Shares of this specialty chemical company have seen their oversold bounce fail.


NEW DIRECTIONAL PUT PLAYS

Lubrizol Corp. - LZ - close: 107.68 change: -1.20

Stop Loss: 110.25
Target(s): 100.50
Current Option Gain/Loss: +0.00%
Time Frame: 3 to 4 weeks
New Positions: Yes

Company Description:
The Lubrizol Corporation (NYSE:LZ - News) is an innovative specialty chemical company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology and performance coatings in the form of specialty resins and additives. Lubrizol's industry-leading technologies in additives, ingredients and compounds enhance the quality, performance and value of customers' products, while reducing their environmental impact. With headquarters in Wickliffe, Ohio, The Lubrizol Corporation owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 6,800 employees worldwide. Revenues for 2009 were $4.6 billion. (source: company press release or website)

Why We Like It:
Shares of this specialty chemical company soared to new all-time highs back in October. When the company reported earnings they smashed the earnings estimate and management guided higher. Yet revenues were a miss. The stock was hammered on then news. Now LZ has fought its way back toward the $110 level, which seems to be new resistance. I'm not convinced the correction is over and it looks like LZ could retest support near $100 again.

I am suggesting bearish positions now. We'll use a stop loss just above resistance. Our target is $100.50. More aggressive traders could aim for $97 or even the 200-dma.

Suggested Position: Buy the December $105 puts (symbol:LZ1018X105) current ask $3.10

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume = 525 thousand
Listed on November 9th, 2010