NEW DIRECTIONAL PUT PLAYS

Hittite Microwave Corp. - HITT - close: 54.59 change: -1.52

Stop Loss: 55.75
Target(s): 50.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
After a two-month decline shares of HITT were on the rebound. Then the company reported earnings that were only inline and guided lowered. Shares are now poised to breakdown below their April low.

HITT is in the semiconductor sector and shares have been underperforming their peers and the NASDAQ for weeks. I am suggesting a trigger to buy puts at $54.00. If triggered our target is $50.25.

Trigger @ 54.00

- Suggested Positions -

buy the Jun $55 PUT (HITT1322R55) current ask $2.45

Annotated Chart:

Entry on May -- at $---.--
Average Daily Volume = 164 thousand
Listed on May 01 2013


Vertex Pharma. - VRTX - close: 76.83 change: +0.01

Stop Loss: 80.50
Target(s): 66.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
VRTX is in the healthcare sector, specifically the biotech industry. Shares exploded higher from $54 to $85 on April 19th following positive news on a treatment in development to fight cystic fibrosis. While the news is certainly encouraging a +60% one-day gains might be too much too fast.

VRTX has been trending lower since then. The company reported earnings on April 30th and beat estimates but that didn't stop the profit taking. We suspect this profit taking continues.

I am suggesting new bearish positions now at current levels. The old 2012 highs were near $65.00. This could be new support. We will aim for $66.00.

FYI: If you like using Fibonacci retracement tools in your trading, a retracement of the April 19th rally would put a 38.2% pullback at $73.60. A 50% pullback is near $69.40. A 61.8% retracement would be $65, near likely support although it's possible any of these could produce a bounce.

- Suggested Positions -

buy the Jun $75 PUT (VRTX1322R75) current ask $3.60

Annotated Chart:

Entry on May 02 at $---.--
Average Daily Volume = 3.8 million
Listed on May 01 2013