NEW DIRECTIONAL CALL PLAYS

Boeing Co. - BA - close: 65.06 change: +0.45

Stop Loss: 62.75
Target(s): 69.00, 72.25
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
BA has been constantly plagued with delays to their new Dreamliner planes they're trying to bring to market. Yet in spite of all the negative headlines the company is still doing a brisk business. While the stock has underperformed the broad market averages BA still has a pattern of higher lows. Aggressive traders could buy calls now. I want to see a little bit more confirmation since there is short-term resistance near $65.00. I'm suggesting a trigger to buy calls at $65.50. We'll use a stop loss under this past week's low at $62.75. There is additional resistance at the 200-dma near the $67 level. We should consider this a higher-risk aggressive trade. Keep your position size small. Our first target is $69.00. Our second target is $72.25.

Trigger @ 65.50

- Suggested Positions -

Buy the 2011 January 67.50 calls (BA1122a67.5) current ask $0.64

Buy the 2011 February $70.00 calls (BA1119B70) current ask $0.77

Annotated Chart:

Entry on December xxth at $ xx.xx
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume = 5.3 million
Listed on December 25th, 2010


Baxter Intl. Inc. - BAX - close: 51.09 change: +0.45

Stop Loss: 49.90
Target(s): 55.50, 57.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Look at a daily chart of BAX and one of the first things you notice is the huge gap down back in April of this year. The company issued an earnings warning and investors punished the stock painfully. As is typically the case the bottom and top of a big gap move like that tends to be resistance. BAX has been testing resistance at the bottom of the gap near $52.00. The stock looks ready to breakout into this gap area and could see a strong move higher toward the top of the gap.

I am suggesting a trigger to buy calls at $52.55. If triggered our first target is $55.75. Our second target is $57.50. I would consider this a higher-risk trade. If you look at the weekly chart of BAX you can draw a trendline across the long-term highs and the trend is lower. BAX could see additional resistance near $55.00. Keep your position size small.

Trigger @ 52.55

- Suggested Positions -

Buy the 2011 February $55 calls (BAX1119B55)

Annotated Chart:

Entry on December xxth at $ xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 3.3 million
Listed on December 25th, 2010