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NEW DIRECTIONAL PUT PLAYS

Assurant Inc. - AIZ - close: 25.64 change: -2.89 stop: 30.05

Why We Like It:
The bullish up trend in this accident and health insurance company has died. The upward momentum began to weaken last week and today's 10% plunge has started what should be a new leg lower. A 10% one-day drop is pretty big so I'm looking for an oversold bounce to open positions. Don't chase it here.

I am suggesting that readers buy puts on a bounce into the $27.00-28.00 zone. If triggered we have two targets. Our first target is $25.10. Our second target is $21.00. We do not want to hold over the early February earnings report. I'm listing our stop at $30.05. More conservative traders may want to consider a stop loss just north of $28.00.

Suggested Options:
I am suggesting the February puts. Our entry point is $27.00.

BUY PUT FEB 30.00 AIZ-NF open interest= 10 current ask $6.00
BUY PUT FEB 25.00 AIZ-NE open interest=167 current ask $2.70

Annotated Chart:
AIZ

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked:     + 0.00
Earnings Date          02/04/09 (unconfirmed)
Average Daily Volume =      1.6 million  


Amazon.com - AMZN - close: 48.44 change: -3.15 stop: 50.25

Why We Like It:
If the market continues lower then AMZN should breakdown under support near $48.00. This is going to be a very short-term play since AMZN is due to report earnings on January 28th after the closing bell. That gives us six trading days. I am suggesting a trigger to buy puts at $47.45. If triggered our target is $41.00.

Suggested Options:
Our trigger is $47.45. We are suggesting the February puts. Do not hold over earnings.

BUY PUT FEB 50.00 ZQN-NJ open interest=5142 current ask $5.65
BUY PUT FEB 45.00 ZQN-NI open interest=7212 current ask $3.30
BUY PUT FEB 42.50 ZQN-NV open interest=1873 current ask $2.44

Annotated Chart:
AMZN

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked:     + 0.00
Earnings Date          01/28/09 (confirmed)
Average Daily Volume =      7.7 million  


Alpha Natural Resources - ANR - cls: 14.73 chg: -2.23 stop: 15.25

Why We Like It:
The Obama administration is not friendly to the coal industry and investors might begin to shy away from coal stocks again. ANR has fallen toward support in the $15-14 zone. The December low was $13.85. I am suggesting that readers buy puts at $13.75. If triggered our target is $10.15. Our secondary target is $7.75. This can be a very volatile stock so consider this an aggressive, higher-risk play. We do not want to hold over the mid February earnings report.

Suggested Options:
Our trigger is $13.75. We're suggesting the February puts.

BUY PUT FEB 15.00 ANR-NC open interest= 899 current ask $2.25
BUY PUT FEB 12.50 ANR-NV open interest=1048 current ask $1.15

Annotated Chart:
ANR

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked:     + 0.00
Earnings Date          02/12/09 (unconfirmed)
Average Daily Volume =      2.9 million  


First Solar - FSLR - close: 137.76 chg: -7.66 stop: 150.51

Why We Like It:
Solar stocks should be soaring right? Obama's inauguration speech reminded us of his plans to increase solar energy use in the U.S. So why are shares of FSLR sinking? I think the Obama rally in solar has already occurred in December. FSLR produced a bearish double top near $165 and its 100-dma two weeks ago. Friday saw a failed rally near $150. Today's decline just confirms that the next move should be down. The play isn't perfect. The stock does have support near $130 and its 50-dma. Plus, the stock can be very volatile. I would consider this a very aggressive trade. I'm suggesting positions now with a stop above Friday's high. Our first target is $121. Our second target is $103. We do not want to hold over the late February earnings report.

Suggested Options:

BUY PUT FEB 140.0 QHB-NH open interest=1353 current ask $15.30
BUY PUT FEB 130.0 QHB-NZ open interest=1990 current ask $10.60
BUY PUT FEB 120.0 QHB-ND open interest=1194 current ask $ 7.10

Annotated Chart:
FSLR

Picked on January 20 at $137.76
Change since picked:     + 0.00
Earnings Date          02/24/09 (unconfirmed)
Average Daily Volume =      3.6 million  


iShares REIT ETF - IYR - close: 29.92 change: -3.63 stop: *varies*

Why We Like It:
Most of the REIT stocks look bearish again. Instead of adding stocks like ESS and AVB (which you may want to check out anyway) we are listing IYR as a put play. The IYR has fallen back toward support at $30.00. It could keep falling or see an oversold bounce. I'm listing two alternative entry points.

Entry #1 is a new relative low. I'm suggesting readers buy puts if IYR trades at $29.45 or lower and use a stop loss at $32.51.

Entry #2 is a bounce back toward resistance. I'm suggesting readers buy puts if IYR trades in the $32.50-33.50 zone and use a stop loss at $34.05.

Our target is the same. We want to exit at $25.25.

Suggested Options:
I am suggesting the February puts. Remember, it's up to the individual trader to decide on which month and which strike price best suits your trading style. Don't buy all of them.

BUY PUT FEB 32.00 BJN-NF open interest=11110 current ask $4.50
BUY PUT FEB 30.00 BJN-ND open interest=14944 current ask $3.40
BUY PUT FEB 27.00 BJN-NA open interest=19136 current ask $2.05
BUY PUT FEB 25.00 BJN-NY open interest=23094 current ask $1.40

Annotated Chart:
IYR

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked:     + 0.00
Earnings Date          00/00/00
Average Daily Volume =     26.5 million  


NEW MARKET NEUTRAL STRANGLE PLAYS

Apple Inc. - AAPL - close: 78.20 chg: -4.13 stop: n/a

Why We Like It:
AAPL is due to report earnings tomorrow (January 21st) after the closing bell. Analysts are expecting AAPL to report a profit of $1.39 a share. Investors will be focused on the company's guidance and if management has anything new to say on Steve Job's recent medical leave. Whatever the news is the stock could move big but we don't know which direction. Thus I'm suggesting a strangle. Buy both the call and the put with the expectation that AAPL will move far enough to put one side into profitability for the entire position. Tomorrow (Wednesday, Jan. 21st) is our only entry point. AAPL should see a big move on Thursday. If we're not profitable by Friday we'll probably close the play.

Suggested Options:
With a strangle we are buying two options, an out of the money call and an out of the money put. Our estimated cost for this play is $6.26. We want to sell if either option hits $9.40 or higher.

BUY PUT CALL 85.00 QAA-BQ open interest=7398 current ask $3.35
-and-
BUY PUT FEB 70.00 QAA-NN open interest=9199 current ask $2.91

Annotated Chart:
AAPL

Picked on January 20 at $ 78.20
Change since picked:     + 0.00
Earnings Date          01/21/09 (confirmed)
Average Daily Volume =     29.5 million  


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