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NEW DIRECTIONAL CALL PLAYS

Diamond Offshore - DO - close: 68.71 change: +2.08 stop: 64.90

Why We Like It:
We are going to hedge our bearish bet on CVX with a bullish bet on DO. CVX has more natural gas exposure and DO is an oil service stock so this isn't an apples-to-apples comparison. Shares of DO look more bullish after a four-month consolidation and bottom formed in the $55-70 zone. The current trend of higher lows is offering us an entry point with today's bounce.

I'm suggesting call positions now with a stop loss under $65.00. Readers should note that buying calls now is an aggressive bet that DO will be able to breakout over resistance near $71.25. Our first target is $74.00. Our second target is $77.40. We do not want to hold over the April 23rd earnings report.

Suggested Options:
I am suggesting the May calls.

BUY CALL MAY 65.00 DO-EM open interest= 523 current ask $7.00
BUY CALL MAY 70.00 DO-EN open interest= 625 current ask $4.20
BUY CALL MAY 75.00 DO-EO open interest= 834 current ask $2.30

Annotated Chart:
DO

Picked on    April 08 at $ 68.71
Change since picked:      + 0.00
Earnings Date           03/27/09 (unconfirmed)
Average Daily Volume =       2.9 million  
Listed on April 08, 2009         


iShares Transports - IYT - close: 50.40 change: +0.90 stop: 48.75

Why We Like It:
The stock market is in rally mode and investors are buying the dips. When stocks are ignoring bad news it's hard to be bearish. Dow theory suggests that we can't have a sustained rally without a rally in the transports and fortunately the transports have been participating. The IYT has been advancing on big volume days, which tends to be a sign of strength. Today's bounce is another test of the trendline of support.

I am suggesting call positions now with a stop loss at $48.75. Our first target is $53.90. Our second target is $57.25.

Suggested Options:
I am suggesting the May calls. There appears to be a root-symbol change at the May 55 mark. Note the May 60s are an aggressive trade.

BUY CALL MAY 50.00 IYT-EX open interest= 166 current ask $4.00
BUY CALL MAY 55.00 IHB-EX open interest= 492 current ask $1.80
BUY CALL MAY 60.00 IHB-EH open interest= 729 current ask $0.80

Annotated Chart:
IYT

Picked on    April 08 at $ 50.40
Change since picked:      + 0.00
Earnings Date           00/00/00
Average Daily Volume =       1.2 million  
Listed on April 08, 2009         


Mastercard - MA - close: 167.33 change: +1.72 stop: 162.85

Why We Like It:
We're going to take another swing at MA again. Traders bought the dip twice near $164 today. The stock is trading inside a bullish channel and once again threatening to break out over resistance in the $170 region. We want to buy calls now on the afternoon bounce and use a tight stop under today's low.

Our first target to take profits is at $177.00. Our second target to take profits is $183.00. More aggressive traders may want to aim for the $195-200 zone. We do not want to hold over the early May earnings report.

Suggested Options:
I am suggesting the May calls.

BUY CALL MAY 165 MAL-EM open interest=1163 current ask $14.40
BUY CALL MAY 170 MAL-EN open interest=1113 current ask $11.80
BUY CALL MAY 180 MAL-EP open interest=11918 current ask $7.60

Annotated Chart:
MA

Picked on    April 08 at $167.33
Change since picked:      + 0.00
Earnings Date           05/01/09 (unconfirmed)
Average Daily Volume =       3.0 million  
Listed on April 08, 2009         


Visa Inc. - V - close: 57.82 change: +0.67 stop: 55.90

Why We Like It:
MA's rival Visa (V) also looks bullish. The stock has broken out over resistance in the $56.00 zone but failed under resistance at $60 and its 200-dma. After three days of consolidating lower shares of V look ready for a rematch with its 200-dma and the $60.00 level. The P&F chart looks very bullish given the breakout higher.

I am suggesting call positions now with a stop loss under $56.00. Out first target is $64.00.

Suggested Options:
I am suggesting the May calls. It is always up to the individual trader to decide which month and which strike price best suits your trading style and risk profile.

BUY CALL MAY 55.00 V-EK open interest= 4671 current ask $5.70
BUY CALL MAY 60.00 V-EL open interest= 2510 current ask $3.10
BUY CALL MAY 62.50 V-EZ open interest=  926 current ask $2.15
BUY CALL MAY 65.00 V-EM open interest= 3408 current ask $1.45

Annotated Chart:
V

Picked on    April 08 at $ 57.82
Change since picked:      + 0.00
Earnings Date           04/29/09 (confirmed)
Average Daily Volume =      10.6 million  
Listed on April 08, 2009         


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