Editor's Note:

Tonight's candidates are major components in some of the market's biggest indices. Both are hitting new all-time highs.

- James


NEW DIRECTIONAL CALL PLAYS

International Business Machines - IBM - close: 170.37 change: +1.88

Stop Loss: 164.75
Target(s): 174.00, 179.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 9 weeks
New Positions: Yes, see Trigger

Company Description

Why We Like It:
IBM made headlines a few days ago with a very strong earnings report. The company beat estimates on both the profit number and revenue number. Management then guided higher and eventually raised their dividend. The stock is performing well and closed at new all-time highs today. Aggressive traders may want to buy calls now. I would prefer to wait and buy a dip.

I am suggesting we buy calls on a dip at $167.50. If triggered we'll use a stop loss at $164.75. Our targets are $174.00 and $179.50. FYI: The Point & Figure chart for IBM is bullish with a $208 target.

Buy-the-Dip Trigger @ 167.50

- Suggested Positions -

Buy the June $170 calls (IBM1118F170)

Annotated Chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/19/11
Average Daily Volume = 4.8 million
Listed on April 27th, 2011


United Technologies Corp. - UTX - close: 87.86 change: +0.00

Stop Loss: 83.25
Target(s): 89.50, 94.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
Last week Dow-component UTX beat both the profit estimate and revenue estimate when the company reported earnings. The positive news fueled the stock's rally to a new all-time high. Shares have a bullish trend of higher highs but I don't want to chase it here. UTX looks a little bit overbought. Broken resistance near $86.00 should be new support. I am suggesting a trigger to buy at $86.25. If triggered we'll use a stop loss at $83.25. Our targets are $89.50 and $94.00.

Buy-the-dip Trigger @ $86.25

- Suggested Positions -

Buy the June $90 calls (UTX1118F90)

Annotated Chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011