NEW DIRECTIONAL CALL PLAYS

Goldman Sachs - GS - close: 164.42 change: -0.60 stop: 159.00

Why We Like It:
Technicals in GS are mixed but I think the stock could surprise traders with another move higher. Shares have been consolidating sideways under the $166.00-166.50 zone last week. I'm suggesting readers open small call positions (smaller than our normal trade size) at $166.75. If triggered our first target is $179.00. FYI: The Point & Figure chart is bullish with a $228 target.

Suggested Options:
This could be a quick two or three week play. Aggressive traders can use September calls, which expire in three weeks. The rest of us can trade October calls.

BUY CALL SEP 165 GPY-IM open interest=10202 current ask $4.15
BUY CALL SEP 170 GPY-IN open interest=10775 current ask $2.10
BUY CALL SEP 175 GPY-IO open interest= 7091 current ask .92

BUY CALL OCT 165 GPY-JM open interest= 4509 current ask $8.10
BUY CALL OCT 170 GPY-JN open interest= 6553 current ask $5.80
BUY CALL OCT 175 GPY-JO open interest= 7200 current ask $4.00

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 166.75
Change since picked:      + 0.00
Earnings Date           10/13/09 (unconfirmed)
Average Daily Volume =       8.8 million  
Listed on August 29, 2009         


United Health - UNH - close: 28.18 change: -0.76 stop: 27.49

Why We Like It:
When Congress comes back from its summer recess and it becomes more apparent that the government-run healthcare bill is dead then private health insurance stocks could soar. UNH already has a bullish bias and the Point & Figure chart has a triple-top breakout buy signal with a $45 target.

I am suggesting a trigger to buy calls at $30.55. If triggered our first target to take profits is $34.50. Our second target is $37.50. My time frame is about eight weeks.

Suggested Options:
I am suggesting the October or December calls. Options are available at $1.00 strikes but $34s are the highest Octobers currently available.

BUY CALL OCT 30.00 UNH-JF open interest=16214 current ask $1.35
BUY CALL OCT 32.00 UNH-JL open interest=    1 current ask .75
BUY CALL OCT 34.00 UNH-JB open interest=   74 current ask .40

BUY CALL DEC 30.00 UNH-LF open interest=6764 current ask $2.30
BUY CALL DEC 32.00 UNH-LL open interest=1427 current ask $1.55
BUY CALL DEC 35.00 UMH-LG open interest= 974 current ask .85

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 30.55
Change since picked:      + 0.00
Earnings Date           10/20/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 29, 2009         


Valmont Ind. - VMI - close: 84.84 change: -1.30 stop: 79.45

Why We Like It:
VMI is a Nebraska-based metal fabricator. The stock has been showing relative strength. We want to buy calls on a dip at $82.00 (actually anywhere in the 82.00-80.00 zone). We're going to try a tight stop loss at $79.45. If triggered at $82.00 our first target is $88.00. I'm setting a second target at $94.00 but that might be a little too optimistic. Currently the Point & Figure chart is bullish with a $104 target.

Suggested Options:
Our time frame is several weeks so I'm suggesting the October calls. Readers may want to trade Decembers since they have more open interest.

BUY CALL OCT 80.00 VMI-JP open interest= 12  current ask $8.40
BUY CALL OCT 85.00 VMI-JQ open interest=  0  current ask $5.50
BUY CALL OCT 90.00 VMI-JR open interest= 21  current ask $3.40

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 82.00
Change since picked:      + 0.00
Earnings Date           10/15/09 (unconfirmed)
Average Daily Volume =       315 thousand 
Listed on August 29, 2009