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Call Updates

Building Mat. - BMHC - cls: 88.32 chg: +0.10 stop: 83.49

On Wednesday BMHC produced a strong breakout over its simple 50-dma and the $87.50 mark hitting our trigger at $87.55 opening the play. Our six-week target is the $98-99 range. If you think the market looks a bit overbought and due for a dip then watch BMHC for a pull back toward the $87 region and buy a bounce there.

Picked on November 02 at $ 87.55
Change since picked: + 0.77
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 536 thousand
 

Put Updates

Bard C.R.- BCR - close: 63.01 change: -0.07 stop: 63.55*new*

The action in the markets is growing more and more bullish. That's bad news for our put play in BCR. Thus far the stock remains under its trend of lower highs but the MACD indicator is nearing a new buy signal. More conservative traders may want to seriously consider exiting now to avoid further losses. We are adjusting our stop loss to $63.55.

Picked on October 26 at $ 61.70
Change since picked: + 1.31
Earnings Date 10/18/05 (confirmed)
Average Daily Volume = 745 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: 76.93 chg: +0.71 stop: n/a

ABC reported earnings before the opening bell today. The company beat estimates by 2 cents a share. The reaction to the news produced a gap up at the open but shares faded from their highs of the session. We are not suggesting new strangles at this time. The options in our suggested November strangle are the November $80 call (ABC-KP) and the November $70 put (ABC-WN). We plan to see if either side rises to $3.50. The options in our suggested December strangle are the December $80 calls (ABC-LP) and the December $70 puts (ABC-XN). We would sell if either side rises to $5.00 or more.

Picked on October 16 at $ 74.81
Change since picked: + 2.12
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Genentech - DNA - close: 92.84 chg: +1.09 stop: n/a

Another day, another gain for DNA. Yesterday the FDA announced an approval for Tarceva as a treatment for pancreatic cancer. Tarceva is produced by OSIP and DNA. At this time we see no changes from our previous updates on DNA. We are not suggesting new strangles 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.

Picked on October 20 at $ 84.83
Change since picked: + 8.01
Earnings Date 10/10/05 (confirmed)
Average Daily Volume = 3.9 million

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eBay Inc. - EBAY - close: 41.55 chg: +0.47 stop: n/a

EBAY has rallied back to resistance at the top of its previous trading range near $42.00. A breakout here and the stock will start to look like a call candidate. We are not suggesting new strangle positions. The options in our suggested strangle are the November $45 call (XBA-KI) and the November $35 put (XBA-WG). We are adjusting our price target for either side of the strangle from $2.00 to $1.65.

Picked on October 18 at $ 40.42
Change since picked: + 1.13
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 18.3 million

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General Dynamics - GD - cls: 116.15 chg: -0.15 stop: n/a

GD has been under performing the market lately by not participating in the rally. Shares have been churning sideways near the $116 level under resistance at the 50-dma but above support at the 100-dma. We're not suggesting new strangles. 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.

Picked on October 09 at $119.59
Change since picked: - 3.29
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 713 thousand

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Harman Intl - HAR - cls: 98.64 chg: -1.36 stop: n/a

HAR displayed some relative weakness today with a 1.3% decline. The next test is a breakdown below short-term support at the $98 level. The options in our previously suggested strangle are the November $110 call (HAR-KB) and the November $90 put (HAR-WR). Over the previous weekend we adjusted our target to $4.00 to try and breakeven (which is $3.80).

Picked on October 18 at $100.80
Change since picked: - 2.16
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 739 thousand

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Hutchinson Tech. - HTCH - cls: 25.79 chg: -0.35 stop: n/a

The action in HTCH was interesting. There was a little follow through this morning on yesterday's rally but today's strength quickly faded. Shares closed back under the simple 50-dma before the closing bell. Yesterday the stock got an upgrade to a "buy" rating and another analyst reiterated their "buy" rating on the stock. We are not suggesting new strangles at this time. The options in our previously suggested strangle were the January $30 calls (UTQ-AF) and the January $20 puts (UTQ-MD). We'll target a rise to $3.00.

Picked on October 26 at $ 24.89
Change since picked: + 0.90
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand

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Inamed Corp. - IMDC - close: 75.41 change: -0.03 stop: n/a

After four days of gains it looks like IMDC is taking a breather. The reaction to the earnings report has been positive but a pull back may be in order. We are not suggesting new plays at this time. The options in our strangle are the December $75 call (UZI-LO) and the December $65 put (UZI-XM). We plan to sell if either side rises to $5.00 or more.

