NEW DIRECTIONAL CALL PLAYS

Intl. Bus. Mach. - IBM - close: 121.82 chg: +2.47 stop: 117.75

Why We Like It:
It's taken more than six weeks but IBM has finally broken out over resistance at the $120 level. Volume was more than double the norm and the MACD on the daily chart has produced a new buy signal. I am suggesting readers buy calls on this breakout. Our first target to take profits is at $126.00. Our second target is $129.75. We will plan to exit ahead of IBM's earnings report in mid October.

Suggested Options:
I'm suggesting the October calls. My preference is the $125 strike.

BUY CALL OCT 120 IBM-JD open interest=19081 current ask $4.70
BUY CALL OCT 125 IBM-JE open interest= 8723 current ask $2.15
BUY CALL OCT 130 IBM-JF open interest= 6103 current ask $0.80

Annotated Chart:

Picked on September 16 at $121.82
Change since picked:       + 0.00
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        5.3 million  
Listed on September 16, 2009