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New Plays

Industrial Products and Apparel

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NEW DIRECTIONAL CALL PLAYS

Fastenal Co. - FAST - close: 35.76 change: +0.50 stop: 34.34

Why We Like It:
FAST, a maker of industrial equipment, recently reported earnings. The results were less than expected as management said the economy's slowdown hurt sales. That shouldn't be a surprise. The stock sold off on the news but it appears to be a one-day decline. Traders were back to buying dips on Wednesday. Thus far the trendline of higher lows for FAST is still holding up.

Shares look poised to rally back toward their recent highs. I'm expecting this to be a quickly three or four-day play. Buy calls now. We'll use a tight stop under Wednesday's low. Our exit target is $38.45. I will set a second target at $39.95 but we'll be quick to exit if shares look weak near $38.50. Be sure to take most of your position off the table at $38.45.

Suggested Options:
I am suggesting the May calls. This should be a very short-term trade.

BUY CALL MAY 35.00 FQA-EG open interest=1740 current ask $2.65
BUY CALL MAY 37.50 FQA-EH open interest=2714 current ask $0.75

Annotated Chart:
FAST

Picked on    April 16 at $ 35.76
Change since picked:      + 0.00
Earnings Date           04/14/09 (confirmed)
Average Daily Volume =       2.4 million  
Listed on April 16, 2009         


Urban Outfitters - URBN - close: 17.12 change: +0.59 stop: 15.80

Why We Like It:
Expectations for URBN's earnings results are pretty low but investors are buying dips in the stock anyway. Last week's same-store sales report for the rest of the industry lifted shares of URBN. I couldn't find any same-store reports from URBN. Volume has been light on the recent bounce, which raises the caution flag. On the positive side, if the market's rally continues URBN may actually see a short squeeze. The stock has a high-amount of short interest at more than 16% of the 128 million-share float.

I am labeling this an aggressive, higher-risk trade. We'll start with a stop loss at $15.80. Our first target is $18.90. Our second target is $19.90. We do not want to hold over the mid May earnings report.

Suggested Options:
I am suggesting the May calls. Our time frame is about three weeks.

BUY CALL MAY 17.50 URQ-EW open interest= 504 current ask $1.15
BUY CALL MAY 20.00 URQ-ED open interest= 574 current ask $0.40

Annotated Chart:
URBN

Picked on    April xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           05/14/09 (unconfirmed)
Average Daily Volume =       6.6 million  
Listed on April 16, 2009         


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