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Call Updates

None
 

Put Updates

Bard C.R.- BCR - close: 61.90 change: +0.54 stop: 64.25

Friday was a very tough day for the bears with almost every sector closing in the green and many with very hefty gains. Shares of BCR were not immune to the widespread bullishness and the stock rebounded from its intraday low. We would hesitate to launch any new put positions at this time. Look for a failed rally under the simple 10-dma currently near $63.00 as a potential entry point. Our target is the $58.00 level but more aggressive traders might want to target the $55 region. Currently the Point & Figure chart points to a $55.00 target. Our time frame is less than six weeks.

Suggested Options:
We are not suggesting new plays at this time. However, if BCR does offer a new entry point we'd look to the December puts.

Picked on October 26 at $ 61.70
Change since picked: + 0.20
Earnings Date 10/18/05 (confirmed)
Average Daily Volume = 745 thousand

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Broadcom - BRCM - close: 41.42 chg: +0.11 stop: 44.11

The semiconductor sector was one of two sectors that failed to close in the green during Friday's big rally. Yet it is important to note that chip stocks rebounded well off their lows. BRCM dipped to $39.57 before bouncing all the way back into the green. This pattern is typically a one-day bullish reversal pattern and doesn't bode well for us. The pattern is even more of a problem for us since BRCM has effectively "filled the gap" from July. We would expect BRCM to produce some follow through on Friday's bounce. The question is where will the stock encounter resistance. There is some resistance near $42.00 and its 100-dma. There is additional resistance in the $43.00-43.25 region. We are not going to suggest new plays at this time. If BRCM produces a failed rally under $43.00 then more aggressive traders might want to consider it. Should BRCM reverse course again our target is the $37.00 level. Currently the Point & Figure chart points to a $35 target.

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

Picked on October 24 at $ 41.95
Change since picked: - 0.53
Earnings Date 10/20/05 (confirmed)
Average Daily Volume = 7.3 million

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Infosys Tech. - INFY - close: 67.14 chg: +1.62 stop: 70.51

Investors reacted favorably to MSFT's earnings report and the stock added 2.57% on strong volume, which lead the GSO software index to a 1.5% gain. INFY followed suit and paced MSFT with a 2.4% bounce from the $65 region. INFY's pattern remains bearish. The P&F chart points to a $57 target. We are not going to suggest new put positions in INFY at this time but more aggressive traders might want to watch for a failed rally under the 200-dma and the $70.00 level as a new entry point. Our target is the $62-60 range. November 11th might see some volatility as INFY hosts an analysts meeting.

Suggested Options:
We are not suggesting new positions at this time. If INFY does provide an entry point we'd consider the December or January calls.

Picked on October 26 at $ 67.95
Change since picked: - 0.81
Earnings Date 10/11/05 (confirmed)
Average Daily Volume = 698 thousand
 

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: 75.34 chg: +1.90 stop: n/a

The big rally on Friday pushed ABC to a 2.58% gain on strong volume. Shares are trading back near the pivotal $75.00 level and testing technical resistance at its simple 50-dma. As long as ABC trades inside the $74.50-75.50 range we would still consider launching new strangle positions but we want to do so before the company's earnings report. ABC is expected to report earnings on Thursday, November 3rd before the market's open. Wall Street is looking for profits of $0.93 a share. Our initial strangle involves the November strikes. We are also going to suggest December strikes for any new positions. See below.

Suggested Options:
A strangle play requires that traders buy both an out of the money call and an out of the money put. We're suggesting Novembers (more aggressive/risky) and Decembers, which give you more time but cost more. At current prices the November strangle costs about $1.50. Try not to pay more than $1.75. We are going to adjust the target on the Novembers to $3.50.

BUY CALL NOV 80.00 ABC-KP open interest= 764 current ask $0.70
-and-
BUY PUT NOV 70.00 ABC-WN open interest=1488 current ask $0.80

If you play December strikes current prices would cost about $2.80. Try to pay less than $3.00. We would target a rise to $5.00 or more.

BUY CALL DEC 80.00 ABC-LP open interest= 115 current ask $1.40
-and-
BUY PUT DEC 70.00 ABC-XN open interest= 42 current ask $1.40

Picked on October 16 at $ 74.81
Change since picked: + 0.53
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Abercrombie&Fitch - ANF - cls: 49.58 chg: +2.61 stop: n/a

Perfect! The big rally on Friday pushed ANF right back toward the $50.00 mark and into our suggested entry window of $49.50-50.50. The stock has been narrowing its consolidation with a pattern of higher lows and lower highs and the longer it coils like this the bigger the breakout. We do plan to hold over ANF's November 15th earnings report.

