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Call Updates

Amerada Hess - AHC - close: 128.64 chg: 0.66 stop: 121.49

Crude oil slipped lower again on Friday but that didn't stop the oil sector from closing in the green. Shares of AHC dipped back toward its 50-dma but managed a bounce higher back into the closing bell. We want to reiterate that we're definitely bullish long-term on AHC but this is an aggressive play to go long calls on AHC now with crude oil still in a two-month downtrend. Fortunately, the one-month trend in shares of AHC is bullish and short-term technical look positive. We also like the Point & Figure chart on AHC, which has a strong buy signal and a $160 price target. We have a seven-week target in the $139.85-140.00 range. More conservative traders may want to wait for a new high over 130.75 before considering new bullish positions.

Suggested Options:
We are going to suggest January calls.

BUY CALL JAN 125.00 AHC-AE open interest=613 current ask $9.60
BUY CALL JAN 130.00 AHC-AZ open interest=948 current ask $6.80
BUY CALL JAN 135.00 AHC-AY open interest=511 current ask $4.70

Picked on November 16 at $128.49
Change since picked: 0.15
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.9 million

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Intl. Bus. Mach. - IBM - cls: 87.77 chg: 0.88 stop: 83.99 *new*

Technology stocks have helped lead the rally this past week and in the front of the pack was IBM. The stock broke through significant resistance at the $85.00 mark and has not looked back. IBM's gains this past week have also produced a new buy signal on its Point & Figure chart that now points to a $104 target. We're targeting a rally into the $89.90-90.00 range. However, IBM does look a little bit short-term overbought so we would not suggest new bullish positions here. A dip back to its simple 10-dma, near support at $85.00, could offer another entry point. We are raising the stop loss to $83.99.

Suggested Options:
We are not suggesting new call positions in IBM at this time.

Picked on November 15 at $ 85.25
Change since picked: 2.52
Earnings Date 01/16/06 (unconfirmed)
Average Daily Volume = 5.6 million

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Intel Corp. - INTC - close: 25.30 chg: 0.19 stop: 23.45

The SOX semiconductor index turned in a very strong performance on Friday, up 2.5%, but sadly shares of INTC lagged behind its peers. INTC continues to struggle with short-term resistance at the simple 100-dma near $25.50. We are not suggesting new bullish call positions at this time. Traders interested in starting new plays can watch for a potential dip back toward the $24.50-24.75 region. Our year-end target is the $26.00-26.50 range.

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

Picked on November 06 at $ 23.99
Change since picked: 1.31
Earnings Date 10/18/05 (confirmed)
Average Daily Volume = 51.6 million

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NovAtel Inc. - NGPS - close: 29.81 chg: 0.60 stop: 27.75

It has been a quiet week for NGPS. The stock has spent the last five days churning sideways in its $28.00-30.00 trading range. However, the bullish market has lifted NGPS toward the top of its range and the stock looks poised to breakout. Our strategy is to go long calls on a breakout with a trigger at $30.45 above last week's high. If triggered we'll target a move into the $35.00-36.00 range.

Suggested Options:
We are going to suggest the December calls because there aren't any Januarys available yet.

BUY CALL DEC 25.00 QAZ-LE open interest= 98 current ask $7.70
BUY CALL DEC 30.00 QAZ-LF open interest=496 current ask $2.50
BUY CALL DEC 35.00 QAZ-LG open interest=214 current ask $0.60

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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Phelps Dodge - PD - cls: 131.19 chg: 1.14 stop: 123.45

Copper prices produced a strong surge on Friday and the commodity is nearing $2.00 a contract, which is multi-year if not all-time highs. This strength in the metal pulled shares of PD higher and the stock hit our trigger to buy calls at $131.25. We do not see any changes from our new play description on Thursday night so we're reposting it here:

You know the old saying, "if at first you don't succeed, try, try again." Well, we're going to try again with PD. The metal stocks are moving and copper prices continue to march higher. This time we're going to alter our bullish strategy a bit with PD. We're going to suggest a trigger at $131.25. Only if PD trades at our trigger or higher will we suggest buying calls on the stock. We're also going to set our stop loss at $123.45, which is under the recent lows of this week. More aggressive traders might want to put their stop under the simple 50-dma at $123.00. Our target is the $139.90-140.00 range. The Point & Figure chart for PD points to a $150.00 target. More conservative traders may want to target the October high near $138.50.

