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Call Updates

Alliance Resource - ARLP - cls: 79.75 chg: +1.73 stop: 74.49*new*

Target achieved! ARLP continues to rally following its breakout last week and Friday's surge higher in the broader markets didn't hurt. We had an initial target of $80.00 and a secondary, longer-term target of $85.00. Shares of ARLP hit the $80.00 mark on Friday. Considering the rise in the suggested options we listed (the April 70s have run from $6.50 to $10.40 and the April 75s have run from $2.75 to $7.20, the June strikes have done well too) we strongly suggest that readers consider taking some profits here. The $80.00 level could be short-term resistance and ARLP may hit a little bit of profit taking. Now we're not giving up on ARLP just yet but the stock could pull back to the simple 10-dma before continuing higher. We're going to raise our stop loss to $74.49.

Suggested Options:
All of our suggested options have risen significantly and we're suggesting that readers consider taking some profits here. Traders looking for a new entry point can watch for a pullback.


 

Picked on February 27 at $ 75.01
Change since picked: + 4.74
Earnings Date 01/27/05 (confirmed)
Average Daily Volume = 95 thousand

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Barr Pharma - BRL - close: 48.33 chg: +0.06 stop: 45.40

The DRG drug index is still creeping higher and has broken out over resistance at its December highs. Meanwhile shares of BRL are struggling a bit to gain any traction following the bullish breakout three days ago. The short-term trend is still bullish or at least it looks bullish with the higher lows this past week. Readers may want to wait for BRL to clear the $48.75-49.00 level before initiating new plays. Remember that we have a two-month time horizon on this play. Our target is the $54-55 region.

Suggested Options:
We are going to suggest the May calls as BRL doesn't move that fast so we need time for shares to appreciate.

BUY CALL MAY 45 BRL-EI OI=1722 current ask $4.70
BUY CALL MAY 50 BRL-EJ OI=1962 current ask $1.75


 

Picked on March 01 at $ 48.53
Change since picked: - 0.20
Earnings Date 02/02/05 (confirmed)
Average Daily Volume = 800 thousand

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Hartford Financial - HIG - cls: 72.93 chg: +0.35 stop: 69.95

The action in HIG has not been that exciting. The stock only gained three cents for the week. If you're feeling optimistic we'll point out that HIG's trend of higher lows is still in pace and that the Elliot Spitzer-inspired sell-off in AIG did not impact the sector as much as we anticipated. Plus, the IUX insurance is trading near potential support. We remain cautiously bullish with HIG still above support at the $70.00 level but we'd be careful when it comes to initiating new positions.

Suggested Options:
We are suggesting the April calls but see the above play for details.

BUY CALL APR 70 HIG-DN OI= 46 current ask $4.00
BUY CALL APR 75 HIG-DO OI= 76 current ask $1.00


 

Picked on February 06 at $ 71.17
Change since picked: + 1.76
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 1.2 million

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Ingersoll-Rand - IR - cls: 87.33 chg: +2.29 stop: 82.49*new*

Heads up! IR continues to show strength and shares broke out over the $86.00 level on Friday. The stock is very close to our target in the $88.00-90.00 range. The suggested options we listed have risen significantly and readers need to consider taking some profits here. We will plan to exit at $88.00 because IR is starting to look over extended here. If you choose not to do any profit taking now be sure to decide where you will exit before the market opens. Once trading begins emotions begin to cloud the average trader's judgment. We are raising our stop loss to $82.49.

Suggested Options:
IR is very close to our target so we're suggesting readers prepare to exit (or exit now).


 

Picked on February 27 at $ 83.00
Change since picked: + 4.33
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 1.1 million

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Loews Corp - LTR - close: 73.87 chg: +0.58 stop: 69.95

We remain cautiously bullish on LTR. The stock continues to rise with a slow trend of higher lows. The two things to watch are the IUX insurance index, which has pulled back to potential support. The second is the news out on Friday regarding the tobacco industry. Federal prosecutors are asking a three-judge panel to reconsider their earlier decision to bar the government for trying to go after $280 billion (with a "B") in past profits during the current racketeering case that began last fall. We do note that the P&F chart is looking strong again and still points to a $102 target. Our target remains near the $80 level but we're hesitant to suggest new plays. A bounce from the $72 level might be a good spot to consider a new entry.

