NEW DIRECTIONAL CALL PLAYS

CF Industries - CF - close: 83.12 change: +1.33 stop: 79.75

Why We Like It:
The large fertilizer-chemical names are starting to look bullish again. CF is one of them and shares are drifting higher toward resistance in the $84.50-85.00 zone. I am suggesting a trigger to launch small call positions at $85.25. CF and this sector can be a volatile bunch so we want to trade smaller position sizes.

If triggered at $85.25 our stop loss is at $79.75 and our first target is $89.85. Our second target is $97.50. My time frame is four to six weeks. FYI: A breakout over $85.00 would produce a new triple-top breakout buy signal on the Point & Figure chart.

Trading note: Investors should note that Agrium (AGU) has been trying to buy CF for months. CF has been trying to buy Terra Industries (TRA) for months. Nobody is selling because they claim the offers don't fully value the company (a.k.a. it's not enough money). There is potential upside if AGU finally makes a high enough offer or someone else steps in. There is potential downside if CF makes too high a bid for TRA and the market thinks they overpaid. This M&A merger dance hasn't affected the stock much lately but it is a risk either direction.

Suggested Options:
I am suggesting the September or October calls.

BUY CALL SEP 85.00 CF-IQ open interest=2276 current ask $2.90
BUY CALL SEP 90.00 CF-IR open interest=2515 current ask $1.20

BUY CALL OCT 85.00 CF-JQ open interest=   0 current ask $4.50
BUY CALL OCT 90.00 CF-JR open interest=   0 current ask $2.50
BUY CALL OCT 95.00 CF-JS open interest=   0 current ask $1.30

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER 85.25
Change since picked:      + 0.00
Earnings Date           10/27/09 (unconfirmed)
Average Daily Volume =       872 thousand 
Listed on August 24, 2009         


Newmarket Corp. - NEU - close: 83.54 change: +4.42 stop: 76.49

Why We Like It:
NEU is a specialty chemical company that has broken out over major resistance near $80.00. The next level of significant resistance appears to be the $88-93 zone. I am suggesting a two-part strategy. Buy half our call position now at $83.54 and we'll buy the second half on a dip back to $80.50.

Our first target to take profits is at $88.50. Our second and final target is $92.50. FYI: More conservative traders may want to consider a stop loss closer to $78.50-79.00 instead.

Suggested Options:
I am suggesting the September or October calls. FYI: I currently don't see any October $90 strikes available. They should show up soon.

BUY CALL SEP 80.00 NEU-IP open interest=1141 current ask $6.70
BUY CALL SEP 85.00 NEU-IQ open interest= 225 current ask $3.90
BUY CALL SEP 90.00 NEU-IR open interest= 227 current ask $2.10

BUY CALL OCT 85.00 NEU-JQ open interest=   0 current ask $5.80

Annotated Chart:

Picked on   August 24 at $ 83.54 <- buy half now 8/24/09
Picked on   August xx at $ xx.xx <-- TRIGGER @ 80.50 for 2nd half
Change since picked:      + 0.00
Earnings Date           10/27/09 (unconfirmed)
Average Daily Volume =       141 thousand 
Listed on August 24, 2009