Suggested Options:
We are suggesting the December strikes for this strangle although traders who prefer more time could use January's. Current prices put the December strangle at $2.95. Try not to pay more than 3.00 if you can help it. We'll target a rise to $5.00 or more.

BUY CALL DEC 55.00 ANF-LK open interest= 464 current ask $1.40
-and-
BUY PUT DEC 45.00 ANF-XI open interest=1335 current ask $1.55

Picked on October 28 at $ 49.50
Change since picked: + 0.08
Earnings Date 11/15/05 (unconfirmed)
Average Daily Volume = 2.6 million

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Administaff - ASF - close: 41.29 change: +1.01 stop: n/a

Friday offered traders yet another chance to launch strangle positions on ASF. The stock oscillated on either side of the $40.00 level before finally surging higher in the afternoon. The stock looks poised to continue climbing but all that could change. The company is due to report earnings on Tuesday, November 1st. Wall Street expects earnings of $0.23 a share. At this time we would not suggest new strangle positions but if ASF pulled back to the $40 level again on Monday that could be used as another entry point.
Suggested Options:
We are not suggesting new plays at this time. The options in our previous suggested strangle are the November $45 call (ASF-KI) and the November $35 put (ASF-WG). We plan to sell if either side of the strangle rises to $2.75 or more.

Picked on October 23 at $ 39.40
Change since picked: + 1.89
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 433 thousand

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Genentech - DNA - close: 87.72 chg: +0.63 stop: n/a

We are currently in a wait-and-see mode with DNA. The recent breakout from its sideways consolidation suggests an upward bias. This is also reflected in the Point & Figure chart with its triple-top breakout buy signal and $107 price target. We're not suggesting new positions at this time. The options in our strangle are the December $95 call (DWN-LS) and the December $75 put (DWN-XO). We plan to exit if either option rises to $4.50-5.00 or more.

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

Picked on October 20 at $ 84.83
Change since picked: + 2.89
Earnings Date 10/10/05 (confirmed)
Average Daily Volume = 3.9 million

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eBay Inc. - EBAY - close: 38.43 chg: +0.59 stop: n/a

EBAY continues to languish behind the rest of the market following its disappointing earnings report. Yet even EBAY could not escape the Friday rally and shares added 1.55%. We are not suggesting new plays at this time. The options in our suggested strangle are the November $45 call (XBA-KI) and the November $35 put (XBA-WG). Thus far EBAY has not been cooperating and this sideways churning is killing the option premiums. We are adjusting our price target for either side of the strangle from $2.00 to $1.65.

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

Picked on October 18 at $ 40.42
Change since picked: - 1.99
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 18.3 million

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General Dynamics - GD - cls: 116.65 chg: +1.49 stop: n/a

The market rally on Friday helped GD rebound from support near $115 and its simple 100-dma. Short-term technicals are turning positive but the $118.00-118.50 region looks like new resistance. We are not suggesting new plays. Our strangle strategy involves the November $125 call (GD-KE) and the November $115 put (GD-WC). We plan to sell if either option rises to $4.00 or more.

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

Picked on October 09 at $119.59
Change since picked: - 2.94
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 713 thousand

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Harman Intl - HAR - cls: 98.85 chg: -1.25 stop: n/a

Technicals have taken a turn for the worse and HAR is now trading under the $100 level and its simple 50-dma. We are not suggesting new strangle positions at this time. Our initial strangle is based on the November $110 call (HAR-KB) and the November $90 put (HAR-WR). Lack of follow through on the earnings move does not bode well. We are adjusting our target from $6.00 to $4.00. We'll try to get out at break even and may be a little bit more to cover commissions. Our hypothetical cost basis is $3.80.

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

Picked on October 18 at $100.80
Change since picked: - 1.95
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 739 thousand

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Hutchinson Tech. - HTCH - cls: 24.36 chg: -0.14 stop: n/a

HTCH continues to display relative weakness. The stock lost more than half a percent on Friday while the rest of the market surged higher. The company is expected to report earnings on Tuesday, November 1st after the closing bell. Wall Street is looking for profits of 13-cents a share. That makes Monday and Tuesday our last chance to initiate any new strangle positions but only if HTCH moves back into our suggested entry window of $24.75-25.25. The options we were suggesting are the January $30 calls (UTQ-AF) and the January $20 puts (UTQ-MD). We would try and keep the costs around $1.75 or less. We'll target a rise to $3.00.

Suggested Options:
We are not suggesting new plays unless HTCH moves back into the $24.75-25.25 entry window.

