NEW DIRECTIONAL CALL PLAYS

Westlake Chemical Corp. - WLK - close: 55.37 change: +1.32

Stop Loss: 53.40
Target(s): 62.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
WLK is a specialty chemical company. The stock broke out of a consolidation phase a few days ago and now it's breaking out past technical resistance at its 150-dma and 50-dma. If this rally continues WLK could see a short squeeze. The most recent data listed short interest at 24% of the small 19.9 million share float.

Last week's high was $56.22. I am suggesting a trigger to buy calls at $56.35. We are using a wide stop loss at $53.35 so that does raise the risk on this trade. The $60.00 level might be resistance but we're aiming for $62.00. FYI: The Point & Figure chart for WLK is bullish with a $69 target.

Trigger @ 56.35

- Suggested Positions -

(July options expire in less than two weeks)
buy the Jul $55 call (WLK1221G55) current ask $1.95

- or -

buy the Aug $60 call (WLK1218H60) current ask $1.60

Annotated Chart:

Entry on July xx at $ xx.xx
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 543 thousand
Listed on July 09, 2012


NEW DIRECTIONAL PUT PLAYS

Sohu.com Inc. - SOHU - close: 40.02 change: -1.45

Stop Loss: 41.75
Target(s): 35.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Many of the Chinese Internet stocks have been sinking. Shares of SOHU appear to be in a long-term bearish trend of lower highs. The stock has fallen to support near $40.00. Last month's low was $39.71. I am suggesting a trigger to buy puts at $39.65. We will want to keep our position size small to limit our risk because the most recent data listed short interest at 23% of the small 29.6 million-share float.

FYI: The Point & Figure chart for SOHU is bearish with a $32 target.

Trigger @ 39.65 *Small Positions*

- Suggested Positions -

(July options expire in less than two weeks)
buy the Jul $40 PUT (SOHU1221S40) current ask $1.30

- or -

buy the Aug $37.50 PUT (SOHU1218T37.5) current ask $1.75

Annotated Chart:

Entry on July xx at $ xx.xx
Earnings Date 07/30/12 (unconfirmed)
Average Daily Volume = 634 thousand
Listed on July 09, 2012