NEW DIRECTIONAL CALL PLAYS

Bank of America - BAC - close 15.42 change +0.40 stop 14.65

Company Description:
Bank of America Corporation is a bank holding company, and a financial holding company. The Company is a financial institution, serving individual consumers, small and middle market businesses, large corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Through its banking subsidiaries (the Banks) and various nonbanking subsidiaries throughout the United States and in selected international markets, it provides a range of banking and nonbanking financial services and products through six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Banking, Global Markets, Global Wealth & Investment Management (GWIM), with the remaining operations recorded in All Other. On January 1, 2009, the Company completed the acquisition of Merrill Lynch.

Target(s): 16.05, 16.35, 16.50
Key Support/Resistance Areas: 16.45, 16.10, 15.00
Time Frame: 1 to 2 weeks

Why We Like It:
Details of the FinReg reform bill have been agreed upon in principle by both aisles in Washington so the banks have more certainty. BAC has held a critical support level near $14.75 dating back 12/08 and 1/09. $14.75 is the dashed red line on the weekly chart below and it has been on this chart for quite some time. I believe the bank stocks are going to catch a bid, even if its short lived, so I suggest we take advantage and initiate long positions in BAC. Every time BAC dips down to this level buyers have stepped in creating bottom tails 4 of the past 5 weeks. The stock has also broken through a steep downtrend line and looks like it is forming a rounded bottom on the weekly chart. Our initial stop is $14.65 which is below the most recent lows from early June.

Suggested Position: Buy August $15.00 CALLS, current ask $1.21

Annotated Chart:

Entry on June xx
Earnings Date 7/16/10 (unconfirmed)
Average Daily Volume: 163 million
Listed on 6/26/10


NEW DIRECTIONAL PUT PLAYS

Avon Products - AVP - close 27.49 change +0.04 stop 29.65

Company Description:
Avon Products, Inc. (Avon) is a global manufacturer and marketer of beauty and related products. Its products fall into three product categories: Beauty, Fashion and Home. Beauty consists of color cosmetics, fragrances, skin care and personal care. Fashion consists of fashion jewelry, watches, apparel, footwear and accessories. Home consists of gift and decorative products, house wares, entertainment and leisure products, and children’s and nutritional products. Sales from Health and Wellness products and mark., a global cosmetics brand that focuses on the market for young women, are included among these three categories based on product type. Avon primarily sells its products to the consumers through the direct-selling channel. It has operations in six regions: Latin America; North America; Central & Eastern Europe; Western Europe, Middle East & Africa; Asia Pacific, and China. In March 2010, the Company acquired Liz Earle Beauty Co. Limited.

Target(s): 25.80, 25.25, 24.25
Key Support/Resistance Areas: 29.50, 29.00, 27.50, 25.75, 25.00
Time Frame: Several weeks

Why We Like It:
AVP ran into prior support and its 50-day SMA this past week and is now turning lower. The stock made a lower high and I believe it is due to make a lower low, or at least retest its recent lows near $25.00. If we simply catch a portion of this move we will have a nice profitable trade. Our primary target is $25.25 but I have also listed $25.80 as a target which is an area to consider tightening stops or taking profits. If the selling picks up AVP could go all the way down to the $24.00 area which was a prior support/resistance level from 10/08 and 5/09. Our stop is $29.65 and our time frame is several weeks.

Suggested Position: August $27.00 PUTS, current ask $1.45

Annotated chart:

Entry on June xx
Earnings 7/29/2010 (unconfirmed)
Average Daily Volume: 4.2 million
Listed on June 26, 2010


Penn National Gaming, Inc. - IGT - close 18.35 change -0.11 stop 19.26

Company Description:
Penn National Gaming, Inc. (Penn National) is a diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties. The Company owns or manages 19 facilities in 15 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The Company's properties include Charles Town Entertainment Complex, Hollywood Casino Lawrenceburg, Hollywood Casino at Penn National Race Course, Hollywood Casino Aurora, Empress Casino Hotel, Argosy Casino Riverside, Hollywood Casino Baton Rouge, Argosy Casino Al, Hollywood Casino Tunica, Hollywood Casino Bay St. Louis, Argosy Casino Sioux City, Boomtown Biloxi, Hollywood Slots Hotel and Raceway, Bullwhackers, Black Gold Casino at Zia Park, Raceway Park, Freehold Raceway, Sanford-Orlando Kennel Club, Off-track Wagering Facilities, Account Wagering/Internet Wagering and Casino Rama.

Target(s): 24.05, 23.60, 23.05
Key Support/Resistance Areas: 27.00, 26.45, 26.00, 24.60, 24.00, 23.50, 22.50
Time Frame: 1 to 2 weeks

Why We Like It:
PENN has a primary and secondary downtrend line as overhead resistance along with all of its SMA's which are declining. It is also below a key support resistance area at $26.45 dating back to late 2009. I believe the stock will bounce a tad higher from here before it makes new lows in the coming days/weeks. Let's use a trigger to enter short positions at $25.75. My primary target is $23.60 but I have also listed $24.05 as a target where the stock may find some support. If the selling intensifies PENN will probably trade down to the $22.50 area which is below our most aggressive target. I'm going to place a wide initial stop at $27.60 to account for volatility and will adjust it once we are in the position.

Suggested Position: August $25.00 PUTS, current ask $1.70, estimated ask at entry $1.55

Annotated chart:

Entry on June xx
Earnings 7/26/2010 (unconfirmed)
Average Daily Volume: 738,000
Listed on June 26, 2010