NEW DIRECTIONAL PUT PLAYS

Hittite Microwave - HITT - close: 54.28 change: -0.72

Stop Loss: 55.20
Target(s): 50.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
HITT is in the semiconductor industry. The company reported earnings in late April and guided lower for the current quarter. Since then traders have been selling the rallies. HITT has developed a consistent trend of lower highs that is about to push this stock below support near $54.00. If the $54 level breaks it could signal a drop toward $50 or lower.

I do consider this a higher-risk, more aggressive traders because the option spreads on HITT's options are relatively wide. Thus I am suggesting we keep our position size small to limit our overall risk.

Tonight we're suggesting a trigger to buy puts at $53.90. If triggered our target is $50.00. More aggressive traders could aim lower. FYI: The Point & Figure chart for HITT is bearish with a $43 target.

Trigger @ 53.90 *Small Positions*

- Suggested Positions -

Buy the Jul $50 PUT (HITT1320S50) current ask $1.00

Annotated Chart:

Entry on June -- at $---.--
Average Daily Volume = 183 thousand
Listed on June 01, 2013


Johnson & Johnson - JNJ - close: 84.18 change: -1.81

Stop Loss: 86.05
Target(s): 80.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It looks like the up trend in shares of JNJ has finally broken. The stock reversed at $90.00 and has since broken through several layers of potential support. I would love to see JNJ produce a big correction lower so we could launch bullish positions in this stock but shares are so overbought it could take weeks before JNJ finds a bottom again. In the mean time we want to try and capture part of the sell-off.

JNJ closed near its 50-dma and might bounce. If shares do bounce then nimble traders could look for a failed rally near the 20-dma as an alternative entry point. Tonight I am suggesting a trigger at $83.95 to buy puts. Our target is $80.25.

Trigger @ 83.95 *small positions*

- Suggested Positions -

buy the Jul $80 PUT (JNJ1320S80) current ask $0.79

Annotated Chart:

Entry on June -- at $---.--
Average Daily Volume = 10 million
Listed on June 01, 2013


NEW LONGER-TERM TRADES

Chicago Bridge & Iron - CBI - close: 63.30 change: -0.23

Stop Loss: 61.45
Target(s): 74.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 months
New Positions: Yes, see below

Company Description

Why We Like It:
We are bringing CBI back to the newsletter and back as a longer-term trade. Last time we added CBI we successfully caught the bounce from mid April back toward its March highs. You can read the background details and bullish fundamentals for CBI in our original play description here, since it still applies. Just scroll down to the "longer-term trades" section of the page.

CBI has managed to breakout to new highs and has not seen much profit taking. Actually traders are buying the dips at the stock's rising 10-dma and now CBI is poised to breakout past resistance at $65.00.

Tonight I am suggesting a trigger to buy calls at $65.25. If triggered our long-term target is $74.50. NOTE: the broader market does look vulnerable to more selling. Thus traders may want to start this trade with small positions to limit risk. Even though CBI looks strong it is up six weeks in a row and could succumb to profit taking. More conservative traders may want to wait for shares of CBI to close above $65.25 and then launch bullish positions the next morning as an alternative entry point strategy.

Trigger @ 65.25 *Small Positions*

- Suggested Positions -

Buy the 2014 Jan $70 call (CBI1418A70) current ask $3.80

Annotated Chart:

Entry on June -- at $---.--
Average Daily Volume = 1.8 million
Listed on June 01, 2013