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Bullish Plays for an Oversold Bounce

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Play Editor's Note:

My market bias is bearish but I think the market is oversold and due for a bounce. I'm adding a couple of bullish candidates but they are very short-term and only for aggressive traders. We will be looking for any market bounce to fail and set us up to launch new bearish plays.


NEW DIRECTIONAL CALL PLAYS

CF Inds. - CF - close: 55.72 change: +1.18 stop: 52.24

Why We Like It:
CF is part of the fertilizer/agriculture chemical industry. The group has been showing relative strength lately. I think that if the market does see an oversold bounce that these stocks could out perform to the upside. If CF can rise over $57.00 it will produce a new quadruple top breakout buy signal on its P&F chart. The February highs are near $56.90. I'm suggesting a trigger to buy calls at $57.10. If triggered our is $64.75.

Suggested Options:
If CF hits our trigger at $57.10 I would buy the March calls.


BUY CALL MAR 55.00 CF-CK open interest=1294 current ask $5.20
BUY CALL MAR 60.00 CF-CL open interest=2049 current ask $3.00
BUY CALL MAR 65.00 CF-CM open interest= 471 current ask $1.60

Annotated Chart:
CF

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =       4.1 million  


Chipotle Mexican Grill - CMG - close: 55.50 chg: +1.76 stop: 51.99

Why We Like It:
Honestly I'm very surprised at the relative strength in CMG. The stock shot higher on February 12th following its post-market earnings report the night before. Shares of CMG are heavily shorted and this could all be short covering in spite of the stock market weakness. If the market should bounce I think this short covering continues. Currently CMG is testing resistance near $56.00. I am suggesting two different entry points. Our first entry point is a new relative high at $56.25. My alternative entry point is buy calls on a dip at $52.75.

If we are triggered our short-term target is $62.00. We want to keep our target under technical resistance at the 200-dma. FYI: The P&F chart is bullish with a $75 target. The most recent data listed short interest at more than 32% of the 31.4 million share float.

Suggested Options:
If we are triggered I'm suggesting the March calls.


BUY CALL MAR 55.00 CMG-CK open interest=2231 current ask $3.60
BUY CALL MAR 60.00 CMG-CL open interest= 967 current ask $1.50

Annotated Chart:
CMG

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =       765 thousand 


Potash - POT - close: 83.96 change: +1.52 stop: 78.99

Why We Like It:
In spite of the market's overall weakness shares of POT still have a bullish trend of higher lows. POT is part of the fertilizer/agriculture sector and I think that if the market does see an oversold bounce that POT, like CF, will out perform to the upside. Now remember, my overall market bias is bearish. This is just a short-term trade to catch any bounce.

I'm suggesting a trigger to buy calls at $86.25 or on a dip at $80.50. Our target is $93.50.

Suggested Options:
If triggered we're suggesting the March calls.


BUY CALL MAR 80.00 PVZ-CP open interest=2934 current ask $10.00
BUY CALL MAR 85.00 PVZ-CQ open interest=6767 current ask $ 7.20
BUY CALL MAR 90.00 PVZ-CR open interest=7529 current ask $ 5.10

Annotated Chart:
POT

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           04/23/09 (unconfirmed)
Average Daily Volume =      12.3 million  


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