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Call Updates

Intl. Bus. Mach. - IBM - cls: 85.53 chg: +1.17 stop: 81.95

IBM proved to be a bright spot in the technology sector weakness today. The stock broke out over significant resistance at the $85.00 mark and lead the GHA hardware index to a gain. Our trigger to buy calls was $85.25 so the play is now open. Technical traders will note that volume came in above average on today's bullish breakout. Our target is the $89.90-90.00 range.

Picked on November 15 at $ 85.25
Change since picked: + 0.28
Earnings Date 01/16/06 (unconfirmed)
Average Daily Volume = 5.6 million

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Intel Corp. - INTC - close: 25.08 chg: -0.30 stop: 23.45

INTC is still struggling under its 100-dma and looks poised to breakdown under the 200-dma and the $25.00 mark. That is okay. We've been expecting a pull back toward the 10-dma currently near 24.60.
Our year-end target is the $26.00-26.50 range.

Picked on November 06 at $ 23.99
Change since picked: + 1.09
Earnings Date 10/18/05 (confirmed)
Average Daily Volume = 51.6 million

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Legg Mason - LM - cls: 114.82 change: -3.03 stop: 109.95

The broker-dealer stocks, which have been a leadership group, finally hit some profit taking today. LM lost 2.57% and we would expect the decline to touch its 10-dma currently at 113.25. Suddenly an early exit doesn't look so bad but we will continue to target the $119-120 range.

Picked on November 02 at $111.69
Change since picked: + 3.13
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 904 thousand

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NovAtel Inc. - NGPS - close: 28.32 chg: -0.55 stop: 27.75

We remain on the sidelines with NGPS. The stock is still trading inside its $28.00-30.00 trading range for now. If the stock breaks down under the $28 level or the 100-dma at 27.55 we'll probably drop NGPS as a bullish candidate. Our trigger to buy calls is at $30.45 (over Friday's high). If triggered we'll target a move into the $35.00-36.00 range.

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 292 thousand

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Rockwell Autom. - ROK - cls: 56.45 chg: -0.17 stop: 53.49

ROK reiterated their 2006 guidance today. Reaction to the news sparked a little bit of volatility but the sideways to up trend remains intact for now. We are targeting a move into the $61-62 range.

Picked on November 03 at $ 55.90
Change since picked: + 0.55
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 804 thousand
 

Put Updates

None
 

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: 77.11 chg: +0.37 stop: n/a

Wow! The action in ABC was incredibly anemic today. The company announced it was doubling its cash dividend and it would split its stock 2-for-1 and share closed with a 37-cent gain after failing to breakout of its two-week trading range? This was the perfect opportunity for ABC to make a move before November options expire and it failed. We are not suggesting new strangle positions at this time. The December strangle still has five weeks left with an estimated cost of $2.80 using the December $80 calls (ABC-LP) and the December $70 puts (ABC-XN). Our target for the December strangle is $5.00.

Picked on October 16 at $ 74.81
Change since picked: + 2.30
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 23.21 chg: -1.14 stop: n/a

AEOS reported earnings this morning and beat by a penny but guided lower for the fourth quarter. Reaction to the news was naturally negative. The stock gapped lower and at least two analysts firm downgraded the stock. We are no longer suggesting new strangle positions. The current strangle has an estimated cost of $2.35 with the January $27.50 calls (AQU-AY) and the January $22.50 puts (AQU-MX). We are targeting a rise to $4.70.

Picked on November 13 at $ 25.47
Change since picked: - 2.26
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 56.89 chg: -2.64 stop: n/a

The action in ANF today was bearish too and that's not surprising after rival AEOS guided lower for the fourth quarter and TGT issued and earnings warning. However, after the closing bell today ANF reported earnings and beat estimates by 8 cents while guiding higher for the fourth quarter. This positive surprise has pushed shares of ANF back toward the $60 level in after hours trading. We are not suggesting new strangle positions at this time. The options in our strangle are the January $65 calls (ANF-AM) and the January $55 puts (ANF-MK). Our estimated cost was $5.15. We're looking for a rise to $8.50.

Picked on November 13 at $ 59.67
Change since picked: - 2.78
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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D.R.Horton - DHI - close: 32.31 chg: -0.10 stop: n/a

There is not much change in DHI. The stock is still trading sideways as investors wait for the earnings report due out tomorrow. We are no longer suggesting new strangle positions at this time. Our strangle strategy involves the January $35 calls (DHI-AG) and the January $30 puts (DHI-MF). Our estimated cost was $3.15. We're aiming for a rise to $6.00.

