NEW DIRECTIONAL PUT PLAYS

AvalonBay Comm. - AVB - close: 86.99 change: +0.13 stop: 90.15

Company Description:
AvalonBay Communities, Inc. is in the business of developing, redeveloping, acquiring and managing high-quality apartment communities in the high barrier-to-entry markets of the United States. These markets are located in the Northeast, Mid-Atlantic, Midwest, Pacific Northwest and Northern and Southern California regions of the country. (source: company press release or website)

Why We Like It:
The REIT stocks have had a very impressive run up off their February lows but now the rally is stalling. A few stocks, like AVB, have already formed bearish topping formations. AVB has produced a bearish double top with failed rallies under $90.00 resistance in the last two weeks. I am suggesting we take advantage of any correction. Use a trigger at $85.75 to open bearish positions. Our target is $80.50. The simple 50-dma might be technical support but once the market begins to correct I don't believe the 50-dma will stop it. We should consider this somewhat aggressive since the P&F chart for AVB is still bullish and shares offer a 4% dividend yield, which might attract some capital in a prolonged downturn. Plus, our stop loss is a little wide.

Trigger to buy puts at $85.75

Suggested Position: BUY PUT APRIL $85.00 (AVB 10P85.00) current ask $1.25

Annotated Chart:

Entry on March xxth at $ xx.xx
Earnings Date 04/28/10
Average Daily Volume = 5.67 million
Listed on March 30th, 2010