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New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
CLF None None
FCX    
JLL    
KSS    
PRU    

Play Editor's Note: This remains a bear market. However, after a week of steady selling pressure this weekend's news regarding a government bailout for FRE and FNM could spark a big short-covering rally. Bear market rallies tend to be fast and sharp. I'm expecting a three or four day bounce and then we'll start looking for new bearish candidates if conditions have changed. More conservative traders will want to strongly consider an early exit for any of our bearish plays especially if the stock produced a bullish "hammer" candlestick on Friday.

FYI: Keep an eye on Wal-Mart (WMT). It might be a buy here or on a breakout over $61.00.


New Calls

Cleveland Cliffs - CLF - close: 82.13 chg: +1.16 stop: 75.69

Company Description:
Cleveland-Cliffs Inc, headquartered in Cleveland, Ohio, is an international mining company, the largest producer of iron ore pellets in North America and a major supplier of metallurgical coal to the global steelmaking industry. (source: company press release or website)

Why We Like It:
CLF is bouncing sharply from a test of technical support at its rising 200-dma. The stock looks short-term oversold after a painful week of selling that took CLF from $101 to $76. There is plenty of room here for an oversold bounce. We're suggesting call positions now with CLF over $80.00 and a stop loss under Friday's low. Our target is the $89.00-90.00 zone.

Suggested Options:
We are suggesting the October calls. However, this should be a short-term play and aggressive traders could probably use September calls instead.

BUY CALL OCT 80.00 CGJ-JP open interest=626 current ask $9.30
BUY CALL OCT 85.00 CGJ-JQ open interest=520 current ask $6.90
BUY CALL OCT 90.00 CGJ-JR open interest=794 current ask $4.90

Picked on September 06 at $ 82.13
Change since picked: + 0.00
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 4.4 million

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Freeport-McMoran - FCX - cls: 73.91 change: -1.02 stop: 69.19


Company Description:
Freeport-McMoRan Copper & Gold Inc. (FCX) is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. (source: company press release or website)

Why We Like It:
The two-month trend in FCX is bearish and this past week the stock just got crushed with a drop from $90 to $69. Volume accelerated all week into what might be considered a selling climax on Friday with 32 million shares trading. FCX produced a big bounce after testing its January 2008 lows. This looks like a good spot to speculate on a bounce in FCX. We are speculating and FCX should be considered a higher-risk play. If the U.S. dollar continues to march higher this week it will put more pressure on commodities and everything that FCX mines will get pushed lower and the stock could follow. We have two targets. Our first target is $79.75. Our second target is $84.00.

Suggested Options:
We are suggesting the October 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 OCT 75.00 FCX-JO open interest= 745 current ask $6.60
BUY CALL OCT 80.00 FCX-JP open interest=2555 current ask $4.60
BUY CALL OCT 85.00 FCX-JQ open interest=1822 current ask $3.05

Picked on September 06 at $ 73.91
Change since picked: + 0.00
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 11.2 million

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Jones Lang - JLL - close: 50.98 chg: +1.46 stop: 48.95

Company Description:
Jones Lang LaSalle is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. (source: company press release or website)

Why We Like It:
The financial sector looks poised to rally on the FRE/FNM news over the weekend. JLL, while in a bearish trend, could see some short covering. The stock is bouncing from a test of the $49.00 level and the close on Friday looks like an entry point to buy the bounce. We're suggesting a stop under Friday's low. We're listing two targets. Our first target is $54.95. Our second target is $59.00. FYI: We would consider this a more aggressive play because option volume is light and the option spreads are wide.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 50.00 JLL-JJ open interest= 4 current ask $4.40
BUY CALL OCT 55.00 JLL-JK open interest=26 current ask $2.20

Picked on September 06 at $ 50.98
Change since picked: + 0.00
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 705 thousand

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Kohls - KSS - close: 51.04 change: +0.30 stop: 49.15

Company Description:
Based in Menomonee Falls, Wis., Kohls is a family-focused, value-oriented specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment. Kohls operates 957 stores in 47 states and will celebrate the opening of its 1,000th store in the fall. (source: company press release or website)

Why We Like It:
After months and months of hearing about our economic slow down it is a surprise to see the retailers showing so much strength lately. It could have been a back-to-school rally but most of the news has suggested that back-to-school sales were a dud. That hasn't stalled the bullish trend in shares of KSS. Traders bought the dip again on Friday. We're suggesting readers buy the bounce with a stop loss under Friday's low. There is resistance near $52.50 but KSS should be able to power through it this time. Our first target is $55.00. We're considering a second, higher target. The P&F chart is bullish with a $62 target. If KSS can trade over $53.00 it will produce a new triple-top breakout buy signal.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 50.00 KSS-JJ open interest=10958 current ask $3.90
BUY CALL OCT 55.00 KSS-JK open interest=6320 current ask $1.60

Picked on September 06 at $ 51.04
Change since picked: + 0.00
Earnings Date 11/13/08 (unconfirmed)
Average Daily Volume = 7.6 million

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Prudential Fincl. - PRU - cls: 78.74 chg: +1.78 stop: 74.99

Company Description:
Prudential Financial, Inc., a financial services leader with approximately $638 billion in assets under management as of June 30, 2008, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping approximately 50 million individual and institutional customers grow and protect their wealth. (source: company press release or website)

Why We Like It:
The insurance-related financial stocks have been showing some relative strength lately. Now that we think the financials might see a rally this week the insurance stocks could be a good way to play it. PRU looks bullish given its breakout from the consolidation phase a few days ago plus the bullish breakout over its 200-dma. The P&F chart is already bullish with a $100 target. We're suggesting readers buy calls on Friday's bounce with a stop loss under Friday's low. Our target is $84.75.

Suggested Options:
We are suggesting the October calls.

BUY CALL OCT 75.00 PRU-JO open interest= 761 current ask $6.90
BUY CALL OCT 80.00 PRU-JP open interest=1415 current ask $4.00
BUY CALL OCT 85.00 PRU-JQ open interest=2337 current ask $1.90

Picked on September 06 at $ 78.74
Change since picked: + 0.00
Earnings Date 10/29/08 (unconfirmed)
Average Daily Volume = 4.0 million
 

New Puts

None today.
 

New Strangles

None today.
 

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