Just a quick note, readers may want to keep an eye on IBM. The stock has a bullish trend of higher lows and the consolidation is narrowing. The stock actually set a new 52-week high today but the $130.00 level could be resistance. Traders should also be aware that the stock reversed at $130.93 back in August 2008. IBM could be a bullish candidate above $130.00 (or better yet 131.00).
NEW DIRECTIONAL CALL PLAYS
UnitedHealth Group - UNH - close: 30.31 change: +1.81 stop: 26.99
Why We Like It:
It looks like the only sector really moving today was healthcare. These stocks were up on expectations that the latest version of the Senate's healthcare reform bill will have a lot less reform in it. Until this bill eventually gets passed and signed into law the healthcare stocks could have a cloud over them. Yet once the big details are known and investors can make decisions without so much uncertainty this group could really move. UNH appears to be out performing its peers. Today's close over significant resistance at the $30.00 mark is bullish.
I'm suggesting small call positions on today's move. Consider this a lottery ticket play. We're either going to win big or lose it all. Options are probably a little expensive given today's volatile move. If you can wait consider waiting a day for the premiums to come in a little bit. Our first target is $34.00. Our longer-term target is $36.00. Our time frame is several weeks. If you buy March calls you might want to think about holding over the late January earnings report.
I'm going to list January calls and March calls. Depending on your risk tolerance pick the month that suits you best.
BUY CALL JAN 32.00 UNH-AL open interest=2859 current ask $0.80
BUY CALL MAR 30.00 UNH-CM open interest=5582 current ask $1.57
Entry on December 10 at $ 30.31
Change since picked: + 0.00
Earnings Date 01/21/10 (unconfirmed)
Average Daily Volume = 819 thousand
Listed on December 10, 2009