NEW DIRECTIONAL CALL PLAYS

Peabody Energy - BTU - close: 28.35 change: -0.60

Stop Loss: 25.60
Target(s): 31.50
Current Option Gain/Loss: Unopened
Time Frame: several weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of BTU soared to new relative highs on Monday thanks to a better than expected earnings report. The stock did see a downgrade this morning so I am somewhat surprised BTU only lost -2%. I certainly looks like BTU has built a bottom over the last few months but the stock is arguably short-term overbought.

I am suggesting a buy-the-dip trigger to buy calls on a dip at $27.25. We'll use a stop loss at $25.60. Our multi-week target is $31.50.

Trigger @ 27.25

- Suggested Positions -

buy the 2013 Jan $30 call (BTU1319a30) current ask $1.81

Annotated Chart:

Entry on October xx at $ xx.xx
Average Daily Volume = 10.6 million
Listed on October 23, 2012


Riverbed Technology - RVBD - close: 23.96 change: +0.83

Stop Loss: 22.49
Target(s): 29.00
Current Option Gain/Loss: Unopened
Time Frame: several weeks
New Positions: Yes, see below

Company Description

Why We Like It:
RVBD is showing relative strength thanks to a better than expected earnings report. Now shares are testing resistance at the $24.00 mark. I do consider this an aggressive, higher-risk trade given the bounce RVBD has already produced.

I am suggesting a trigger to open positions at $24.20 with a stop under today's low. Our target is $29.00.

Trigger @ 24.20

- Suggested Positions -

buy the 2013 Jan $25 call (RVBD1319a25) current ask $1.76

Annotated Chart:

Entry on October xx at $ xx.xx
Average Daily Volume = 5.1 million
Listed on October 23, 2012