Picked on November 13 at $ 32.56
Change since picked: - 0.25
Earnings Date 11/16/05 (confirmed)
Average Daily Volume = 3.2 million


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eBay Inc. - EBAY - close: 43.05 chg: -0.48 stop: n/a

A Reuters article that came out late last night mentioned that a fund controlled by billionaire George Soros had made new investments in Intel, Amazon.com, Ebay and increased its stake in Microsoft. Soros is no favorite among the generally conservative investing public but we're still surprised that the news didn't engender more strength in shares of EBAY today. We have three days left before November options expire. Our estimated cost was about $1.05. The November $35 puts (XBA-WG) are virtually worthless so we would not waste the commission trying to sell them - just let them expire. The November $45 calls (XBA-KI) are currently selling at $0.05bid/$0.10ask. It's up to you, the individual trader, to decide at what price do you try and salvage some capital from this play. We're going to lower our target to $0.50.

Picked on October 18 at $ 40.42
Change since picked: + 2.63
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 18.3 million

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Four Seasons - FS - close: 51.66 chg: +0.86 stop: n/a

FS continued its oversold bounce today and added another 1.6% but remains under what should be short-term resistance at the $52 level. We are not suggesting new strangles at this time. The options in our strangle were the January $60 calls (FS-AL) and the January $50 puts (FS-MJ). Our estimated cost was about $2.60. We're aiming for a rise to $5.00 or more.

Picked on November 08 at $ 55.37
Change since picked: - 3.71
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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General Dynamics - GD - cls: 115.50 chg: -0.45 stop: n/a

The good news here is that GD has closed under its simple 100-dma and looks poised to test and potentially break support at the $115 level. The chart does look bearish but we're running out of time with only three days left before November options expire. The options in our strangle are the November $125 calls (GD-KE) and the November $115 puts (GD-WC). Our estimated cost was about $2.00. Currently the Nov. 115 puts are trading at $0.40bid/$0.50ask. We're adjusted our target to $1.00 to try and salvage some trading capital here but if GD bounces from the $115 level then these puts will quickly sink toward zero and we'll have no chance to exit. Readers have to decide whether to exit now or bet on a breakdown.

Picked on October 09 at $119.59
Change since picked: - 4.09
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 713 thousand

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Harman Intl - HAR - cls: 100.25 chg: +0.25 stop: n/a

There is no change for our play in HAR. The stock continues to oscillate around the $100 level. Murphy's law will dictate that once the November options have expired the stock will shoot off sharply in one direction just to spite us! The options in our strangle were the November $110 calls (HAR-KB) and the November $90 puts (HAR-WR). Traders should try to salvage what they can if HAR makes any attempt at a breakout either direction.

Picked on October 18 at $100.80
Change since picked: - 0.55
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 739 thousand

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Hutchinson Tech. - HTCH - cls: 24.67 chg: -0.50 stop: n/a

What's this? Is HTCH breaking down again? Today's 2% decline did push the stock under round-number support at the $25.00 mark and its MACD indicator is nearing a new sell signal. We are not suggesting new strangles at this time. The options in our strangle were the January $30 calls (UTQ-AF) and the January $20 puts (UTQ-MD). Our estimated cost was $1.65. We are adjusting our target from $3.00 to breakeven at $1.65.

Picked on October 26 at $ 24.89
Change since picked: - 0.22
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand

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Kos Pharma - KOSP - close: 60.03 chg: +1.75 stop: n/a

Today's gain is bad news for our strangle since it puts us right back where we started. Shares of KOSP added 3% after announcing positive research news about one of its drugs raising "good" cholesterol and cutting artery plaque. The options in our strangle were the November $65 calls (KQW-KM) and the November $55 puts (KQW-WK). We need to be planning to exit on any spike that might breathe new life into the options so we can salvage some trading capital.

Picked on October 20 at $ 59.80
Change since picked: + 0.23
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 460 thousand

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Lear Corp - LEA - close: 28.11 chg: -0.31 stop: n/a

We see no changes from our weekend update on LEA. We're not suggesting new strangles at this time. The options in our strangle are the January $35 calls (LEA-AG) and the January $25 puts (LEA-ME). We are targeting a rise to $3.20 or more.

