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New Option Plays

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SDS IWM None

Play Editor's Note: Traders looking for bullish candidates might want to check out Joy Global (JOYG). I came really close to adding the stock as a call play today. The intraday bounce from support near $68.00 looks like a potential entry point. Or readers could wait for a new bounce over $70.00 to buy calls. What stopped me was the overhead technical resistance at the 50-dma and the widespread weakness in the major indices. If the market keeps falling even a strong stock tends to go down.


New Calls

UltraShort S&P 500 - SDS - cls: 67.02 chg: +2.50 stop: 64.95

Company Description:
The UltraShort S&P 500 ProShares are an exchange traded fund (ETF) that moves twice the inverse performance of the S&P 500 index.

Why We Like It:
Short-term technical indicators are turning positive on the SDS and the daily chart's MACD is nearing a new buy signal. Today's rally might be a tempting entry point for more aggressive traders. We want to see the SDS clear last week's highs. We're suggesting a trigger to buy calls at 68.01. If triggered our target is the $73.50-75.00 range. We would consider this a slightly more aggressive play since the SDS is going to be twice as volatile as the S&P 500. For every 1% the S&P goes down, the SDS will go up 2%.

Suggested Options:
We are suggesting the October calls although September calls would probably work just as well. September options expire in just under four weeks.

BUY CALL OCT 68.00 SDS-JP open interest= 181 current ask $4.00
BUY CALL OCT 70.00 SDS-JR open interest= 628 current ask $3.30
BUY CALL OCT 73.00 SBJ-JZ open interest= 13 current ask $2.45

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 25 million
 

New Puts

iShares Russell 2000 - IWM - cls: 72.06 chg: -1.62 stop: 74.15

Company Description:
The iShares Russell 2000 Index is an exchange traded fund (ETF) that mimics the price and performance of the Russell 2000 small cap index.

Why We Like It:
The small cap index has produced a failed rally under its simple 10-dma and came to rest right on its simple 200-dma today. Short-term technicals have turned bearish and the daily chart's MACD is three days into a new sell signal. More aggressive traders may want to consider new positions now. We want to see a confirmed break through on the 200-dma. We're suggesting readers use a trigger at $71.45, which is actually under the IWM's 100-dma. More conservative traders could wait for a drop under the 50-dma (near 70.85) or wait for a drop under $70.00. Our target is the $66.50 level.

Suggested Options:
We are suggesting the October puts.

BUY PUT OCT 72.00 IOW-VT open interest=7596 current ask $3.05
BUY PUT OCT 70.00 DIW-VR open interest=18462 current ask $2.19
BUY PUT OCT 67.00 DIW-VO open interest=6148 current ask $1.29

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 110 million
 

New Strangles

None today.
 

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