Editor's Note:

The banking sector is really showing some relative strength the last couple of days. Today's candidate could play a little catch up after the November swoon. Keep in mind that the Friday morning jobs report could cause a lot of volatility tomorrow if the numbers are a surprise!

- James


NEW DIRECTIONAL CALL PLAYS

Goldman Sachs - GS - close: 162.50 change: +4.05

Stop Loss: 152.75
Target(s): 169.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Company Description:

Why We Like It:
Financials are on the rebound and appear to be leading the market higher. Shares of GS suffered following word of the trading probes a couple of weeks ago but the sell-off seemed to stall near the 50-dma and the 50% retracement of its October-November rally. If the rally in financials continues I expect GS to catch up! However, we don't want to buy today's big move. Let's use a trigger to buy calls at $160.25. If triggered we'll use a stop loss at $152.75, just under the 200-dma. Our first target is $169.75.

Trigger @ 160.25

Suggested Position: Buy the 2011 January $165 calls (GS1122A165) current ask $5.40

Annotated Chart:

Entry on December xxth at $ xx.xx
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 7.2 million
Listed on December 2nd, 2010