Editor's Note:

Scanning the financial sector for potential trades tonight I noticed that some of the foreign banks are showing relative strength. Readers may want to check out BMO, CIB, and TD.


NEW DIRECTIONAL CALL PLAYS

Ishares Financial - IYF - close: 52.17 change: +0.00 stop: 49.99

Why We Like It:
The IYF is an exchange traded fund (ETF) that seeks to mimic the Dow Jones U.S. Financials Index. The banking stocks could turn higher tomorrow based on news out after the bell tonight that Bank of America (BAC) is returning the TARP money back to the government. On a short-term basis the IYF is still trading under a trend of lower highs. I'm suggesting we look for a breakout and use a trigger to buy calls at $52.60. If triggered our multi-week target is $59.00. I would use small positions.

Suggested Options:
February strikes have more open interest than January's so I'm suggesting February calls. My preference is the $55 strike.

BUY CALL FEB 55.00 IYF-BU open interest=229  current ask $1.55

Annotated Chart:

Picked on  December 01 at $ xx.xx <-- TRIGGER 52.60
Change since picked:       + 0.00
Earnings Date            --/--/--
Average Daily Volume =        3.1 million  
Listed on  December 02, 2009