NEW DIRECTIONAL CALL PLAYS

Lorillard Inc. - LO - close: 69.34 change: +1.57 stop: 67.30

Why We Like It:
The market has been churning sideways the last several weeks and volatility has been contracting. It appears that investors are turning more cautious and looking for stocks with high dividend yields. LO fits that description. Shares have a bullish up trend and the stock currently yields more than 5%. Technically LO has built a bullish (inverse) head-and-shoulders pattern with the neckline at $70.00 resistance.

I'm suggesting readers buy calls at $70.10. Our first target is $74.00. Our second target is $76.75. FYI: The Point & Figure chart is very bullish and currently forecasts a $92 target.

Suggested Options:
I am suggesting the August calls but we plan to exit ahead of the late July earnings report.

BUY CALL AUG 70.00 LO-HN open interest=1126 current ask $2.80
BUY CALL AUG 75.00 LO-HO open interest= 309 current ask $1.10

Annotated Chart:

Picked on     July xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           07/27/09 (unconfirmed)
Average Daily Volume =       1.8 million  
Listed on  July 01, 2009         


NEW DIRECTIONAL PUT PLAYS

Core Labs - CLB - close: 84.53 change: -2.62 stop: 88.30

Why We Like It:
The oversold bounce in the oil service stocks is rolling over. Now with crude oil futures acting like they want to move lower as well the energy sector could be poised for another leg down. CLB under performed its peers with a 3% decline and another failed rally under $88.00. I'm suggesting new put positions now although if we're lucky we'll see a bounce towards $86.00 and we can launch positions there. Our first target is $80.25. Our second target is $76.00. FYI: The P&F chart is bearish and forecasts a $71 target.

Suggested Options:
Earnings are expected on July 22nd. Yet July puts expire after July 17th. Since stocks tend to fall faster than they climb I am listing July puts but readers may want to play August instead. We'll plan to exit ahead of earnings.

BUY PUT JUL 85.00 CLB-SQ open interest= 37  current ask $3.00
BUY PUT JUL 80.00 CLB-SP open interest=432  current ask $1.15

BUY PUT AUG 85.00 CLB-TQ open interest= 25  current ask $5.80
BUY PUT AUG 80.00 CLB-TP open interest= 26  current ask $3.60

Annotated Chart:

Picked on     July 01 at $ 84.53
Change since picked:      + 0.00
Earnings Date           07/22/09 (unconfirmed)
Average Daily Volume =       232 thousand 
Listed on  July 01, 2009