Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version
3 BODY-->

Call Updates

Chubb Corp - CB - close: 85.44 change: -0.17 stop: 82.99 *new*

Insurance stock CB continues to slowly churn sideways within its slow six-week drift higher. For the most part CB continues to look bullish. The challenge is the prolonged loss of momentum, which is throwing off the oscillators. Option players have a right to be concerned because this slow crawl higher will eat up any time premium. Due to CB's lack of upward mobility we are not suggesting new bullish plays at this time. We are also going to raise our stop loss to $82.99, keeping it under the simple 50-dma. The Point & Figure chart is still bullish and points to a $109 target. We are targeting a move into the $89.50-90.00 range but at the current rate of ascension CB will not get there before its July 26th earnings report. We will plan to exit ahead of the report.

Suggested Options:
We are not suggesting new plays at this time.

Picked on June 10 at $ 85.05
Change since picked: + 0.39
Earnings Date 07/26/05 (confirmed)
Average Daily Volume = 1.2 million

---

Rockwell Collins - COL - close: 47.24 chg: -0.44 stop: 46.49

Our strategy with COL has been a simple one. Investors have consistently bought the dips to its rising 100-dma. We waited for COL to pull back to its 100-dma and bought the dip. We did see an immediate rebound but now we're growing a little concerned that the rebound has not seen any follow through. Traders holding positions can double-check their stops to make sure they're comfortable with them. Our stop is relatively tight at $46.49. We would not suggest new bullish positions at this time. Wait for COL to breakout above its short-term trend of lower highs, which would probably be in the $48.25 region.

Suggested Options:
We are not suggesting new plays at this time.

Picked on June 27 at $ 46.75
Change since picked: + 0.49
Earnings Date 07/26/05 (unconfirmed)
Average Daily Volume = 800 thousand

---

Cummins Inc - CMI - close: 74.76 change: +0.15 stop: 70.95

We remain bullish on CMI. The stock's breakout past the $72-73 region in addition to its simple 200-dma also coincided with a breakout through resistance on its Point & Figure chart. Speaking of the P&F chart CMI's points to a $101.00 target. Traders looking for a new play might want to consider a bounce from the $74 level but we would confirm market direction in the major indices first (a.k.a. if the DJIA and SPX are sinking, don't open new bullish plays here). We would definitely look for a bounce here first because the technical oscillators are looking a bit tired. Our target is the $77.50-80.00 range. We plan to exit ahead of CMI's July 21st (unconfirmed) earnings report.

Suggested Options:
We would suggest the August calls.

BUY CALL AUG 70.00 CMI-HN OI= 0 current ask $6.30
BUY CALL AUG 75.00 CMI-HO OI=64 current ask $3.00

Picked on June 19 at $ 74.03
Change since picked: + 0.73
Earnings Date 07/21/05 (unconfirmed)
Average Daily Volume = 970 thousand

---

Coventry Hlth Care - CVH - cls: 70.60 chg: -0.15 stop: 68.49

The health insurance stocks have been pillars of strength in this market for a while now. We've had our eye on a possible bullish play in CVH for weeks as it consolidates sideways after an impressive October '04 through April '05 run. Currently shares of CVH are testing resistance in the $72.00-72.50 region and we are suggesting that readers use a trigger to catch the next breakout and probably the next leg higher. Our suggested entry point is $72.75. We're targeting a move into the $77.50-80.00 range but we plan to exit ahead of CVH's early August (unconfirmed) earnings report. In the news on Friday CVH reaffirmed its positive Q2 outlook.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 65.00 CVH-HM OI= 91 current ask $6.80
BUY CALL AUG 70.00 CVH-HN OI= 88 current ask $3.20
BUY CALL AUG 75.00 CVH-HO OI=468 current ask $0.95

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/02/05 (unconfirmed)
Average Daily Volume = 1.0 million

---

Fording Candn Coal - FDG - cls: 93.60 chg: +1.40 stop: 88.49

So far so good. Shares of coal producer FDG have broken through several layers of resistance in the past couple of weeks. Traders were there to buy the dip back toward the $90.00 level and its simple 100-dma. We see the bounce as another entry point for bullish plays. Currently the P&F chart points to a $118.00 target. We are targeting a move into the $97.00-100.00 range.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 90.00 FDG-HR OI= 43 current ask $7.65
BUY CALL AUG 95.00 FDG-HS OI=158 current ask $4.40
BUY CALL AUG 100.00 FDG-HT OI=631 current ask $2.10