Picked on October 30 at $ 70.63
Change since picked: + 4.78
Earnings Date 11/01/05 (unconfirmed)
Average Daily Volume = 533 thousand

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Kos Pharma - KOSP - close: 61.00 chg: -1.92 stop: n/a

On Wednesday the stock surged on news of a new hire. The company announced that it has named Kevin Clarke as executive vice president and chief financial officer. According to a Reuters article Clarke used to be senior managing director "responsible for healthcare mergers and acquisitions at Bear Stearns Cos." Before the opening bell this morning KOSP reported earnings and beat estimates by four cents. The earnings news prompted KOSP to gap open higher at $64.15 but the rally couldn't breakout over the simple 50-dma. This negative reaction doesn't bode well for the bulls. Of course we don't care what direct the stock goes. We are not suggesting new plays. 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.

Picked on October 20 at $ 59.80
Change since picked: + 1.20
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 460 thousand

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Legg Mason - LM - cls: 111.69 chg: +0.71 stop: n/a

Do our eyes deceive us? Has the impossible happened? LM finally broke out through resistance at the top of its trading range near $110.00. This is technically very bullish and volume came in above average on the move. Now the question is what do we do? Our hypothetical cost was around $2.40 for our initial strangle using November options. Our original target was for a rise toward $7.00. That seems pretty optimistic, especially now with only two weeks left before the November options expire. The high today for the November $110 call (LM-KB) was $3.40 and it is currently trading at $3.50bid/$3.70ask. If we sold right now we'd cover the cost of the play and still come out with a profit. That might be a wise thing to do. Yet on the other hand the breakout move is very bullish and the broker-dealer sector has displayed a lot of relative strength. If you bought multiple positions you might think about selling half to reduce your risk and leave the other half or a small position still open to see how far LM can go. We're going to leave the play open and adjust our price target for the options to $5.00, which could easily happen if LM rises another couple of points in the next few days. The options in our previously suggested strangle were the November $110 call (LM-KB) and the November $90 put (LM-WR).

Picked on October 12 at $102.59
Change since picked: + 9.10
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 966 thousand

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Loews - LTR - close: 95.07 change: +0.03 close: n/a

Another day, another rise for LTR although the rally looks like it is losing some steam. We wouldn't be surprised to see a dip back toward $92.50. We're not suggesting new strangle positions in LTR. 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.

Picked on October 23 at $ 89.94
Change since picked: + 5.13
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Microsoft - MSFT - close: 26.46 change: +0.00 stop: n/a

The stock closed unchanged today but yesterday investors responded very positively to a new plan of attack by MSFT to begin marketing some of its software programs online. The stock is looking pretty short-term overbought but the velocity of the new bullish trend is good news for our strangle. We are not suggesting new strangle positions. 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.

Picked on October 25 at $ 25.03
Change since picked: + 1.43
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 64 million

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O'Reilly Auto. - ORLY - close: 29.97 chg: +0.19 stop: n/a

We cannot find the catalyst behind ORLY's show of strength this week but the move has been impressive. The stock is now testing resistance at the $30.00 mark. The target for our strangle is $1.20 but more conservative traders may want to exit early around breakeven at $0.75. The options in our suggested strangle were the November $30 calls (OQR-KF) and the November $25 puts (OQR-WE).

Picked on October 09 at $ 28.23
Change since picked: + 1.78
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 513 thousand

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Oshkosh Truck - OSK - close: 42.98 chg: +1.20 stop: n/a

This is not a good sign. OSK rallied from the bottom of its trading range putting the stock almost right back where we started. If OSK doesn't breakout from the $41.50-44.00 range in the next several days then more conservative traders may want to abandon this play early. We are not suggesting new strangles. The options in our suggested strangle are the December $45 call (OSK-LI) and the December $40 put (OSK-XH). We're targeting a rise to $3.00 or more.

