NEW DIRECTIONAL CALL PLAYS

Mead Johnson Nutrition Co. - MJN - close: 70.57 change: +1.50

Stop Loss: 66.99
Target(s): 74.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
This is a relative strength trade. MJN, which makes baby formula, has been performing very well. The sell-off in MJN during the recent market meltdown wasn't that bad. The bounce has lifted shares back toward its all-time highs. Today's show of relative strength leaves MJN back above potential resistance at $70.00.

I am suggesting bullish call positions now but only if MJN and the S&P500 both open positive tomorrow. Nimble traders may want to wait anyway and hope that MJN sees a dip back into the $70.00-69.00 range as their entry point instead. If the trade is opened tomorrow we'll use a stop loss at $66.99.

buy calls if MJN and S&P500 both open positive tomorrow.

- Suggested Positions -

buy the SEP $70 call (MJN1117I70) current ask $2.60

- or -

buy the SEP $75 call (MJN1117I75) current ask $0.74

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on August 16, 2011