When tech stocks are breaking out we should pay attention to those that are breaking down.


NEW DIRECTIONAL PUT PLAYS

SWI - Solar Winds - $18.30

Company Description:

SolarWinds, Inc. (SolarWinds) designs, develops, markets, sells and supports enterprise information technology (IT), management software to IT professionals in organizations of all sizes. The Company’s offerings ranges from individual software tools to software products, which solve problems faced every day by IT professionals and help to enable management of networks and IT environments. The Company’s customers include small and mid-size businesses, enterprises, and local, state and federal government entities, which have purchased one or more of the products. SolarWinds offer a portfolio of products for network management and products for IT management. It includes free tools, tools for engineers, entry-level monitoring product, and enterprise-class network and IT management products.

Why We Like It:
Solar Winds is a tech stock that is declining in a bullish tech market. The stock has been going downhill for a couple months and is on the verge of breaking critical support.

Suggested Options:
I am looking for support to break and I am recommending the June $17.50 put. I wanted to recommend the April put but we don't normally recommend options with little or no open interest. The April cycle is new and it will need a week or so to develop open interest so I went with the June. I am going to list both but the official recommendation is the June strike.

BUY PUT APR 17.50 (SWI 10P1750) open interest= zero,  current ask $.85 
BUY PUT JUN 17.50 (SWI 10R1750) open interest= 899, current ask $1.55

Annotated Chart:

Entry  on  March 3rd at $ 00.00 
Change since picked:       + 0.00
Earnings Date            02/8/10 
Average Daily Volume =  600K  
Listed on  March 2nd, 2010