Picked on October 30 at $ 42.82
Change since picked: + 0.16
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 405 million

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Verifone Holdings - PAY - cls: 24.09 chg: +0.24 stop: n/a

PAY continues to creep higher and it's making the call side of our strangles look pretty strong. When we launched this play we suggested the January strikes but we also listed a more aggressive November strangle. The target for our November strangle was a rise to $2.00. Currently the November $22.50 calls (PAY-KX) are trading at $1.80bid/$2.00ask. That's pretty close to our target and readers may want to consider exiting early. The calls in our January strangle are the January $22.50s (PAY-AX) and we're looking for a rise to $4.50.

Picked on October 12 at $ 19.98
Change since picked: + 4.11
Earnings Date 11/18/05 (unconfirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 26.55 chg: +0.32 stop: n/a

PDLI got a bit of a bounce today following yesterday's post-earnings sell-off. We are no longer suggesting new strangle positions. The options in our hypothetical strangle are the December $30 calls (PQI-LF) and the December $25 puts (PQI-XE). We'll plan to sell if either side rises to $3.25.

Picked on October 30 at $ 27.70
Change since picked: - 1.15
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million
 

Dropped Calls

None
 

Dropped Puts

Broadcom - BRCM - close: 43.10 chg: +1.10 stop: 44.11

*This closing update and data for BRCM is dated 11/02/05.

Wednesday's rally was given a big boost by some leadership in the semiconductors. The SOX added 2.95% and pushed back above its simple 200-dma. It is this bullish action in the sector that suggests we should abandon our play in BRCM. Looking at BRCM we still see partial resistance at $44 and more near $45 with its 50-dma currently at 44.33. However, we'd rather bail out early and minimize our loss than hold the stock and see it test $45 again.

Picked on October 24 at $ 41.95
Change since picked: + 1.15
Earnings Date 10/20/05 (confirmed)
Average Daily Volume = 7.3 million

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Infosys Tech. - INFY - close: 70.21 chg: +0.94 stop: 70.51

The GSO software sector index continues to under perform and failed to rally with the rest of the market today. Yet that did not stop shares of INFY from breaking out over resistance at the $70.00 mark and its simple 200-dma. We have been stopped out at $70.51.

Picked on October 26 at $ 67.95
Change since picked: + 2.26
Earnings Date 10/11/05 (confirmed)
Average Daily Volume = 698 thousand
 

Dropped Strangles

Abercrombie&Fitch - ANF - cls: 56.27 chg: +2.42 stop: n/a

Target achieved. ANF's same-store sales figures for October blew away the estimates. The company announced that same-store sales soared to +31%. The reaction to the news had ANF gap higher to open at $58.70 and traded to $60.00 before pulling back. The calls in our suggested strangle were the December $55 calls (ANF-LK). The calls hit a high of $5.70 versus our target of $5.00. Our hypothetical cost was about $2.70 making a rise to our target of $5.00 an 85% jump in value.

Picked on October 28 at $ 49.50
Change since picked: + 6.77
Earnings Date 11/15/05 (unconfirmed)
Average Daily Volume = 2.6 million

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Administaff - ASF - close: 46.99 change: +2.02 stop: n/a

*This closing update and data for ASF is dated 11/02/05.

Target achieved! ASF added another 4.49% today on strong volume. Today's move put the stock at new all-time highs. Our suggested strangle was with the November $45 calls (ASF-KI) and the November $35 puts (ASF-WG). Today the calls hit our target of $2.75. That is a 65% rise from our hypothetical cost for the strangle of $1.60. At this point we would just let the put options expire worthless instead of trying to sell them and pay another commission.

Picked on October 23 at $ 39.40
Change since picked: + 7.59
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 433 thousand

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Black Box - BBOX - close: 45.10 chg: +4.90 stop: n/a

*This closing update and data for BBOX is dated 11/02/05.

Target achieved! BBOX reported earnings after the bell last night and beat estimates by six cents a share. This morning at least one analyst firm upgraded the stock. Shares gapped open at $42.38 and raced to an intraday high of $46.44 before setting for a 12.18% gain. Our suggested strangle was with the December $45 calls (QBX-LI) and the December $35 puts (QBX-XG). Our target was for a rise to $2.85. The $45 calls hit an intraday high of $3.00 surpassing our target. Our hypothetical cost basis was $1.65 so a rise to $2.85 is about 72%. We would let the puts expire worthless instead of trying to sell them and pay another commission, unless of course BBOX dips significantly and we can sell them for more than your brokers commission.

Picked on October 30 at $ 39.40
Change since picked: + 5.70
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 124 thousand
 

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