Editor's Note:
I listed ESS as a trading idea in the weekend letter.

- James


NEW DIRECTIONAL CALL PLAYS

Essex Property Trust - ESS - close: 115.24 change: -1.70

Stop Loss: 111.80
Target(s): 119.50, 124.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes

Company Description:
Essex Property Trust, Inc., located in Palo Alto, California and traded on the New York Stock Exchange (ESS), is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 142 apartment communities with an additional 3 properties in various stages of development (source: company press release or website)

Why We Like It:
It might be a cynical outlook but given all the foreclosures on the west coast those families have to live somewhere. Shares of this apartment REIT have been performing well. The stock has a very consistent trend of higher lows and I'm suggesting we buy the next dip near that trendline. At current levels that means buying calls on a dip at $114.00. If triggered we'll use a tight stop loss at $111.80 (you might be able to get away with $112.40 as an alternative stop). Our first target is $119.50 and our second target is $124.50. Keep your position size small!

Suggested Position:

Ouch! The option spreads are wide on this stock. I am suggesting very small positions given this handicap.

Trigger @ $114.00

BUY the 2011 January $120 calls (symbol: ESS1122A120)

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 02/02/11
Average Daily Volume = 209 thousand
Listed on November 8th, 2010