Suggested Options:
We are suggesting the December or January options but our preference is the Januarys.

BUY CALL DEC 125 PD-LE open interest=1128 current ask $9.20
BUY CALL DEC 130 PD-LF open interest=1404 current ask $6.00
BUY CALL DEC 135 PD-LG open interest= 898 current ask $3.60

-or-

BUY CALL JAN 125 PD-AE open interest=2138 current ask $12.00
BUY CALL JAN 130 PD-AF open interest=6855 current ask $9.20
BUY CALL JAN 135 PD-AG open interest=1689 current ask $6.70

Picked on November 18 at $131.25
Change since picked: - 0.06
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Rockwell Autom. - ROK - cls: 57.49 chg: 0.10 stop: 53.90

ROK continues to creep higher and hit another new seven-month high on Friday but it looks like the rally is losing some steam. We would not suggest new bullish positions right here. Overall the pattern looks very promising for ROK but shares might dip back to its 10-dma or even the $56 or $55 level before moving much higher. We are targeting a move into the $61-62 range. We are raising our stop loss to $54.80.

Suggested Options:
We are not suggesting new bullish positions in ROK at this time.

Picked on November 03 at $ 55.90
Change since picked: 1.59
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: 78.00 chg: 0.00 stop: n/a

The lack of upward momentum in ABC is unnerving. The overall pattern remains bullish and its P&F chart is bullish (with a $114 price target, no less) but we're just not seeing any oomph in the stock's trajectory. This sideways consolidation killed our November strangle and has done a lot of damage to our current December strangle with the December $80 calls (ABC-LP) and the December $70 puts (ABC-XN). Our estimated cost was $2.80. Our current target is for a rise to $5.00 in the strangle. If ABC can push past the $78.80 level it looks like the bulls will be in the clear or at least in strong shape to challenge the $80 level. Considering the recent dividend and stock split news announced this past week we would expect the slow but upward bullish trend to continue.

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

Picked on October 16 at $ 74.81
Change since picked: 3.19
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 23.66 chg: -0.18 stop: n/a

If you just looked at AEOS' closing numbers on Friday it would not tell the whole story. The stock rallied Friday morning but the rally stalled near the top of its gap down from this past week. This is not too much of a surprise since the top and bottom of a gap tends to act as support or resistance. What is more interesting for traders was news from rival Gap (GPS). GPS reported an earnings warning and guided lower for the fourth quarter. Shares of GPS lost more than 7% and threw doubt back into the retail picture for apparel stores. We suspect that the action on Friday for AEOS could be a turning point before the stock turns lower. At this time we're not 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.

Suggested Options:
At this time we're not suggesting new strangle positions.

Picked on November 13 at $ 25.47
Change since picked: - 1.84
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 61.01 chg: -0.85 stop: n/a

The earnings warning from rival Gap (GPS) undermined the rally in shares of ANF. However, the pull back in ANF on Friday did not dip below broken resistance, now new support, at the $60.00 level. 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.

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

Picked on November 13 at $ 59.67
Change since picked: 1.34
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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D.R.Horton - DHI - close: 34.81 chg: -0.15 stop: n/a

The rally in the homebuilders took a breather on Friday but the action this past week appears to have launched the new leg higher. DHI blew past earnings estimates and guided higher going forward when they reported on the 16th. In the last two sessions the stock has broken through major resistance at its 50-dma, 200-dma and its 3 1/2 month trendline of resistance (see chart). We are not suggesting new strangle positions at this time. Our current 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.

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

Picked on November 13 at $ 32.56
Change since picked: 2.25
Earnings Date 11/16/05 (confirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 50.10 chg: -0.18 stop: n/a

FS continues to under perform the market and the stock looks poised to breakdown under the $40 level again. 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.

Suggested Options:
We are not suggesting new strangle positions in FS at this time.

Picked on November 08 at $ 55.37
Change since picked: - 5.27
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Hutchinson Tech. - HTCH - cls: 25.44 chg: 0.30 stop: n/a

Unfortunately, HTCH remains stuck inside its sideways trading range. If we do not see shares breakout one way or the other in the next week we will probably exit early to avoid a total loss. 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 have adjusted our initial target from $3.00 to breakeven at $1.65 since the post-earnings reaction was not as big as expected.

