NEW DIRECTIONAL CALL PLAYS

Vertex Pharma. - VRTX - close: 54.99 change: +0.46

Stop Loss: 53.40
Target(s): 59.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Thus far shares of VRTX do not seem to be bothered by recent news that the company's Kalydeco treatment for cystic fibrosis could be generating cataracts in the eyes of its lab rat test subjects. The treatment has already been approved for human use and came to market earlier this year. Meanwhile the stock is just now breaking out past resistance (see chart) and starting to breakout from its sideways consolidation.

I am suggesting small bullish positions if VRTX can trade at $55.75. This is a higher-risk trade. You can see from the chart that VRTX has been very volatile over the last few months. We want to limit our position size to reduce our risk. We will aim for $59.75. More aggressive traders could aim higher.

Trigger @ 55.75

- Suggested Positions -

buy the Oct $57.50 call (VRTX1220j57.5) currently $3.20

Annotated Chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 1.4 million
Listed on September 05, 2012


NEW DIRECTIONAL PUT PLAYS

Clean Harbors - CLH - close: 53.18 change: -0.80

Stop Loss: 55.05
Target(s): 50.10
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
CLH is in the waste management industry and handles various environmental clean up jobs. The stock has been in a bearish trend of lower highs and lower lows for months but shares just broke support at $54.00. This looks like an entry point for bearish positions.

I am suggesting new positions at the open tomorrow. We'll use a stop loss at $55.05. Our target is $50.10 but more aggressive traders may want to seriously consider aiming for the $48.00 area instead. FYI: The Point & Figure chart for CLH is bearish with a $46 target.

- Suggested Positions -

buy the Oct $55 PUT (CLH1220v55) current ask $3.40

Annotated Chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 620 thousand
Listed on September 05, 2012