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New Option Plays
Call Options Plays
Put Options Plays
Strangle Options Plays
None AZO None
  MCD  
  PCLN  
     
     

Play Editor's Note: I'm adding new bearish plays because the trend is still down but traders opening new positions now are at a severe risk for a short-covering rally. No one knows what will spark the next short-covering rally but when it occurs it will charge through everyone's stops. The next opportunity is probably the Wednesday decision on interest rates.

NEW DIRECTIONAL PUT PLAYS

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AutoZone - AZO - close: 102.88 change: +0.18 stop: 107.05

Why We Like It:
AZO broke down from a two-week consolidation phase a few days ago and the post-breakdown bounce has now failed. We see today's action as a new opportunity to buy puts and catch the run toward the October lows. Use a stop above today's high. Our target is the 95.50 mark. More aggressive traders could aim for 93.50.

Suggested Options:
We're suggesting the November puts.

BUY PUT NOV 100.0 AZO-WT open interest= 313 current ask $6.40
BUY PUT NOV 95.00 AZO-WS open interest=1260 current ask $4.80

Annotated Chart:
AZO

Picked on October 27 at $102.88
Change since picked: + 0.00
Earnings Date 12/04/08 (unconfirmed)
Average Daily Volume = 964 thousand

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McDonald's - MCD - close: 51.76 change: -1.30 stop: 54.55

Why We Like It:
I know there are a lot of fans for MCD out there. The company has turned its business around and shares were at new all-time highs in August. Now investors are unloading stocks, including MCD, in a move to cash. The recent breakdown appears to be the beginning of a new leg lower. We're suggesting put positions now with a stop above today's high. Our target is the $47.00. The October 2008 low was near $46.00.

Suggested Options:
We're suggesting the November puts.

BUY PUT NOV 50.00 MCD-WJ open interest=9665 current ask $2.60
BUY PUT NOV 47.50 MCD-WW open interest=5043 current ask $1.80

Annotated Chart:
MCD

Picked on October 27 at $ 51.76
Change since picked: + 0.00
Earnings Date 10/22/08 (confirmed)
Average Daily Volume = 12 million

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PriceLine.com - PCLN - close: 49.26 change: -2.69 stop: 54.15

Why We Like It:
PCLN is sinking fast. A few days ago the stock broke down from a three-week consolidation and today's performance is a failed rally at new resistance (a.k.a. old support). We're suggesting bearish positions with a stop above today's high. It's possible that PCLN could have some support near $45.00 but we're listing two targets. Our first target to take profits is $45.25. Our secondary target is $41.00. This should be considered an aggressive play given our wide stop loss! Please note we do not want to hold over the early November earnings report.

Suggested Options:
We're suggesting the November puts.

BUY PUT NOV 50.00 PUZ-WJ open interest= 257 current ask $6.70
BUY PUT NOV 45.00 PUZ-WI open interest= 479 current ask $4.40

Annotated Chart:
PCLN

Picked on October 27 at $ 49.25
Change since picked: + 0.00
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 2.0 million

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