Picked on June 19 at $ 90.30
Change since picked: + 3.30
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 384 thousand

---

Rio Tinto - RTP - close: 122.98 chg: +1.06 stop: 119.99

We remain bullish on RTP. The stock's pull back toward the $122 level can be used as a new bullish entry point. This happens to coincide with technical support (broken resistance) at the 40 and 50-dma's. There is additional support below with the 200-dma near the $120.00 level. Plus, the P&F chart is bullish and points to a $154 target. Our target is the $129.50-130.00 range since the $130 level is the next level of major resistance. We plan to exit ahead of RTP's early August earnings report.

Suggested Options:
We are suggesting the August calls although some traders might want to consider the October strikes.

BUY CALL AUG 120.00 RTP-HD OI= 0 current ask $6.70
BUY CALL AUG 125.00 RTP-HE OI= 8 current ask $3.80
BUY CALL AUG 130.00 RTP-HF OI= 10 current ask $1.95

Picked on June 27 at $123.33
Change since picked: - 0.35
Earnings Date 08/03/05 (unconfirmed)
Average Daily Volume = 160 thousand

---

SLM Corp - SLM - close: 50.25 change: -0.55 stop: 48.95

We initially added SLM on its bullish technical breakout over round-number resistance at the $50.00 level. The stock had been consolidating under the $49.50-50.00 region for weeks and had broken its trend of lower highs as well. We certainly didn't expect to see SLM struggle this much with the $51-52 region following the breakout but then again the broader market hasn't been very cooperative either. We remain bullish on the stock and would still consider new positions with SLM above the $50.00 mark. However, at this time we would probably watch for a dip to and a bounce from the $50 level before initiating new plays. The P&F chart is bullish and points to an $89 target but we are only targeting a move $54.50-55.00 range. The company just confirmed that it will report earnings on July 21st and we will plan to exit ahead of the report.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 45.00 SLM-HI OI=325 current ask $5.80
BUY CALL AUG 50.00 SLM-HJ OI=508 current ask $1.90
BUY CALL AUG 55.00 SLM-HK OI=117 current ask $0.30

Picked on June 20 at $ 50.92
Change since picked: - 0.67
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 1.8 million

---

Molson Coors - TAP - close: 61.59 chg: -0.41 stop: 59.49

So far so good. TAP appears to have built a new bottom or base pattern over the last several weeks and the recent breakout over the $61.00 level looked like a bullish entry point for short-term longs. We suggested that readers buy calls and target a move to the $64.00-65.00 range but to also be aware that the 50-dma would probably act as short-term resistance. Thus far TAP is following the script. The rally stalled at the 50-dma but Friday's pull back or profit taking was pretty mild. Traders bought the dip at the $61.00 level and shares were bouncing higher into the weekend. Readers can choose to go long at current levels of hope for a possible dip back toward the $60.00-60.50 region and buy a bounce from there instead. We plan to exit ahead of TAP's late July earnings report.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 60.00 TAP-HL OI= 83 current ask $3.30
BUY CALL AUG 65.00 TAP-HM OI= 66 current ask $0.95

Picked on June 29 at $ 61.38
Change since picked: + 0.21
Earnings Date 07/28/05 (unconfirmed)
Average Daily Volume = 909 thousand

---

Wellpoint Inc - WLP - close: 69.82 chg: +0.18 stop: 65.90

WLP is another health insurance stock that is trading at or near its all-time high. To be completely honest we've been disappointed with WLP's performance over the last few weeks. The breakout over resistance in the 68.00-68.30 region has been following with a slow, rocky, churning consolidation higher. This has made the technical oscillators useless. The P&F chart, which cuts out a lot of this noise, remains bullish and points to an $87 target. We're going to keep the play active but we do plan on exiting ahead of WLP's late July earnings report. Our target is the $74.00-75.00 range.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 65.00 WLP-HM OI= 13 current ask $6.20
BUY CALL AUG 70.00 WLP-HN OI=508 current ask $2.75
BUY CALL AUG 75.00 WLP-HO OI=428 current ask $0.85

Picked on June 05 at $ 68.40
Change since picked: + 1.42
Earnings Date 07/27/05 (unconfirmed)
Average Daily Volume = 3.5 million
 

Put Updates

Ambac Fincl. - ABK - close: 70.26 chg: +0.50 stop: 71.51

Hmm... ABK is struggling to let go of support near the $70.00 level. On Thursday the decline looked like a new bearish entry point but we would not open new plays with ABK above the $70 mark. Instead look for a new decline under $69.65. The P&F chart continues to look bearish with a $63 target. Our target is the $64.50-65.00 range but we plan to exit before ABK's late July earnings report.

