NEW DIRECTIONAL PUT PLAYS

General Dynamic - GD - close: 66.40 change: -1.13

Stop Loss: 68.25
Target(s): 61.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
GD is an aerospace and defense contractor. The stock has been sinking the last few weeks. Now it's on the verge of breaking down under technical support at its simple 200-dma. I am suggesting we buy puts if GD trades at $65.75 or lower. More conservative traders may want to wait for a drop under $65.00 instead. Our target is $61.50. FYI: The Point & Figure chart for GD is bearish with a $60 target.

Trigger @ 65.75

- Suggested Positions -

buy the Jun $65 PUT (GD1216R65) current ask $1.30

Annotated Chart:

Entry on May xx at $ xx.xx
Earnings Date 07/25/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 09, 2012


Humana Inc. - HUM - close: 79.11 change: -2.28

Stop Loss: 82.25
Target(s): 71.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of HUM were already looking weak following the post-earnings sell-off from late April. Now shares are breaking down under support near $80 and its 300-dma thanks to an analyst downgrade this morning.

I am suggesting bearish put positions at the open tomorrow. Our target is $71.50. FYI: The Point & Figure chart for HUM is bearish with a $69 target.

- Suggested Positions -

buy the Jun $80 put (HUM1216R80) current ask $3.30

- or -

buy the Jun $75 put (HUM1216R75) current ask $1.35

Annotated Chart:

Entry on May xx at $ xx.xx
Earnings Date 07/30/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on May 09, 2012