Picked on November 06 at $ 30.24
Change since picked: - 2.13
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 97.27 change: +0.21 close: n/a

LTR hit another new all-time high today. We don't see any changes from our previous updates. The options in our strategy are the December $95 calls (LTR-LS) and the December $85 puts (LTR-XQ). Our estimated cost is about $3.05. We did notice that the December $95 calls hit a high of $4.00 and are currently trading at $3.50bid/$3.90 ask. We have been targeting a rise to $5.00 or more but now we're adjusting our target so that we will exit if LTR-LS hits $5.00 or if shares of LTR hit $99.90 or more.

Picked on October 23 at $ 89.94
Change since picked: + 7.33
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Microsoft - MSFT - close: 27.50 change: +0.23 stop: n/a

MSFT performed another round of its magic act today as the stock continued to levitate higher. Shares are now testing resistance near $27.50 and the stock looks very overbought and due for a pull back. More conservative traders may want to seriously consider exiting right here. The MSQ-LY December $27.50 call hit a high of $0.60 today, which is an +100% rise in value for the cost of our strangle. Our estimated cost was $0.30 for the position. We are planning to exit if the calls hit $0.80.

Picked on October 25 at $ 25.03
Change since picked: + 2.55
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 64 million

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O'Reilly Auto. - ORLY - close: 30.00 chg: -0.60 stop: n/a

Ouch! ORLY hit some stronger profit taking today. Shares lost almost two percent and fell under its simple 10-dma. Today's decline pushed the November $30 calls (OQR-KF) down to $0.30bid/ $0.50ask. Our estimated cost was about $0.75. Traders might want to exit early to avoid further losses. More aggressive traders may want to bet on another bounce before November expiration but the short-term technical oscillators for the stock look bearish! We are adjusting our target down to $0.75.

Picked on October 09 at $ 28.23
Change since picked: + 1.79
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 513 thousand

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Verifone Holdings - PAY - cls: 23.95 chg: -0.35 stop: n/a

We see no changes from our weekend update on PAY. We are targeting a rise to $4.50 for our January strangle. Currently the January $22.50 calls (PAY-AX) appear to be the winning side.

Picked on October 12 at $ 19.98
Change since picked: + 3.97
Earnings Date 11/18/05 (unconfirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 25.92 chg: +0.43 stop: n/a

PDLI produced a bit of an oversold bounce today. We would not be surprised to see the stock rally toward $26.60-27.00 before continuing lower again. We are not suggesting new positions at this time. 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. We have five weeks left before December options expire.

Picked on October 30 at $ 27.70
Change since picked: - 1.78
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 16.39 change: -1.61 stop: n/a

SPC hit another new low today and closed down 1.15% on above average volume. We are not suggesting new strangle positions. Our estimated cost for this strangle was $1.25. The options in our suggested strangle are the December $22.50 calls (SPC-LX) and the December $17.50 puts (SPC-XW). We are aiming for a rise to $2.50 or more. Currently the Dec. $17.50 puts hit an intraday high of $1.95 and are currently trading at $1.75bid/$1.85ask. More conservative traders may want to consider exiting right now with a 44% rise in value.

Picked on November 08 at $ 20.63
Change since picked: - 4.24
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand
 

Dropped Calls

None
 

Dropped Puts

AutoZone - AZO - close: 85.31 chg: -0.76 stop: 84.95

Odds are that Target's (TGT) earnings warning before the opening bell today was the catalyst for AZO's weakness this morning after the open. The stock fell below short-term support at the 10-dma, 50-dma and the $85.00 level to hit our stop loss at $84.95 - closing the play.

Picked on November 13 at $ 86.74
Change since picked: - 1.43
Earnings Date 12/08/05 (unconfirmed)
Average Daily Volume = 1.1 million
 

Dropped Strangles

Inamed Corp. - IMDC - close: 81.28 change: +6.84 stop: n/a

Target achieved! This morning before the bell news hit the wires that Allergan (AGN) had announced an $84/share buyout bid for IMDC. Shares of IMDC gapped open at $82.00 and hit $83.16 before paring its gains. The options in our strangle were the December $75 calls (UZI-LO) and the December $65 puts (UZI-XM). We were targeting a rise to $5.00 or more and this morning the December $75 calls (UZI-LO) gapped open at $7.10 and rose to $8.10 before closing at $6.60bid/$6.80 ask. Our estimated cost was at $2.80. An exit at $7.10 would have been a 153% rise in value.

Picked on October 30 at $ 70.63
Change since picked: +13.63
Earnings Date 11/01/05 (unconfirmed)
Average Daily Volume = 533 thousand
 

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