Suggested Options:
We are suggesting the August puts.

BUY PUT AUG 75.00 ABK-TO OI=853 current ask $5.30
BUY PUT AUG 70.00 ABK-TN OI=338 current ask $2.15
BUY PUT AUG 65.00 ABK-TM OI=499 current ask $0.75

Picked on June 26 at $ 69.62
Change since picked: + 0.64
Earnings Date 07/20/05 (unconfirmed)
Average Daily Volume = 992 thousand

---

ESCO Tech. - ESE - close: 99.60 chg: -1.20 stop: 101.65 *new*

Good news! Our aggressive higher-risk put play in ESE is starting to look better. The stock was unable to breakout over its three-week trend of lower highs. Friday's breakdown under round-number, psychological support/resistance at the $100.00 mark is a good sign. Shares even dipped under the $99 level, which could have been used as a new entry point. We are going to lower our stop loss to $101.65. We continue to suggest that readers look for a decline under $99.00 or $98.00 before opening new put positions. Our target is the $92.00-90.00 range. We plan to exit before ESE's August earnings report.

Suggested Options:
We are suggesting the August puts although Septembers are also available.

BUY PUT AUG 100.00 ESE-TT OI=10 current ask $5.00
BUY PUT AUG 95.00 ESE-TS OI= 0 current ask $3.40

Picked on June 26 at $ 97.80
Change since picked: + 1.80
Earnings Date 08/10/05 (unconfirmed)
Average Daily Volume = 102 thousand

---

KLA-Tencor - KLAC - close: 43.60 chg: -0.08 stop: 45.76

KLAC isn't moving very fast but it is moving the right direction. We added KLAC as a put candidate this past week after the stock broke down under support at the $44.00 level and its 200-dma. The stock has continued to sink and now the SOX semiconductor index could help lead KLAC lower now that the SOX has broken down under support at the 420 level. The next obstacle for the bears is KLAC's 50-dma currently at 43.40. We are targeting a decline to the $40.50-40.00 range. The biggest risk we see in this play would be overly positive earnings reports from other semiconductor companies. The biggest one to watch out for is Intel's (INTC) on July 19th. We plan to exit KLAC before its own late July earnings report.

Suggested Options:
We are suggesting the August puts.

BUY PUT AUG 45.00 KCQ-TI OI=1647 current ask $2.75
BUY PUT AUG 42.50 KCQ-TV OI= 232 current ask $1.50
BUY PUT AUG 40.00 KCQ-TH OI= 390 current ask $0.75

Picked on June 29 at $ 43.88
Change since picked: - 0.28
Earnings Date 07/28/05 (unconfirmed)
Average Daily Volume = 5.4 million
 

Dropped Calls

AmerisourceBergen - ABC - close: 69.35 change: +0.20 stop: 65.57

Target achieved. ABC continued to rally on Friday morning and hit an intraday high of $69.74, which is more than enough for our $69.50 target. The stock looks a little short-term overbought and is facing round-number, psychological resistance at the $70.00 mark. Yet more aggressive traders may want to consider letting the stock run as ABC was bouncing higher on Friday afternoon. We are following our game plan and closing the play.

Picked on June 13 at $ 65.57
Change since picked: + 3.78
Earnings Date 07/21/05 (confirmed)
Average Daily Volume = 1.3 million

---

Ashland Inc - ASH - close: 60.15 chg: -11.72 stop: 67.95

Do you remember the headline on Wednesday regarding ASH completing the sale of its stake of an oil refinery to Marathon Oil (MRO) for $3.7 billion. The actual transfer of assets for that transaction took place on Friday and the share price of ASH was readjusted for the change. Looking at the daily chart you'll see a gap down and a 16 percent decline. Oddly enough we don't see any huge changes in the stock's calls or put prices. We're going to call this a busted play where we have been stopped out for a loss but you'd better check with your broker on how they're handling this change regarding the option values.

Picked on June 16 at $ 70.05
Change since picked: - 9.90*
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume = 1.1 million
 

Dropped Puts

None
 

Play Update Archives