Picked on October 26 at $ 24.89
Change since picked: - 0.53
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand

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Kos Pharma - KOSP - close: 60.79 chg: -0.86 stop: n/a

The relative weakness in KOSP on Friday pulled the stock back towards the $60.00 level. Traders might want to consider launching new strangle positions with shares under $61.00. However, our preferred entry window to initiate strangles would be the $60.50-59.50 range. Traders will want to create their positions ahead of KOSP's earnings report. The company is due to report earnings on November 3rd before the opening bell. Analysts are looking for 0.70 a share. The options for our previously suggested strangle are the November $65 call (KQW-KM) and the November $55 put (KQW-WK). We'll plan to exit if either option rises to $5.00 or more.

Suggested Options:
If you choose to open new strangle positions in KOSP we would probably use the December options instead of Novembers. This gives you more time but raises the cost of the trade.

Picked on October 20 at $ 59.80
Change since picked: + 0.99
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 460 thousand

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Legg Mason - LM - cls: 104.00 chg: +1.04 stop: n/a

LM traded in a relatively narrow range on Friday. It was as if both the bulls and bears were too tired to push any more after the extremely volatile week. We are not suggesting new strangle positions on the stock at this time. Furthermore we will have to consider the possibility that LM will continue to churn sideways inside its $100-$110 trading range, which would kill any remaining premiums for our options. We do still have three weeks before the November options expire but it may be time to adjust our target to breakeven at $2.40 or higher. Keep that possibility in mind. The options in our previously suggested strangle were the November $110 call (LM-KB) and the November $90 put (LM-WR).

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

Picked on October 12 at $102.59
Change since picked: + 1.41
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 966 thousand

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Loews - LTR - close: 90.75 change: +1.95 close: n/a

Shares of LTR did not produce a very big reaction to its earnings report. Therefore we are not suggesting new strangle positions at this time although if LTR continues to narrow its consolidation around the $90.00 mark new strangles could certainly work. The options in our strategy are the December $95 calls (LTR-LS) and the December $85 puts (LTR-XQ). We'll plan to exit if either option rises to $5.00 or more.

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

Picked on October 23 at $ 89.94
Change since picked: + 0.81
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Microsoft - MSFT - close: 25.53 change: +0.64 stop: n/a

Reaction to MSFT's earnings report on Thursday night went from mostly bearish after hours on Thursday to bullish on Friday. An upgrade from CSFB didn't hurt nor did a massive rally in the markets. The stock added 2.5% and is challenging resistance at its simple 200-dma. We are not suggesting new strangle positions at this time. Our strangle is based on the December $27.50 call (MSQ-LY) and the December $22.50 put (MSQ-XX). We are aiming for a rise to $0.80-0.90 for either side of the strangle.

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

Picked on October 25 at $ 25.03
Change since picked: + 0.50
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 64 million

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O'Reilly Auto. - ORLY - close: 27.01 chg: -0.23 stop: n/a

ORLY did not produce a very big reaction to its earnings report. The sideways churning in the stock price is killing the option premiums. Therefore we're going to lower our target. We'll exit if either option in our strangle rises to $1.20. The options were the November $30 calls (OQR-KF) and the November $25 puts (OQR-WE). More conservative traders might want to consider just exiting at breakeven (0.75).

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

Picked on October 09 at $ 28.23
Change since picked: - 0.86
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 513 thousand

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Verifone Holdings - PAY - cls: 21.86 chg: +0.02 stop: n/a

We are still in a wait-and-see mode with PAY. The stock is outside our suggested entry window to initiate strangles. It looks like the call side of the strangle might win out but there is still plenty of time for our January options. We also listed a more aggressive November strangle, which has three weeks left until expiration. 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. The options in the November strangle were 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.

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

Picked on October 12 at $ 19.98
Change since picked: + 1.88
Earnings Date 11/18/05 (unconfirmed)
Average Daily Volume = 259 thousand
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

Avid Tech. - AVID - close: 48.91 chg: +5.08 stop: n/a

Target achieved! Investor reaction to AVID's earnings after the bell on Thursday pushed the stock significantly higher on Friday. The stock gapped open at $49.40 and traded to $50.00. At least two analysts reiterated their "buy" ratings on the stock. The options in our strangle were the December $45 call (AQI-LI) and the December $35 put (AQI-XG). Our target was to sell if either side rose to $4.50 or more. The $45 call hit a high of $6.50 and is trading now at 5.30bid/5.70 ask.

Picked on October 25 at $ 39.56
Change since picked: + 9.35
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 929 thousand

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Intl Rectifier - IRF - close: 27.86 chg: -6.19 stop: n/a

Target achieved. Friday's reaction to IRF's earnings (Thursday night) was pretty drastic. The stock lost more than 18 percent. The December $30 put (IRF-XF) in our strangle hit a high of $3.70 and is trading at $3.00bid/$3.10 ask. Our target was $2.40.

Picked on October 25 at $ 34.95
Change since picked: - 7.09
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 1.5 million
 

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