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

BUY CALL APR 70 LTR-DN OI= 63 current ask $4.80
BUY CALL APR 75 LTR-DO OI= 31 current ask $1.40

BUY CALL JUN 70 LTR-FN OI= 75 current ask $5.70
BUY CALL JUN 75 LTR-FO OI=535 current ask $2.55


 

Picked on February 15 at $ 74.15
Change since picked: - 0.28
Earnings Date 02/10/05 (confirmed)
Average Daily Volume = 452 thousand

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Nova Chemicals - NCX - close: 51.64 chg: +2.16 stop: 47.95*new*

We cannot find any specific news to account for NCX's 4.3 percent rally on Friday but we suspect it is related to the surge in the commodities index. NCX's volume on Friday was very big, which suggest more strength ahead. The stock is relatively close to our target in the $52.50-54.00 range. Readers may actually want to consider exiting now since the options have risen significantly since NCX hit our trigger on February 22nd. We're going to raise our stop loss to $47.95.

Suggested Options:
NCX is near our target so we're not suggesting new positions at this time. Readers may want to exit now or prepare to exit soon.


 

Picked on February 22 at $ 48.01
Change since picked: + 3.63
Earnings Date 01/26/05 (confirmed)
Average Daily Volume = 383 thousand

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Parker-Hannifin - PH - close: 69.28 change: +0.36 stop: 63.99

This past week has been very bullish for PH. The stock broke through resistance in the $68.00 region and pushed past its 40 and 50-dma's. The stock is nearing potential resistance at the $70.00 level and this will be the real test of PH's current breakout. We're optimistic. The P&F chart has a very bullish price target of $127.00. Yet the January sell-off was pretty brutal but did not invalid the buy signal. Now that PH has filled the October gap and bounced from its rising 200-dma the stock looks ready to run higher and its P&F chart has produced another new buy signal. Our target remains the $73-75 region.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 65 PH-EM OI= 244 current ask $6.10
BUY CALL MAY 70 PH-EN OI= 391 current ask $3.00
BUY CALL MAY 75 PH-EO OI= 449 current ask $1.15


 

Picked on March 03 at $ 68.11
Change since picked: + 1.17
Earnings Date 01/18/05 (confirmed)
Average Daily Volume = 1.0 million

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PACCAR - PCAR - close: 76.29 chg: +0.99 stop: 71.99

PCAR has spent much of this past week consolidating its bullish breakout over resistance at the $75.00 level. That's okay with us as shares have re-established the $74.00 level as new support. It's also worth noting that the P&F chart's buy signal now points to a $92 target (it was $86). Readers can choose to go long at current levels or watch for another pull back toward $74.50 and buy a bounce. Our target remains the $80-81 range.

Suggested Options:
We are going to suggest the May calls although the April strikes should work well too.

BUY CALL MAY 70 PAQ-EN OI=2329 current ask $8.10
BUY CALL MAY 75 PAQ-EO OI=1872 current ask $4.50
BUY CALL MAY 80 PAQ-EP OI=5641 current ask $2.35


 

Picked on February 28 at $ 75.25
Change since picked: + 1.04
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 1.0 million

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Spectrasite Inc - SSI - close: 63.41 chg: +1.32 stop: 59.25*new*

We only have a few days left before we have to exit SSI to avoid its March earnings report. Currently our plan is to exit on Friday afternoon since SSI is due to announce on Monday. Fortunately, the trend is still very bullish albeit a slower one. The stock hit a new all-time high on Friday with volume coming in way above average, which is of course a bullish development. We may need to ratchet down our expectations and target zone considering the time left in this play. Currently our target is $66-67. We are going to raise our stop loss to $59.25. FYI: SSI is due to present at the Raymond James conference on Monday. Maybe the company can produce more excitement for its upcoming earnings report.

Suggested options:
We only have five more days before we have to exit SSI. We're not suggesting new plays at this time.


 

Picked on February 16 at $ 61.80
Change since picked: + 1.61
Earnings Date 03/14/05 (confirmed)
Average Daily Volume = 391 thousand

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Texas Industries - TXI - cls: 68.27 chg: +1.45 stop: 63.49*new*

Almost there! We're still suggesting readers take profits at these levels even as TXI inches closer to our secondary target in the $69.00-70.00 range. Actually if TXI can hit $69.00 we'll happily exit. The entire coal industry has been doing well and we'll be sure to keep an eye on them for another bullish entry point. Today we're going to adjust our stop loss to $63.49.

