays
Put Options Plays
Strangle Options Plays
None None DIA
    LEH
    QQQQ

New Calls

None today.
 

New Puts

None today.
 

New Strangles

DIAMONDS - DIA - close: 112.21 chg: -0.84 stop: n/a

Company Description:
The DIAMONDS Trust, Series 1, is an exchange traded fund (ETF) designed to mimic the performance of the Dow Jones Industrial Average.

Why We Like It:
The DJIA is extremely oversold from its May highs and yet it continues to sink. The market should either see a sharp sell-off as the selling pressure culminates into a panic or a sharp rebound. Neither move is a guarantee but odds are pretty good. We're going to speculate on the move with an August strangle.

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 August options. Strikes are available at $1.00 increments if you don't like the ones we're choosing. Our estimated cost is $4.35. We want to sell if either option hits $6.90 or more.

BUY CALL AUG 115.00 DIA-HK open interest=3425 current ask $2.01
-and-
BUY PUT AUG 109.00 DIA-TE open interest= 664 current ask $2.34

Picked on July 07 at $112.21
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 15.5 million

---

Lehman Brothers - LEH - cls: 20.84 chg: -2.01 stop: n/a

Company Description:
Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. (source: company press release or website)

Why We Like It:
Financials continue to be the thorn in the side of this market. Everyday there seems to be a new worry or new concern even as pundits and stock pickers try and call a bottom in the sector. There has been a lot of speculation over LEH and whether or not it will turn into another Bear Stearns disaster. Right now we don't have an opinion either way but the stock has pulled back to major support at $20.00. LEH should move big either way from here. We're going to speculate with a strangle. Try and open positions in the $21.00-19.00 zone. The closer to $20.00 the better as far as an entry point goes.

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 August options. Our estimated cost is $2.54. We want to sell if either option hits $4.25 or more.

BUY CALL AUG 25.00 LYH-HE open interest=3490 current ask $1.31
-and-
BUY PUT AUG 15.00 LYH-TC open interest=8444 current ask $1.23

Picked on July 07 at $ 20.84
Change since picked: + 0.00
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 44 million

---

PowerShares QQQ - QQQQ - cls: 44.90 chg: +0.27 stop: n/a

Company Description:
The PowerShares QQQ is an exchange traded fund (ETF) that mimics the performance of the NASDAQ-100 index (NDX).

Why We Like It:
The NASDAQ-100 index, like the rest of the major indices, is at a pivotal spot. It could produce a big move either way. We don't know which way it will go so we'll speculate with a strangle play. We suggest trying to open positions in the $45.25-44.75 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 August options. Our estimated cost is $1.80. We want to sell if either option hits $2.75 or more.

BUY CALL AUG 47.00 QQQ-HU open interest=30116 current ask $0.81

BUY PUT AUG 43.00 QQQ-TQ open interest=61620 current ask $0.99

Picked on July 07 at $ 44.90
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 148 million
 

New Play Archives