NEW DIRECTIONAL PUT PLAYS

Becton, Dickinson and Company - BDX - close: 84.92 change: -1.38

Stop Loss: 87.15
Target(s): 80.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
BDX is in the healthcare sector but the stock's very impressive rally from March through May has broken. Now shares are falling through multiple layers of support. I do want to keep our position size small because the market's decline is now six weeks old and stocks could see an oversold bounce even though the trend is down.

BDX just closed under the $85.00 mark and its 50-dma on Friday. I am suggesting small bearish put positions now. We'll use a stop loss at $87.15. Our target is $80.50. We'll try and keep our target just above the 200-dma.

NOTE: Just because the July $80 puts are inexpensive don't go overboard. Keep your position size small.

- Suggested (SMALL) Positions -

buy the July $80 put (BDX1116S80) current ask $0.55

Annotated Chart:

Entry on June 13th at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on June 11th, 2011


Transocean Ltd. - RIG - close: 62.85 change: -2.44

Stop Loss: 66.15
Target(s): 58.00, 55.25
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
RIG has already exceeded the bearish target from the head-and-shoulders pattern formed over the first quarter of this year. Now after spending a few weeks consolidating under resistance at $70 and the 200-dma shares are accelerating lower. You could argue that RIG is a little bit oversold here so we want to keep our position size small to limit our risk.

On a short-term basis the oversold bounce on Thursday failed at resistance near $66.00 (old support). I'm suggesting we buy puts now with a stop loss at $66.15. More conservative traders may want to take profits early near $60.00 since the $60 level might be support but I'm setting our targets at $58.00 and $55.25.

- Suggested (SMALL) Positions -

buy the July $60 puts (RIG1116S60) current ask $1.46

Annotated Chart:

Entry on June 13th at $ xx.xx
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on June 11th, 2011