NEW DIRECTIONAL CALL PLAYS

Baker Hughes Inc. - BHI - close: 73.78 change: +3.49

Stop Loss: 68.40
Target(s): 79.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Strength in oil and oil stocks has several equities in this sector breaking out form their recent consolidation. BHI has one of the stronger breakouts with a move past several key moving averages today. I am suggesting we buy calls on this rally. More conservative traders might want to wait for a dip near $73.00 or the $72.00 levels as an alternative entry point.

We'll start this trade with a stop loss at $68.40, just under the 100-dma. Our first target is $79.00. We want to keep our position size small to limit our risk. Oil and oil stocks can be a volatile bounch.

-Small Positions - Suggested Positions -

buy the June $75 call (BHI1118F75) current ask $1.66

Annotated Chart:

Entry on May 26th at $ xx.xx
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on May 25th, 2011


Deere & Co - DE - close: 84.71 change: +1.26

Stop Loss: 82.20
Target(s): 89.75
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DE looks pretty bearish with a three-week sell-off in the month of May. Yet shares are oversold and the stock is trying to rebound from technical support at its 200-dma. If the market can build on today's bounce then there is a decent chance DE will see an oversold bounce as well. The last time DE retreated to its 200-dma back in July 2010 it was a great entry point to buy the stock on weakness.

I am suggesting we buy calls now and aim for resistance near $90. We'll set our exit target at $89.75. More nimble traders could aim for the 100-dma or 50-dma overhead. I would keep our position size small to limit our risk.

-Small Positions Only-

- Suggested Positions -

buy the June $90 call (DE1118F90) current ask $0.50

- or -

buy the June $87.50 call (DE1118F87.5) current ask $1.05

Annotated Chart:

Entry on May 26th at $ xx.xx
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 5.3 million
Listed on May 25th, 2011