NEW DIRECTIONAL CALL PLAYS

Blue Nile Inc. - NILE - close: 60.39 change: +0.82 stop: 57.40

Why We Like It:
It would be natural to think that given the tough economy that a jewelry website would be struggling. Yet shares of NILE are up 200% off their 2009 lows. Shares have been consolidating sideways under resistance at $60.00 and technical support at the 100-dma. Today's move is a bullish breakout over $60.00 and its 50-dma. I am suggesting we open small bullish call positions on the breakout. Our first target is $64.90.

Suggested Options:
Unfortunately NILE only has 2010 and 2011 January calls. Given these two choices I'm suggesting the 2010 January calls. My preference is the $60 strike or $65 strike.

BUY CALL JAN 60.00 JWU-AL open interest=2139 current ask $2.70
BUY CALL JAN 65.00 JWU-AM open interest=1404 current ask $0.75

Annotated Chart:

Entry  on  December 21 at $ 60.39
Change since picked:       + 0.00
Earnings Date            02/18/10 (unconfirmed)
Average Daily Volume =        144 thousand 
Listed on  December 21, 2009