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Call Updates

Target Corp - TGT - close: 53.86 change: -0.19 stop: 52.74*new*

Continued weakness in the retailers does not bode well for TGT and the stock did not bounce from yesterday's low. This is a poor sign for our breakout play. Conservative traders may want to exit now to avoid further losses or tighten their stop loss significantly closer to the 50-dma or the 53.50 region. If TGT breaks down under the 50-dma (53.60) we will consider exiting early! We are raising the stop loss to $52.74.

Picked on October 19 at $ 54.01
Change since picked: - 0.15
Earnings Date 11/10/05 (unconfirmed)
Average Daily Volume = 3.8 million
 

Put Updates

Broadcom - BRCM - close: 42.93 chg: -0.05 stop: 45.01

BRCM tried to rally again this morning but the rally failed under its simple 50-dma. We remain cautious. If the SOX can turn lower from its current sideways consolidation over the last few days and breakdown under the 200-dma then the picture should improve with BRCM. We are not suggesting new put positions in BRCM until the stock trades under Monday's low. If this occurs our target remains the $37 level.

Picked on October 24 at $ 41.95
Change since picked: + 0.98
Earnings Date 10/20/05 (confirmed)
Average Daily Volume = 7.3 million
 

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

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AmerisourceBergen - ABC - cls: 73.39 chg: -1.05 stop: n/a

ABC continues to sink following yesterday's news. The stock has broken support at the $74 level and is nearing support at its 100-dma near $72.50. We would not suggest new strangle positions at this time. The move out of our suggested entry window puts us in a wait-and-see mode. Earnings are due out next week.

Picked on October 16 at $ 74.81
Change since picked: - 1.42
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Administaff - ASF - close: 40.58 change: -0.07 stop: n/a

ASF provided another dip to the $40.00 level this morning and traders could have used that as a preferred entry point to consider launching new strangle positions. The options we are suggesting for the strangle are the November $45 call and the November $35 put. Try and keep your investment under $1.80. Our plan is to exit if either option hits $2.75 or more.

Picked on October 23 at $ 39.40
Change since picked: + 1.18
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 433 thousand

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Avid Tech. - AVID - close: 42.19 chg: +2.63 stop: n/a

Wow! AVID turned in a huge move today. The stock gapped higher to $39.71 and surged above last week's highs. Volume came in well above average and shares closed with a 6.6% gain. If you were quick this morning (the first 30 minutes of trading) there was an opportunity to launch a strangle in our suggested 39.50-40.50 window. Unfortunately, the sudden show of strength probably pushed the cost of our calls higher than we would have liked. We would not suggest new strangle plays at this time unless AVID were to pull back into the 40.50-39.50 trading window ahead of its earnings report due out tomorrow after the closing bell. Hmm... no news on today's spike. We wonder if AVID's earnings news may have leaked out early today. The options in our suggested strangle are the December $45 call and the December $35 put. We plan to exit if either side of the strangle rises to $4.50 or more.

Picked on October xx at $ xx.xx
Change since picked: + 0.00
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 929 thousand

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Genentech - DNA - close: 89.52 chg: +1.15 stop: n/a

DNA continues to show relative strength. The stock added another 1.3% on above average volume despite a decline in the BTK biotech index. We would not suggest new strangle positions at this time. The options in our suggested strangle are the December $95 call and the December $75 put. We plan to exit if either option rises to $4.50-5.00 or more.

Picked on October 20 at $ 84.83
Change since picked: + 4.69
Earnings Date 10/10/05 (confirmed)
Average Daily Volume = 3.9 million

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eBay Inc. - EBAY - close: 38.30 chg: +0.29 stop: n/a

We see no changes from our previous update on EBAY. We're not suggesting new plays at this time. The options in our suggested strangle are the November $45 call and the November $35 put. If either option rises to $2.00 or more we'll exit. Right now it looks like the put side may end up being the winning side.

Picked on October 18 at $ 40.42
Change since picked: - 2.12
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 18.3 million

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General Dynamics - GD - cls: 115.67 chg: -0.75 stop: n/a

Today's failed rally in shares of GD looks pretty bearish. The stock is nearing potential support at $115.00 and its simple 100-dma (114.80). We are not suggesting new strangle plays. Our strangle involves the November $125 call and the November $115 put. We plan to sell if either option rises to $4.00 or more.

Picked on October 09 at $119.59
Change since picked: - 3.92
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 713 thousand

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Harman Intl - HAR - cls: 100.91 chg: -3.13 stop: n/a

HAR is almost back to where we started and that does not bode well for the bulls. We are not suggesting new plays at this time but traders looking for new plays might want to consider a strangle using December options. Our strangle involves the November $110 call and the November $90 put. We plan to exit if either option rises to $6.00 or more.

Picked on October 18 at $100.80
Change since picked: + 0.11
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 739 thousand

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Intl Rectifier - IRF - close: 35.11 chg: +0.16 stop: n/a

IRF did try to rally midday but the momentum faded. IRF is still offering an entry point to launch new strangle positions ahead of its earnings report due out Thursday afternoon. We are suggesting the December $40 call (IRF-LH) and the December $30 put (IRF-XF). Try and keep your total investment under $1.40 if possible. We'll look for a rise to $2.40 as our target.

