NEW DIRECTIONAL CALL PLAYS

J.C.Penney - JCP - close: 30.15 change: +0.69 stop: 28.40

Why We Like It:
Retail stocks have been surprisingly strong as investors completely ignore signs that consumers are saving more and spending less. The GDP report on Friday showed a 1.2% drop in consumer spending. You'd think investors would be worried about the back-to-school shopping season. Yet shares of JCP have broken out from a pennant formation and look poised to rally higher.

I want to see a little more confirmation so I'm suggesting a trigger to buy calls at $30.51. If triggered our first target is $32.75. Our second target is $34.90. I would be tempted to aim higher but JCP is due to report earnings on August 14th and we do not want to hold positions over the announcement. Traders should consider this a more aggressive bullish play with the market overbought. I would trade half your normal position size.

Suggested Options:
I'm suggesting the August calls. Strikes are available almost every $1.00.

BUY CALL AUG 30.00 HZP-HF open interest=6028 current ask $1.50
BUY CALL AUG 32.50 HZP-HD open interest=4418 current ask .55

Annotated Chart:

Picked on   August xx at $ xx.xx <-- see TRIGGER @ 30.51
Change since picked:      + 0.00
Earnings Date           08/14/09 (confirmed)
Average Daily Volume =       5.5 million  
Listed on August 01, 2009         


Lorillard Inc. - LO - close: 73.72 change: +0.64 stop: 69.45

Why We Like It:
We played LO as a call candidate in July but closed the play to avoid holding over earnings. Earnings were released on July 27th and the company beat estimates by 28 cents with a profit of $1.71 per share. Revenues just blew past the estimates with a 42% surge to $1.52 billion for the quarter. Management also announced a $750 million stock buy back program. Now that earnings are out of the way we want to jump back on board. Broken resistance near $70.00 should be support.

Buy calls on a dip in the $70.50-70.00 zone. Our first target is $74.50. Our second target is $77.00.

Suggested Options:
I am suggesting the September calls.

BUY CALL SEP 70.00 LO-IN open interest=7415 current ask $4.90
BUY CALL SEP 75.00 LO-IO open interest=8580 current ask $2.00

Annotated Chart:

Picked on   August xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           07/27/09 (confirmed)
Average Daily Volume =       1.5 million  
Listed on August 01, 2009         


NEW DIRECTIONAL PUT PLAYS

Genzyme - GENZ - close: 51.89 change: -4.36 stop: 52.55

Why We Like It:
If at first you don't succeed, try, try again. We tried playing GENZ as a bearish candidate in July but the market's recent rally was just too strong and shares rallied past resistance. It looks like the tone has changed again with Friday's decline wiping out several days worth of gains.

The drop was fueled by news that the FDA is going to re-inspect a GENZ factory in Boston to make sure any issues regarding a viral contamination have been addressed and corrected. Technically GENZ looks bearish with a head-and-shoulders pattern. This time we're going to wait for the breakdown. The plan is to buy puts at $49.90. If triggered our first target to take profits is $45.25. Our second target is $41.00. The P&F chart is bearish with a $40 target.

Suggested Options:
I am suggesting August or September puts. Just remember that August options expire in three weeks.

BUY PUT AUG 50.00 GZQ-TJ open interest=5388 current ask $1.10
BUY PUT AUG 47.50 GZQ-TW open interest=1035 current ask .55

BUY PUT SEP 50.00 GZQ-UJ open interest= 196 current ask $1.90
BUY PUT SEP 47.50 GZQ-UW open interest= 642 current ask $1.15
BUY PUT SEP 45.00 GZQ-UI open interest= 104 current ask .65

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 49.90
Change since picked:      + 0.00
Earnings Date           10/22/09 (unconfirmed)
Average Daily Volume =       3.9 million  
Listed on August 01, 2009         


VistaPrint - VPRT - close: 41.25 change: -1.89 stop: 42.05

Why We Like It:
The rally in VPRT is running out of gas. The company just reported earnings last week. The headline number was better than expected but management lowered their forecasts. Shares have short-term support near $39.00. I'm suggesting a trigger to buy puts at $38.80. If triggered our first target is $35.20. Our second target is $31.50.

Suggested Options:
I am suggesting August or September puts. Just remember that August options expire in three weeks.

BUY PUT AUG 40.00 QPY-TH open interest=6578 current ask $1.25
BUY PUT AUG 35.00 QPY-TG open interest=1114 current ask .25

BUY PUT SEP 40.00 QPY-UH open interest= 525 current ask $2.30
BUY PUT SEP 35.00 QPY-UG open interest= 972 current ask .80

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 38.80
Change since picked:      + 0.00
Earnings Date           07/30/09 (confirmed)
Average Daily Volume =       1.3 million  
Listed on August 01, 2009