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Medical Devices and Tech

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NEW DIRECTIONAL CALL PLAYS

Henry Schein - HSIC - close: 38.23 change: +0.36 stop: 36.95

Why We Like It:
Healthcare has typically been considered more of a "safe haven" sector when the markets get rough. That didn't save shares of this medical device maker from the bear market sell-off. Yet now the stock is starting to see a recovery and shares are out performing the S&P 500. HSIC has a bullish trend of higher lows. This week's bounce from the $37.00 level looks like a bullish entry point to buy some calls.

HSIC is due to report earnings in late February. We are suggesting the March calls but plan to exit before earnings. If you're nimble enough you may want to consider buying February calls instead. Februarys have more open interest but they also expire in less than three weeks.

The $40.00 level might be resistance but I'm focusing on the 100-dma. I expect the 100-dma to be resistance. We're aiming for the $41.00 mark or the 100-dma, whichever HSIC hits first.

Suggested Options:
We're suggesting the March calls.

BUY CALL MAR 35.00 HQE-CG open interest=   0 current ask $4.40
BUY CALL MAR 40.00 HQE-CH open interest= 135 current ask $1.30

Annotated Chart:
HSIC

Picked on February 03 at $ 38.23
Change since picked:      + 0.00
Earnings Date           02/25/09 (unconfirmed)
Average Daily Volume =       927 thousand 


NEW DIRECTIONAL PUT PLAYS

Qualcomm - QCOM - close: 34.22 change: -1.07 stop: 35.25

Why We Like It:
There has been a lot of talk about strength in technology stocks lately. Well QCOM is one tech stock that is under performing. Shares are on the verge of breaking down below support, which would lead to a retest of its lows around $30.00.

I'm suggesting that readers use a trigger to buy puts at $33.25. If triggered our target is $30.25. More aggressive traders could aim for the 2008 lows closer to $28.00.

Suggested Options:
We are suggesting the March puts.

BUY PUT MAR 35.00 AAO-OG open interest=14578 current ask $2.54
BUY PUT MAR 32.50 AAO-OZ open interest= 6333 current ask $1.41
BUY PUT MAR 30.00 AAO-OF open interest=16899 current ask $0.74

Annotated Chart:
QCOM

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =        21 million  


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