NEW DIRECTIONAL CALL PLAYS

Biogen Idec Inc. - BIIB - close 53.29 change -0.02 stop 51.15

Biogen Idec Inc. (Biogen Idec) is a global biotechnology company. The products of the Company include AVONEX, RITUXAN, TYSABRI and FUMADERM. The Company’s products address diseases, such as multiple sclerosis (MS), non-Hodgkin’s lymphoma (NHL), rheumatoid arthritis (RA), Crohn’s disease (CD) and psoriasis. In addition to the marketed products, Biogen Idec has a number of product candidates in or near registrational stage development. It includes BG-12, Daclizumab, Fampridine, GA101, Humanized Anti-CD20 MAb (ocrelizumab), Lixiavaptan, Long-Acting rFactor IX and PEGylated interferon beta-1a. (source: company press release or website)

Why We Like It:
BIIB gained +44% between its October 29th low and its March 22nd high. The stock has proceeded to retrace almost 50% of that gain and has found support at about $51.50 (see fib retracements on chart). The stock appears ready to break through its downtrend line that started on March 22 and I suggest traders take advantage of any strength. BIIB also trades at a low 16.1 PE ratio when compared to its peers in biotechnology. In fact, BIIB trades below the S&P 500 average PE of 21.72. Biotechnology can be defensive so I like the play if the stock trades above Friday's high of $54.04. Our stop is $51.15 which is below the 200-day SMA and a recent swing low. Our target is $56.90 with a more aggressive target at $58.90. The stock may experience some resistance with its 20-day SMA just overhead but if there is momentum it should overcome it. Aggressive traders may consider entering the position at current levels but will have to deal with overhead resistance.

Trigger to buy CALLS if BIIB trades to $54.10

Suggested Position: Long JUNE $55.00 CALL, current ask $1.70

Annotated chart:

Entry on May xx at $xx.xx
Earnings Date July 15, 2010 (unconfirmed)
Average Daily Volume: 2.7 million
Listed on May 1, 2010


NEW DIRECTIONAL PUT PLAYS

Sina Corporation - SINA - close 38.70 change +0.45 stop 42.25

Company Description:
SINA Corporation (SINA) is an online media company and mobile value-added services (MVAS) provider in the People’s Republic of China and for Chinese communities worldwide. The Company offers a network of localized Websites and provides services through five business lines: SINA.com (online news and content), SINA Mobile (MVAS), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping). Together these business lines provide an array of services, including region-focused online portals, MVAS, search and directory, interest-based and community-building channels, free e-mail, blog services, audio and video streaming, game community services, classified listings, fee-based services, e-commerce and enterprise e-solutions. The Company generates revenues from online advertising and MVAS offerings, and, to a lesser extent, from search and other fee-based services. (source: company press release or website)

Why We Like It:
SINA is forming a descending triangle on its daily and weekly charts. The stock did find support at $35.25 this past week and bounced nicely. However, I feel the conditions are ripe for this stock trade lower in the coming weeks, especially if we get a sustainable market correction. Its 20-day SMA and 20-week SMA are overhead which should provide good resistance. The 50-period and 200-period SMA's are providing some support for the stock right now, but I feel it is only a matter of time before the stock breaks these SMA's. I suggest readers buy PUTS if SINA trades up to $37.60 or if the stock trades down to $34.95, whichever occurs first. I am going to place a wide initial stop at $42.50 until we know where the position was entered. Once we are triggered the stop will be adjusted. Our first target is $33.25 which is a point where I would tighten stops to protect profits. A more aggressive 2nd target is $30.50. If a market correction gets going I think SINA could easily trade down to this level.

Suggested Position: JUNE $35.00 PUT, current ask $1.60

Annotated chart:

Entry on May xx at $xx.xx
Earnings Date June 9, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010