NEW DIRECTIONAL CALL PLAYS

FUQI Intl. - FUQI - close: 19.42 change: +1.47 stop: 18.45

Why We Like It:
I may doubt the strength of this rally but that doesn't mean I want to miss out on it. FUQI is a Chinese jewelry maker and if shares can breakout past resistance near $20.00 and its 50-dma I think it will soar. I'm suggesting very small bullish positions if FUQI hits $20.51. If we are triggered our target is $24.75. This is an aggressive, higher-risk trade.

Suggested Options:
I'm suggesting the February calls. My preference is the $22.50 strike.

This is the CBOE's new format:

2010 (call) Feb 22.50 QXF1020B22.5 open interest= 88 current ask $0.75

Annotated Chart:

Entry  on   January xx at $ xx.xx <-- TRIGGER @ 20.51  (small positions 1/4)
Change since picked:       + 0.00
Earnings Date            03/31/10 (unconfirmed)
Average Daily Volume =        1.0 million  
Listed on   January 04, 2010         


J.P.Morgan Chase - JPM - close: 42.85 change: +1.23 stop: 41.40

Why We Like It:
The rally in the banks was very important to the market's widespread gains. This sector has been under performing for weeks and if financials can rebound then the broader market's rally may not be over yet. JPM displayed relative strength with a 2.9% gain and a breakout past its 50-dma. I am suggesting small bullish positions. Chasing this move feels aggressive so I want to keep positions small. Our target is $46.90 near the October 2009 highs. However, that's a very aggressive target since we less than two weeks before JPM reports earnings. We may want to consider holding over the earnings report. The yield curve has been very, very favorable toward banks the last few months and JPM's earnings could be stronger than expected.

Suggested Options:
I am suggesting the January calls or the February calls. If you're going to consider holding over JPM's earnings report then you'll want February calls. If you're not going to hold over earnings then use the January calls. My preference is the $42 or $45 strikes.

BUY CALL JAN 42.00 JPM-AU open interest=21467 current ask $1.51
-or-
BUY CALL FEB 45.00 JPM-BI open interest=5294 current ask $0.89

Annotated Chart:

Entry  on   January 04 at $ 42.85 (small positions 1/2)
Change since picked:       + 0.00
Earnings Date            01/15/10 (confirmed)
Average Daily Volume =       31.6 million  
Listed on   January 04, 2010