NEW DIRECTIONAL PUT PLAYS

Lufkin Industries - LUFK - close: 49.06 change: -1.53

Stop Loss: 51.85
Target(s): 45.15
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
LUFK's gap down in late October was a reaction to its earnings report. The company's earnings and revenues for the third quarter were actually pretty good but management warned for the fourth quarter and lowered their guidance. LUFK said key customers were lowering their Q4 orders.

The oversold bounce that started in early November has reversed under technical resistance at the 10-dma. Today's breakdown back below the $50.00 mark is a new bearish entry point. Our target is $45.15.

- Suggested Positions -

buy the DEC $45 PUT (LUFK1222x45) current ask $1.40

Annotated Chart:

Entry on November xx at $ xx.xx
Average Daily Volume = 467 thousand
Listed on November 8, 2012