NEW DIRECTIONAL PUT PLAYS

Bank of Montreal - BMO - close: 47.37 change: -1.18 stop: 51.25

Why We Like It:
As the banking sector corrects we're seeing more and more stocks break support. BMO has delivered a stellar performance off its 2009 lows but shares ran into resistance near $51.00. Now the stock is starting to breakdown. I am suggesting put positions now. I'd start with half a position now and if we see another failed rally near $50 we can double down and buy the second half.

There is potential technical support at the 100-dma. Our first target is $42.75. Our second target is $40.50.

Suggested Options:
I am suggesting the December puts. We'll plan to exit ahead of the late November earnings report. My preferred strike is the $45.

BUY PUT DEC 45.00 BMO-XI open interest=16282 current ask $1.80

Annotated Chart:

Picked on   October 27 at $ 47.37
Change since picked:       + 0.00
Earnings Date            11/24/09 (unconfirmed)
Average Daily Volume =        539 thousand 
Listed on   October 27, 2009         


Research In Motion - RIMM - close: 63.75 change: -1.93 stop: 67.55

Why We Like It:
RIMM has been under performing ever since its large gap down back in September. Since then the stock has been drifting sideways in a $65-70 trading range. Today's breakdown under support at $65.00 and its simple 200-dma looks like a very clear bearish breakdown. However, the decline on Tuesday stalled at its July 2009 lows. The low today was $63.37. The low in July was $63.36.

I am suggesting we wait for confirmation. Let's use a trigger at $62.99 to buy puts. If triggered our first target is $58.55. Our second target is $53.00. Currently the P&F chart is bearish with a $41 target.

Suggested Options:
I am suggesting the December puts. I prefer the $60 strike.

BUY PUT DEC 60.00 RFY-XL open interest=15709 current ask $2.84

Annotated Chart:

Picked on   October xx at $ xx.xx <-- TRIGGER @ 62.99
Change since picked:       + 0.00
Earnings Date            12/17/09 (unconfirmed)
Average Daily Volume =       17.9 million  
Listed on   October 26, 2009