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Call Updates

Hartford Financial - HIG - cls: 72.90 chg: +1.71 stop: 69.95

The rebound in the markets has helped lift the IUX insurance index to its third gain in a row. The IUX is bouncing from a test of its 40-dma after several days of profit taking. The technical picture is improving for the sector index with both the RSI and stochastics turning upward. Meanwhile HIG is out performing its peers in the insurance group and the broader indices. The stock held above round-number support at the $70.00 level this past week so when the market began to bounce traders bought the dip. This above average volume on the rally and the move over the $72 level makes this look like a bullish entry point in HIG. Our target remains the $78-80 range.

Suggested Options:
We are suggesting the March and April calls. While Aprils don't have a lot of open interest yet the March strikes only have three weeks left so be careful.

BUY CALL MAR 70 HIG-CN OI=1865 current ask $3.40
BUY CALL MAR 75 HIG-CO OI=1474 current ask $0.45

BUY CALL APR 70 HIG-DN OI= 36 current ask $4.10
BUY CALL APR 75 HIG-DO OI= 2 current ask $1.10


 

Picked on February 06 at $ 71.17
Change since picked: + 1.73
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 1.2 million

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Loews Corp - LTR - close: 72.24 chg: +0.29 stop: 69.95

The widely diversified LTR is benefiting from a bounce in both the insurance sector and the tobacco sector. Investors appear to have bought the dip toward the $71 region and the current bounce looks like a new bullish entry point. Short-term technical oscillators like the RSI and stochastics have turned positive again and we would consider new positions here. Our target remains the $80 region but if you're buying the dip then we might consider exiting anywhere in the $76-78 range.

Suggested options:
We are suggesting the April and June calls.

BUY CALL APR 70 LTR-DN OI= 18 current ask $3.70
BUY CALL APR 75 LTR-DO OI= 18 current ask $0.95

BUY CALL JUN 70 LTR-FN OI= 75 current ask $4.90
BUY CALL JUN 75 LTR-FO OI=517 current ask $2.10


 

Picked on February 15 at $ 74.15
Change since picked: - 1.91
Earnings Date 02/10/05 (confirmed)
Average Daily Volume = 452 thousand

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Nova Chemicals - NCX - close: 50.05 chg: +1.00 stop: 45.95*new*

So far so good. We started NCX with a trigger to go long at $48.01 to catch a breakout over resistance. NCX hit our entry point on February 22nd and shares have been trading higher ever since. More importantly for the bulls the stock has been steadily climbing on above average volume. Friday's breakout over what would normally be considered round-number, psychological resistance at the $50.00 mark is another victory. The move has produced a quadruple top breakout buy signal on its Point & Figure chart that now points to a $63 target. Our target is currently the $52.50-54.00 range. If NCX does pull back we would use a dip as a new entry point, especially now that the $48.00 level, as broken resistance, should become new support. We are raising our stop loss to $45.95.

FYI: the suggested calls have already increased significantly so conservative traders may want to consider some profit taking.

Suggested Options:
We're going to suggest the March and June calls. Our favorites would be the June strikes.

BUY CALL MAR 45 NCX-CI OI=454 current ask $5.50
BUY CALL MAR 50 NCX-CJ OI=369 current ask $1.40

BUY CALL JUN 45 NCX-FI OI=192 current ask $6.65
BUY CALL JUN 50 NCX-FJ OI=288 current ask $3.30


 

Picked on February 22 at $ 48.01
Change since picked: + 2.04
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 383 thousand

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Spectrasite Inc - SSI - close: 62.52 chg: +1.45 stop: 58.00

The two-week countdown clock is about to begin. We want to be out of SSI before the company reports earnings on March 14th. Fortunately, the stock is currently bouncing from a test of support near the $60.00 level. This looks like a bullish entry point and our target remains in the $66-67 region.

Suggested options:
We are suggesting the March calls since we plan to exit before March 14th.

BUY CALL MAR 60 SSI-CL OI= 79 current ask $3.30
BUY CALL MAR 65 SSI-CM OI= 40 current ask $0.85


 

Picked on February 16 at $ 61.80
Change since picked: + 0.72
Earnings Date 03/14/05 (confirmed)
Average Daily Volume = 391 thousand

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Texas Industries - TXI - cls: 68.00 chg: +3.76 stop: 62.95*new*

Finally! TXI, after weeks of consolidating under resistance near $65.00, is finally breaking out to new highs. Furthermore the stock did so on huge volume about three times the average and that suggests much more upside ahead. Aggressive traders may want to see just how far TXI will run. We're going to abide by our target and plan to exit in the $69.00-70.00 range, which could be on Monday. It's up to you whether to exit with us or let TXI keep going now that it's finally breaking out. We are going to raise our stop loss to $62.95.

Suggested Options:
This close to our target of $69-70 we are not suggesting new bullish positions. However, considering the breakout readers may want to consider a pull back toward $66 as a new bullish entry point.


 

Picked on January 09 at $ 60.18
Change since picked: + 7.82
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 238 thousand

Put Updates

Apollo Group - APOL - close: 75.00 chg: -0.22 stop: 78.25*new*

It's been a tough week to play puts or bearish strategies with the Dow Industrials up 240 some points from its low last week. However, APOL has under performed the market, which is what we would want to see in a put candidate. Our target remains the $72-70 region and we are going to lower our stop loss to $78.25 since the $78 level should be new resistance for the stock. Readers looking for new positions can watch for a failed rally near the $77 area although we would hesitate to open new bearish plays if the market continues to climb.

Suggested Options:
We like the March, April and May puts although the Mays aren't listed below. March strikes only have about three weeks left.

