NEW DIRECTIONAL PUT PLAYS
Green Mountain Coffee Roasters - GMCR - cls: 65.86 chg: -2.94 stop: 71.05
Why We Like It:
Looking back over 2009 shares of GMCR have left a bloody trail of dead bears in its path. Time and time again the stock has shot higher with short squeeze after short squeeze. Now it finally looks like the upward momentum has reversed. The peak in November is creating a new lower high. Investors are selling the stock following its recent earnings report several days ago.
GMCR is now testing support near $65.00 and its 100-dma. A breakdown under this level should forecast a much deeper decline. The Point & Figure chart has turned bearish and is targeting a drop toward $55.00. I am suggesting traders buy puts on GMCR if shares hit $64.75. If triggered our first target is $60.25. Our second target is $55.50. This is going to be a very aggressive play. GMCR still has extremely high short interest. The latest data listed short interest at more than 32% of the relatively small 37 million-share float. I would use small positions given the risk.
Stocks drop faster than they climb. I'm suggesting December puts. My preference is the $60 strike.
BUY PUT DEC 60.00 QGM-XL open interest=6750 current ask $1.50
Picked on November xx at $ xx.xx <-- TRIGGER @ 64.75
Change since picked: + 0.00
Earnings Date 01/28/10 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on November 18, 2009