Suggested Options:
This close to our target of $69-70 we are not suggesting new bullish positions.

Picked on January 09 at $ 60.18
Change since picked: + 8.09
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 238 thousand

Put Updates

Apollo Group - APOL - close: 74.69 chg: -0.34 stop: 78.01*new*

All right, it may be time to re-evaluate this play. Thus far APOL has continued to under perform the markets, which is exactly what we want from a put candidate. The stock is stuck under a trend of lower highs and investors continue to sell the rallies to this trendline. Friday is a good example with a sharp spike higher that quickly sold off near this descending trendline (and its exponential 200-dma and the 50-dma). Friday's failed rally looks like a new bearish entry point. However, when you look at APOL's P&F chart you'll see that shares have bounced from rising support. The trend is still down and the P&F chart still points to a $68 target but this is a pivotal test for APOL. Will the bearish trend prevail or is there a potential reversal in the works. Right now we'd lean on the trading maxim "the trend is your friend" but we're going to tighten our stop loss to $78.01. We are also considering a change to our target from $72-70 to the $73.00 level. Conservative traders may also want to consider changing their target. Monday will prove interesting to see if there is any follow through to Friday's failed rally.

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

BUY PUT MAR 80 OAQ-OP OI= 450 current ask $5.60
BUY PUT MAR 75 OAQ-OO OI=5642 current ask $2.00

BUY PUT APR 75 OAQ-PO OI= 196 current ask $3.70
BUY PUT APR 70 OAQ-PN OI= 939 current ask $1.85


 

Picked on January 23 at $ 77.61
Change since picked: - 2.92
Earnings Date 12/16/04 (confirmed)
Average Daily Volume = 2.4 million

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Career Education - CECO - close: 35.29 chg: +0.66 stop: 37.51

CECO continues to under perform the broader markets. The stock only gained 24 cents for the week. Furthermore Friday's failed rally at the $36.00 level may prove to be a new bearish entry point for traders. Look for some follow through and consider new entries on a drop below the $35.00 level. Our target remains the $30.00 region.

Suggested Options:
March puts only have two weeks left. We suggest the April strikes.

BUY PUT APR 40 CUY-PH OI= 3177 current ask $5.40
BUY PUT APR 35 CUY-PG OI=11519 current ask $2.05
BUY PUT APR 30 CUY-PF OI= 7657 current ask $0.70


 

Picked on February 22 at $ 34.90
Change since picked: + 0.39
Earnings Date 02/15/05 (confirmed)
Average Daily Volume = 2.1 million

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Research In Motion - RIMM - cls: 67.32 chg: +0.24 stop: 70.51

RIMM and the NASDAQ continue to under perform the rest of the markets. RIMM's bounce back toward the $70 level after its breakdown is not uncommon and should help establish the $70 level as new overhead resistance. During this past week one analyst firm dropped coverage on RIMM. Some firms choose to drop coverage on a stock instead of issuing a "sell" rating. We remain bearish and our short-term target remains the $64.50-64.00 range. The growing risk here is that we're running out of time. RIMM is due to report earnings in the second half of March. We suggested the March puts because we do not want to hold over the event. March options only have two weeks left before expiration.

Suggested Options:
There are only two weeks left before March expiration. Only nimble traders comfortable with such a short time frame should consider new positions.


 

Picked on February 23 at $ 69.75
Change since picked: - 2.43
Earnings Date 03/22/05 (unconfirmed)
Average Daily Volume = 7.9 million

Dropped Puts

Bear Stearns - BSC - close: 103.20 chg: +2.30 stop: 102.51

A big day for the XBD broker-dealer index (+1.94%) was enough to help fuel a 2.2% rally in BSC and shares of BSC broke through resistance at the $102.00 level. The stock also broke through its descending trendline near $102.50 and hit our stop loss. The question for traders is whether or not there will be any follow through. The P&F chart for BSC is still bearish (although on the verge of a reversal). Plus, the XBD index is still under significant resistance, albeit near its all-time highs. Traders may want to consider bullish positions if BSC can trade over 105 and the XBD trades over 154.


 

Picked on February 20 at $ 97.84
Change since picked: + 5.36
Earnings Date 03/16/05 (confirmed)
Average Daily Volume = 934 thousand

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