Picked on October 25 at $ 34.95
Change since picked: + 0.16
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 1.5 million

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ITT Industries - ITT - close: 107.40 chg: -3.46 stop: n/a

Hmmm... the action in ITT was interesting. The company is not due to report earnings until tomorrow morning before the opening bell. Yet the stock gapped down this morning on no apparent news. Shares opened at $108, managed a quick bounce to the $110 level but the rally failed. Shares of ITT then plunged late this afternoon under support at the $108 level. This doesn't bode well for tomorrow. We are not suggesting new strangle positions. Our current strategy involves the November $115 call and the November $105 put. We'll plan to exit if either option rises to into the $4.50-5.00 range.

Picked on October 20 at $109.96
Change since picked: - 2.56
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 532 thousand

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Kos Pharma - KOSP - close: 63.00 chg: +1.72 stop: n/a

KOSP continues to bounce and is challenging resistance at its trendline of lower highs. We are not suggesting new strangle positions at this time. The options for our previously suggested strangle are the November $65 call and the November $55 put. We'll plan to exit if either option rises to $5.00 or more.

Picked on October 20 at $ 59.80
Change since picked: + 3.20
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 460 thousand

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Legg Mason - LM - cls: 108.48 chg: +5.00 stop: n/a

The volatility in shares of LM has got to be driving some traders crazy! The stock got an upgrade this morning before the bell. This pushed shares to gap higher at $105.50 and soar to $109.90 (near three-month resistance at the $110 level). We are not suggesting new strangle positions. Our suggested strangle involves the November $110 call (LM-KB) and the November $90 put (LM-WR). We'll plan to exit if either rise to $4.50 or higher, which is an adjustment from our previous target of $5.00.

Picked on October 12 at $102.59
Change since picked: + 5.89
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 966 thousand

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Loews - LTR - close: 90.67 change: -0.68 close: n/a

Tomorrow is the big day for LTR. The company is due to report earnings before the opening bell on Thursday. Wall Street expects profits of 0.72 a share. We are not suggesting new positions at this time. The options in our strategy are the December $95 calls and the December $85 puts. We'll plan to exit if either option rises to $5.00 or more.

Picked on October 23 at $ 89.94
Change since picked: + 0.73
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Microsoft - MSFT - close: 25.11 change: +0.08 stop: n/a

MSFT continues to vacillate around the $25 level ahead of its earnings report due out tomorrow after the closing bell. This is still an entry point to consider a strangle position ahead of its earnings report. We are suggesting an entry window of 25.25-24.75. We are suggesting a strangle with the December $27.50 call (MSQ-LY) and the December $22.50 put (MSQ-XX). We're suggesting that readers keep their total cost under $40 cents if possible. As of yesterday the cost for both was $0.30 total. With the December options we're aiming for a rise to $0.80-0.90. Traders might want to consider an alternative and buy a strangle using the January $27.50 call and the $22.50 put for about $0.60 total.

Picked on October 25 at $ 25.03
Change since picked: + 0.08
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 64 million

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O'Reilly Auto. - ORLY - close: 27.42 chg: +0.42 stop: n/a

We see no changes from our previous update on ORLY. The options in our previously suggested strangle are the November $30 calls and the November $25 puts. We'll plan to sell if either option rises to $1.75 or more.

Picked on October 09 at $ 28.23
Change since picked: - 0.81
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 513 thousand

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Verifone Holdings - PAY - cls: 22.65 chg: +0.42 stop: n/a

We see no changes from our Monday update. We're not suggesting new strangle plays at this time. The options in our suggested January strangle are the January $17.50 puts (PAY-MW) and the January $22.50 calls (PAY-AX). We plan to sell if either of these hits $4.50 or more. We also suggested an alternative, more aggressive, November strangle with the November $17.50 puts (PAY-WW) and the November $22.50 calls (PAY-KX). We would sell if either of these hits $2.00 or more. We would definitely keep an eye on those November calls since they're rising!

Picked on October 12 at $ 19.98
Change since picked: + 2.67
Earnings Date 11/18/05 (unconfirmed)
Average Daily Volume = 259 thousand

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P.F.Chang's - PFCB - close: 44.38 chg: -5.93 stop: n/a

Almost! The big gap down today almost pushed the put side of our strangle to our target. PFCB reported earnings this morning. The company missed earnings estimates by a penny and issued lower guidance for the fourth quarter. The stock opened at $45.83 and dipped to $43.63 this afternoon on huge volume! The November $45 put is trading at $1.95bid/2.15 ask and hit a high of $2.35, which is a 56% rise over our estimated $1.50 cost to launch the strangle. We're targeting a rise to $2.50 or more but some traders may want to exit early for a profit.

Picked on October 20 at $ 49.99
Change since picked: - 5.61
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 912 thousand
 

Dropped Calls

SurModics - SRDX - close: 42.71 chg: -0.28 stop: 39.99

Per our game plan (see Sunday's update) we needed to exit on Tuesday or Wednesday afternoon to avoid holding over SRDX's earnings report, which came out after the closing bell today. The company beat by one cent but that wasn't enough to satisfy investors. Shares of SRDX are trading down sharply after hours.

Picked on October 18 at $ 40.95
Change since picked: + 1.76
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 249 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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