NEW DIRECTIONAL CALL PLAYS

Dril-Quip, Inc. - DRQ - close: 47.83 change: +1.16 stop: 45.90

Why We Like It:
Right now most of our unopened plays with triggers are buy-the-dip plays. DRQ, an oil services company, is showing so much strength that the stock is poised to breakout to new 2009 highs. I'm suggesting a trigger to buy calls at $48.50. There is potential round-number resistance at the $50.00 mark so I suggest smaller than normal position sizes.

If triggered our first target is $53.00. Our second target is $57.50. The Point & Figure chart is bullish with a $65.00 target.

Suggested Options:
I am suggesting the November calls. My preference would be the $50 strike.

BUY CALL NOV 50.00 DRQ-KJ open interest= 565 current ask $2.50

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 48.50
Change since picked:       + 0.00
Earnings Date            11/10/09 (unconfirmed)
Average Daily Volume =        282 thousand 
Listed on September 26, 2009         


Illumina Inc. - ILMN - close: 40.66 change: +0.30 stop: 37.45

Why We Like It:
ILMN is a biotech stock that's been showing a lot of relative strength. The bounce from its intraday low on Thursday looks like a new bullish entry point. However, I suspect shares may dip again if the market continues to slip. That's why instead of buying calls now I'm suggesting readers use a trigger at $39.10. We'll use a stop loss at $37.45.

It's worth noting that rival biotech firm Life Technologies Corp. (LIFE) filed a patent infringement lawsuit against ILMN just this past week against ILMN's genome analyzer system. The stock didn't react much so I don't see it as a challenge to the trend higher yet.

If we are triggered at $39.10 our first target is $42.40. Our second target is $46.75 but that's probably being optimistic given our time frame. ILMN reports earnings in less than four weeks. We'll plan to exit before earnings are announced.

Suggested Options:
Nimble traders could use October calls. I'm suggesting November calls. My preference is the November $40 strike.

BUY CALL NOV 40.00 IQA-KH open interest=5228 current ask $3.30

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 39.10
Change since picked:       + 0.00
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =        1.6 million  
Listed on September 26, 2009