NEW DIRECTIONAL CALL PLAYS

SolarWinds, Inc. - SWI - close: 47.68 change: -0.04

Stop Loss: 45.75
Target(s): 52.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
SWI is in the application software industry. Shares have been consolidating sideways the last few weeks as it digests the late April surge higher. Now SWI looks poised to run higher again.

If both SWI and the S&P 500 index open positive on Monday morning, then we'll open positions at the open. Otherwise, we'll use a trigger at $48.55 to buy calls. We'll try and limit our risk with a stop at $45.75. We do need to keep a wary eye on the $50.00 level, which could be round-number resistance but I am setting our exit target at $52.50.

*see entry details above*

- Suggested Positions -

buy the Jun $50 call (SWI1216F50) current ask $1.20

- or -

buy the Jul $50 call (SWI1221G50) current ask $2.50

Annotated Chart:

Entry on May xx at $ xx.xx
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on May 26, 2012


NEW DIRECTIONAL PUT PLAYS

Cummins Inc. - CMI - close: 98.95 change: -1.31

Stop Loss: 102.55
Target(s): 92.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of this engine maker are in a bearish trend. The stock's oversold bounce just failed at technical resistance at the simple 200-dma. This failed rally looks like an entry point to buy puts.

I am suggesting positions at the open on Monday morning with a stop loss at $102.55. Our target is $92.50.

- Suggested Positions -

buy the Jun $95 PUT (CMI1216R95) current ask $2.00

Annotated Chart:

Entry on May xx at $ xx.xx
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on May 26, 2012