NEW DIRECTIONAL CALL PLAYS

DineEquity, Inc. - DIN - close: 58.81 change: +1.05

Stop Loss: 54.90
Target(s): 64.00, 68.50
Current Option Gain/Loss: + 0.0%
Time Frame: 7 trading days
New Positions: Yes, see below

Company Description

Why We Like It:
DIN's claim to fame are their Applebee's and IHOP restaurants. While I blame IHOP's chocolate chip pancakes for the rally in DIN it's actually bulls bidding up the restaurant names on stronger expectations for consumer spending. Or maybe it's not the bulls, maybe it's the bears who keep getting squeezed. Investors should take note that the most recent data (although not really very recent any more) listed short interest in DIN at 29% of the 14.9 million share float. The combination of very high short interest and an extremely low float is definitely a recipe for a short squeeze.

DIN could be ready for some more short covering. Traders bought the dip at DIN's rising 10-dma on Friday. A breakout past short-term resistance at $60.00 could fuel a run at the $70 area. Unfortunately, we only have a few days. DIN is due to report earnings on March 3rd and we do not want to hold over the announcement.

I am suggesting bullish positions now. I consider this a slightly more aggressive trade because our initial stop loss is a little wide (at $54.90). Plus, we only have seven trading days. Buy calls now. Our exit targets are $64.00 and $68.50.

The Point & Figure chart for DIN is bullish with a $92 target.

Open Bullish Positions Now!

- Suggested Positions -

Buy the March $60 calls (DIN1119C60) current ask $2.70

Annotated Chart:

Entry on February 22nd at $ xx.xx
Earnings Date 03/03/11 (confirmed)
Average Daily Volume = 150 thousand
Listed on February 19th, 2010


Lear Corp. - LEA - close: 111.92 change: +1.06

Stop Loss: 107.45
Target(s): 114.95, 119.00
Current Option Gain/Loss: + 0.0%, and + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Vehicle sales are slowly improving here in the U.S. but overseas in countries like China and India sales are surging. That should be strong business for auto parts makers like Lear. The stock is in a nice up trend and appears to be in the process of breaking out higher after a six-week sideways consolidation. The stock looks pretty good considering the recent earnings report. On Feb. 1st LEA blew away the estimates but then guided lower for 2011. This guidance news temporarily pushed the stock down to its rising 50-dma before investors bought the dip.

I am suggesting bullish call positions now. We'll use a stop loss at $107.45, just under short-term technical support at the 30-dma. More aggressive traders could keep their stop loss under the 50-dma instead. Our targets are $114.95 and $119.00.

Readers need to take note that LEA has a 2-for-1 stock split coming up and will start trading adjusted for the split on March 18th. When the split occurs, instead of having one $120 call contract you'll have two $60 call contracts with a new symbol and an adjusted value. FYI: The Point & Figure chart for LEA is bullish with a $140 target.

Open Bullish Positions now!

- Suggested Positions -

Buy the March $115 calls (LEA1119C115) current ask $2.65

- or -

Buy the Jun $120 calls (LEA1118F120) current ask $5.50

Annotated Chart:

Entry on February 22nd at $ xx.xx
Earnings Date 05/05/11 (unconfirmed)
Average Daily Volume = 747 thousand
Listed on February 19th, 2010


NEW DIRECTIONAL PUT PLAYS

Freeport-McMoran - FCX - close: 52.95 change: -2.29

Stop Loss: 56.55
Target(s): 50.25, 46.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Commodities are in breakout mode and yet FCX is poised to breakdown. FCX is one of the biggest and most well known miners on the planet. Right now copper is trading near its highs, gold is within striking distance of its highs, silver is hitting new 30-year highs, but shares of FCX are rolling over. The stock is currently testing support near the 100-dma and the $52.50 area. More aggressive traders may want to open bearish positions now. I suspect the stock will see one more bounce toward overhead resistance at its 30-dma. I am suggesting we buy puts at $54.50. If triggered we'll use a stop loss at $56.55. Our downside targets are $50.25 and $46.50.

Trigger @ 54.50

- Suggested Positions -

Buy the March $50 PUTS (FCX1119O50) current ask $1.25

- or -

Buy the May $50 PUTS (FCX1121Q50) current ask $3.25

Annotated Chart:

Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 14.4 million
Listed on February 19th, 2010