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

Picked on October 26 at $ 24.89
Change since picked: 0.55
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand

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Lear Corp - LEA - close: 28.89 chg: 0.81 stop: n/a

Shares of GM continued to rally sharply for their second day in a row and it's starting to rub off on shares of LEA. Overall the trend remains bearish for LEA and the stock has resistance at both the $29 and $30 levels. We are no longer suggesting new strangle positions. 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.

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

Picked on November 06 at $ 30.24
Change since picked: - 1.35
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 97.80 change: 0.06 close: n/a

LTR hit yet another all-time high on Friday at $98.70. The trend remains bullish but the momentum appears to be slowing. Our target is for a rise to $5.00 in the strangle and/or we'll exit if shares of LTR hit $99.90, since the $100 level is probably going to act as round-number resistance. 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. FYI: the December $95 calls hit a high of $4.60 on Friday.

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

Picked on October 23 at $ 89.94
Change since picked: 7.86
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 23.70 chg: 0.03 stop: n/a

Shares of PAY bounced sharply from a test of support near $22 and its 200-dma's on Thursday. We're a little surprised that Friday's session failed to produce much follow through on the rebound. However, the overall pattern remains bullish and the calls side of our strangle is poised to be the winner. Our November strangle in PAY hit our target a couple of weeks ago. Our remaining strangle involves the January $22.50 calls (PAY-AX) and the January $17.50 puts (PAY-MW). Our estimated cost was $2.60 and we're aiming for a rise to $4.50 or more.

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

Picked on October 12 at $ 19.98
Change since picked: 3.72
Earnings Date 11/18/05 (unconfirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.80 chg: 1.40 stop: n/a

Hmm... we've been expecting a bounce higher into the $26.50-27.00 region but we are surprised by PDLI's strength on Friday with a 5.3% gain on above average volume. The move is partially fueled by a strong day in the biotech sector this past Friday. This may prove to be a turning point in the stock price. PDLI has broken above its simple 50-dma and above its six-week trendline of lower highs. Short-term oscillators have naturally turned positive and its MACD has produced a new buy signal. With a strangle we don't care what direction the stock moves as long as it moves significantly in one direction. We'll need to see PDLI above $30 or under $25 in the next couple of weeks or we'll be facing a loss for the play. The December options expire in about four weeks. The options in our hypothetical strangle are the December $30 calls (PQI-LF) and the December $25 puts (PQI-XE). Our estimated cost was at $1.80. We'll plan to sell if either side rises to $3.25.

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

Picked on October 30 at $ 27.70
Change since picked: 0.10
Earnings Date 11/01105 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 17.80 change: 0.20 stop: n/a

We do not have much new to report on for SPC. The stock gapped lower a couple of weeks ago after its earnings report. The stock dipped to $16.00 before producing an oversold bounce. The trend remains bearish but the oversold bounce may not be over yet. We have about four weeks before December options expire. 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.

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

Picked on November 08 at $ 20.63
Change since picked: - 2.64
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

eBay Inc. - EBAY - close: 44.67 chg: 0.87 stop: n/a

EBAY did make another rally attempt on Friday but shares couldn't push past resistance at the $45.00 level. Our November strangle has expired with a loss. Traders may want to keep an eye on EBAY as a bullish candidate for regular call options if the stock breaks out over the $45 mark.

Picked on October 18 at $ 40.42
Change since picked: 4.25
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 18.3 million

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General Dynamics - GD - cls: 117.21 chg: -0.89 stop: n/a

Shares of GD spiked higher on Friday morning but the rally quickly failed and the stock closed back under its 50-dma and inside its trading range from the previous two weeks. Our November strangle has expired with a loss.

Picked on October 09 at $119.59
Change since picked: - 2.38
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 713 thousand

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Harman Intl - HAR - cls: 99.20 chg: -0.43 stop: n/a

True to form, shares of HAR rallied higher at the open and closed within 80 cents of the $100.00 mark and strike price. Our November strangle has expired with a loss. We fully expect Murphy's law to come alive and see shares take off either direction next week.

Picked on October 18 at $100.80
Change since picked: - 1.60
Earnings Date 10/19/05 (confirmed)
Average Daily Volume = 739 thousand

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Kos Pharma - KOSP - close: 61.53 chg: 0.53 stop: n/a

KOSP continued to bounce on Friday and it is near the top of its descending channel. Unfortunately, the rally wasn't enough to save this play and the November strangle has expired with a loss.

Picked on October 20 at $ 59.80
Change since picked: 1.73
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 460 thousand
 

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