BUY PUT MAR 80 OAQ-OP OI= 338 current ask $5.60
BUY PUT MAR 75 OAQ-OO OI=5774 current ask $2.30
BUY PUT MAR 70 OAQ-ON OI=4483 current ask $0.80

BUY PUT APR 75 OAQ-PO OI= 56 current ask $3.70
BUY PUT APR 70 OAQ-PN OI= 130 current ask $1.85


 

Picked on January 23 at $ 77.61
Change since picked: - 2.61
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 2.4 million

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Bear Stearns - BSC - close: 98.61 chg: +1.96 stop: 102.51

Uh-oh! The XBD index and BSC were doing well as bearish candidates given that both were not participating in the market rally on Wednesday and Thursday. That changed with the XBD added 1.88 percent and shares of BSC climbed 2.02 percent during Friday's session. Were the bears just giving up? Or is this just an oversold bounce? Currently the three-month trend for BSC is still a bearish one but we could easily see BSC bounce a bit more before continuing lower. Actually if you look at the daily chart it's possible that BSC is now in a descending channel and shares just bounced from the bottom of that channel. If this is true then readers probably don't want to be initiating new bearish plays at this time. Stand back and wait to see where BSC rolls over. Will it be round-number resistance at the $100 mark or will shares trade toward the top of the channel in the $102 region before fading. We're still bearish on the stock but we're expecting the next couple of days to be positive. Plan your attack accordingly.

Suggested Options:
Wait and watch to see where BSC rolls over. Once that occurs we'd look to the April puts.


 

Picked on February 20 at $ 97.84
Change since picked: + 0.77
Earnings Date 03/22/05 (unconfirmed)
Average Daily Volume = 934 thousand

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Career Education - CECO - close: 35.05 chg: +0.32 stop: 37.51

CECO has joined APOL in its lack of participation during the market's current bounce. Granted CECO has bounced some from its February 22nd low but the rebound has been a meager one and volume has been mild suggesting a lack of conviction from any buyers. Besides it's not uncommon to see a stock pull back to retest a broken level of support or resistance. Technically CECO still looks bearish with the breakdown from three months of consolidation and its very bearish triangle breakdown pattern on its P&F chart. Our target remains the $30.00 region and traders can watch for a failed rally anywhere under 36.50 as a new bearish entry point.

Suggested Options:
We like the March or April puts.

BUY PUT MAR 40 CUY-OH OI=2342 current ask $5.20
BUY PUT MAR 35 CUY-OG OI=3487 current ask $1.40
BUY PUT MAR 30 CUY-OF OI=1807 current ask $0.25

BUY PUT APR 40 CUY-PH OI= 3162 current ask $5.80
BUY PUT APR 35 CUY-PG OI=11013 current ask $2.55
BUY PUT APR 30 CUY-PF OI= 5885 current ask $0.95


 

Picked on February 22 at $ 34.90
Change since picked: + 0.15
Earnings Date 02/15/05 (confirmed)
Average Daily Volume = 2.1 million

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Research In Motion - RIMM - cls: 65.35 chg: -4.13 stop: 70.51*new*

Wow! What a week for RIMM. We started the play a few days ago with a TRIGGER to buy puts on a breakdown below the $70.00 level, its rising trendline of support, and its 200-dma. We were triggered at our entry point of $69.75 on February 23rd. Fueling RIMM's weakness were rumors that the company was going to see new competition from Microsoft (MSFT). This helped lead RIMM to dip under the $66.00 level on Thursday but at least one broker tried to defend the stock and RIMM bounced back toward the $70 level on Thursday afternoon. Then on Friday BSC lowered it valuation levels for RIMM. The firm also issued concerns over potential competition despite RIMM's leading position in the industry. Shares fell almost six percent on very strong volume. The stock is nearing the January low and our initial target in the $64.00 region. This is a tough spot. Do you exit now with a quick profit to avoid a potential bounce from the $64 level? Or do you hold on and look for the breakdown and a possible drop toward the $60 area? We are going to opt for the quick exit. The options we suggested for RIMM have already risen significantly. The March 75s have run from $5.80 to $10.30. The March 70s from $3.00 to $6.30 and the March 65s from $1.30 to $3.40. We're not suggesting that anyone actually got in at these levels and made these sort of returns but it indicates just how fast the puts have risen and if you're sitting on a hefty gain you may want to strongly consider taking some profits here. We are going to adjust our exit point from $64.00 to a range of $64.50-64.00. If RIMM trades anywhere inside this region we'll exit and close the play. We are going to lower our stop loss to $70.51.

Suggested Options:
We are going to suggest the March puts. RIMM is due to report earnings in late March and we do not want to hold over the event.

BUY PUT MAR 75 RUP-OO OI=8370 current ask $10.30 -5.80
BUY PUT MAR 70 RUP-ON OI=9003 current ask $6.30 -3.00
BUY PUT MAR 65 RUP-OM OI=9981 current ask $3.40 -1.30

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Picked on February 23 at $ 69.75
Change since picked: - 4.40
Earnings Date 03/22/05 (unconfirmed)
Average Daily Volume = 7.9 million

Dropped Put

Penn Natl Gaming - PENN - cls: 60.24 chg: -1.68 stop: 63.01

Experienced traders know that they're not supposed to let their emotions get in the way yet it's still frustrating when we see these intraday spikes hit our stops. PENN climbed above the simple 50-dma and support/resistance at the $63.00 mark on Friday just before a sudden slide lower on massive volume. Evidently there was a gaming decision in Maryland that is being interpreted as negative for PENN. It is worth nothing that the selling paused long enough for PENN to bounce back above the $60 level so it's anyone's guess which direction the stock will move next week. We are stopped out at $63.01.


 

Picked on February 22 at $ 59.77
Change since picked: + 0.47
Earnings Date 02/03/05 (confirmed)
Average Daily Volume = 593 thousand

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