Option Investor
New Plays

Investment Brokerage & Truck Manufacturing

HAVING TROUBLE PRINTING?
Printer friendly version


NEW DIRECTIONAL CALL PLAYS

Greenhill & Co. - GHL - close: 84.45 change: +3.37 stop: 77.90

Why We Like It:
GHL has been showing exceptional relative strength. The stock's rally from its March lows broke through major resistance in the 72-75 zone. As the rally kept going it broke through even bigger resistance near $80.00. The current move is a bullish breakout out of a four-year trading range. This stock could be setting up for another huge run higher.

At the moment shares look a little short-term overbought and we don't want to chase it. I would rather buy a dip near $75.00 but that may not happen. I'm suggesting readers buy calls on a pull back into the $80.75-78.00 zone. We'll use a stop loss at $77.90. If triggered our first target is $84.90. Our second target is $89.00. FYI: The P&F chart is bullish with a $97 target. Furthermore GHL has a very small float of only 14.7 million shares and above average short interest at 16.8% of the float. Put it all together and we could see this short squeeze continue.

Suggested Options:
I am suggesting the May or June calls as this will probably be a short-term two or three week play. GHL is expected to report earnings in early May but we can't find a confirmed earnings date yet. 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 80.00 GHL-EP open interest= 315 current ask $8.30

BUY CALL JUN 80.00 GHL-FP open interest= 375 current ask $10.30
BUY CALL JUN 85.00 GHL-FQ open interest= 545 current ask $ 7.40

Annotated Chart:
GHL

Picked on    April xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           05/01/09 (unconfirmed)
Average Daily Volume =       393 thousand 
Listed on April 18, 2009         


PACCAR Inc. - PCAR - close: 33.86 change: +1.08 stop: 28.75

Why We Like It:
This truck and parts maker is breaking out from its six-month trading range and what appears to be a new bottom or basing pattern. This past week also saw PCAR breakout over resistance at its 200-dma. We want to jump on the PCAR bandwagon but the plan is to wait for the right entry point.

I am suggesting readers buy calls on a dip into the $30.25-29.50 zone. If triggered our first target is $33.45. Our second target is $36.40. The Point & Figure chart is bullish with a $50 target. I would be tempted to aim higher than $36.00 but we don't want to hold over the earnings report in late April.

Suggested Options:
I am suggesting the May calls.

BUY CALL MAY 30.00 PAQ-EF open interest=6756 current ask $5.50
BUY CALL MAY 35.00 PAQ-EG open interest=7474 current ask $2.55

Annotated Chart:
PCAR

Picked on    April xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           04/28/09 (confirmed)
Average Daily Volume =       5.7 million  
Listed on April 18, 2009         


New Play Archives