NEW DIRECTIONAL CALL PLAYS

UltraShort Treasury ETF - TBT - close: 47.89 change: +1.07 stop: 44.40

Why We Like It:
The TBT is an inverse ETF that tries to deliver twice the inverse of the daily performance of the Barclays Capital 20+ Year U.S. Treasury index. What does that mean? It means the TBT goes up as bond yields go up, which is a trend that should continue (yields going up).

I am suggesting half a position now and we'll open the second half if the TBT dips to $45.50 again. Our first target is $54.50. Our second target is $58.50. Our time frame is several weeks (possibly year end).

Note: This same trade in reverse is puts on the TLT. The TLT will go down as yields rise.

Suggested Options:
I am suggesting the January 2010 calls. My preference is the $50 strike.

BUY CALL JAN 50.00 TBT-AX open interest=8010 current ask $2.25

Annotated Chart:

Picked on   October 26 at $ 47.89 (1/2 position)
Change since picked:       + 0.00
Earnings Date            --/--/--
Average Daily Volume =        6.0 million  
Listed on   October 26, 2009         


NEW DIRECTIONAL PUT PLAYS

FUQI Intl. - FUQI - close: 25.28 change: -0.89 stop: 27.55

Why We Like It:
FUQI is a Chinese jewelry producer and sales outlet. The stock exploded higher over the summer but it's begun to correct. Shares are testing support near $25.00. The P&F chart has reversed and currently points to an $18 target. There is potential support at the 100-dma but I suspect the stock retreats toward $20.

I'm suggesting a trigger to buy puts at $24.75. If triggered our target is $20.50. We will plan to exit ahead of the mid November earnings report so our time frame is less than three weeks. This is an aggressive trade on a volatile stock. I'm suggesting small positions.

I want to repeat that this is an aggressive, higher-risk trade. The most recent data lists short interest at 27% of the small 27 million-share float. That's a big recipe for a short squeeze (which probably fueled the rally to begin with).

Suggested Options:
I am suggesting the November puts. My preference is for the $24 strike.

BUY PUT NOV 24.00 QXF-WY open interest=1266 current ask $1.25

Annotated Chart:

Picked on   October xx at $ xx.xx <-- TRIGGER @ 24.75
Change since picked:       + 0.00
Earnings Date            11/12/09 (unconfirmed)
Average Daily Volume =        1.3 million  
Listed on   October 26, 2009