NEW DIRECTIONAL CALL PLAYS

Sherwin-Williams Co. - SHW - close: 132.82 change: -0.17

Stop Loss: 129.90
Target(s): 139.75
Current Option Gain/Loss: Unopened
Time Frame: exit prior to the July 19th earnings report
New Positions: Yes, see below

Company Description

Why We Like It:
The market has seen some significant moves in the second quarter. SHW has managed to shrug off most of the market's gyrations as it maintains its longer-term bullish trend. Granted the stock has been consolidating sideways under resistance in the $133-134 zone the last few weeks but it's been building the pattern of higher lows. SHW looks poised to breakout to new highs soon.

I am suggesting a trigger to buy calls at $134.10. We'll use a stop loss at $129.90. Once triggered we'll likely move the stop loss closer to $131.25. Our target is $139.75. However, we'll plan on exiting prior to the July 19th earnings report.

Trigger @ 134.10

- Suggested Positions -

buy the Jul $135 call (SHW1221G135) current ask $2.40

- or -

buy the Aug $135 call (SHW1218H135) current ask $3.80

Annotated Chart:

Entry on July xx at $ xx.xx
Earnings Date 07/19/12 (confirmed)
Average Daily Volume = 1.2 million
Listed on July 07, 2012


NEW DIRECTIONAL PUT PLAYS

Weight Watchers Intl. - WTW - close: 48.37 change: -2.16

Stop Loss: 50.75
Target(s): 42.00
Current Option Gain/Loss: Unopened
Time Frame: exit prior to the early August earnings report
New Positions: Yes, see below

Company Description

Why We Like It:
WTW has been flirting with a breakdown under key support near $50.00 for several days. Friday the stock got a push over the edge thanks to Bank of America downgrading WTW to "neutral". Unfortunately for shareholders WTW does not have much support between $50 and the $40-38 area.

This move should signal a new leg lower. I am suggesting new bearish positions at the open on Monday. We'll use a stop loss at $50.75. Our target is $42.00. FYI: The most recent data does list short interest at 10% of the small 26.6 million share float. That raises the risk of a short squeeze but lately the any short covering has failed at the 10 or 20-dma.

NOTE: July options expire in two weeks.

- Suggested Positions -

buy the Jul $47.50 PUT (WTW1221S47.5) current ask $1.10

- or -

buy the Aug $45 PUT (WTW1218T45) current ask $1.95

Annotated Chart:

Entry on July xx at $ xx.xx
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 764 thousand
Listed on July 07, 2012