NEW DIRECTIONAL CALL PLAYS

Costco Wholesale - COST - close: 91.69 change: +0.82

Stop Loss: 89.90
Target(s): 99.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
COST is a large wholesale outlet chain and probably the main rival for Wal-mart's Sam's Club chain. Shares of COST have been churning sideways the last few days under resistance at its highs near $92.00.

I am suggesting we launch small bullish positions if COST can trade at $92.50 or higher. If triggered we'll start with a stop loss at $89.90. Our target is $99.00. FYI: The Point & Figure chart for COST is bullish with a $116 target.

Trigger @ 92.50

- Suggested *Small* Positions -

buy the Jul $92.50 call (COST1221G92.5) current ask $1.19

- or -

Buy the Aug $95 call (COST1218H95) current ask $0.98

Annotated Chart:

Entry on June xx at $ xx.xx
Earnings Date 10/11/12 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on June 26, 2012


NEW DIRECTIONAL PUT PLAYS

Weight Watchers Intl - WTW - close: 50.71 change: -1.04

Stop Loss: 52.25
Target(s): 45.50, 42.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It has been a very volatile couple of years for shares of WTW. Just look at the weekly chart below. Currently the stock is sinking. This could be a reflection that investors are worried that consumers are cutting back as the economy slows down. If you are worried about your job, or putting gas in the car, then you might be less inclined to pay for the WTW program and food products.

I am suggesting that we wait for WTW to breakdown under what could be round-number, psychological support at the $50.00 mark. We'll use a trigger at $49.75 to buy puts. We do want to keep our position size small since the most recent data listed short interest at 10% of the very small 26.6 million share float. I am listing two targets, one at $45.50, the other at $42.00.

FYI: WTW will begin trading ex-dividend tomorrow morning. Look for shares to gap down about 18 cents.

Trigger @ 49.75

- Suggested Positions -

buy the Jul $50 PUT (WTW1221S50) current ask $1.65

- or -

buy the Aug $47.50 PUT (WTW1218T47.5) current ask $2.25

Annotated Chart:

Annotated Chart:

Entry on June xx at $ xx.xx
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 667 thousand
Listed on June 26, 2012