NEW DIRECTIONAL CALL PLAYS

Int'l Business Machines - IBM - close 125.77 change +2.64 stop 121.90

Company Description:
International Business Machines Corporation (IBM) is an information technology (IT) company. The Company operates under five segments: Global Technology Services segment (GTS); Global Business Services segment (GBS); Software segment; System and Technology segment, and Global Financing segment.

Target(s): 127.75, 129.90
Key Support/Resistance Areas: 132.00, 128.00, 127,00, 123.00
Time Frame: 1 to 2 weeks

Why We Like It:
We closed a short winner in IBM a couple of weeks ago and we are now back with a long play. I suggest readers take advantage of the 9 point wide channel the stock has traded within over the past 4 to 5 months. Today's reversal in the broader market was either a huge head fake or the start of a bigger rally. I think we go higher before breaking the recent lows. Let's use a trigger of $125.25 to initiate long positions and target a $2.50 to $4.50 move higher over the next one to two weeks. If triggered and our two targets are reached the profit projection is +45% and +75%, respectively. Our stop is below the recent swing low at $121.90.

Suggested Position: Buy October $130.00 CALL, current ask $1.70, estimated ask at entry $1.55

Annotated daily chart:

Entry on September xx
Earnings 10/18/2010 (unconfirmed)
Average Daily Volume: 5.5 million
Listed on August 28, 2010