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Call Updates

Dominion Res. - D - close: 76.31 chg: +0.36 stop: 74.75

D managed a bounce from its intraday low above the simple 200-dma but the stock seemed to lag behind the major indices and some of its peers. Readers looking for an entry point might want to wait for a move over $77.50 or the $78 level before considering new calls. The 50-dma near $78.40 is the next significant level of resistance so more conservative traders might feel better waiting for a breakout over the $50-dma before considering new longs.

Picked on November 27 at $ 78.24
Change since picked: - 1.93
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Hovnanian - HOV - close: 50.09 change: +0.25 stop: 47.45

Homebuilders rebounded today but shares of HOV spent the session consolidating sideways. A rise from here over 50.50 could be used as a new bullish entry point now that the major indices are showing strength again. The $48 level remains short-term support. Our target is the $54.50-55.00 range.

Picked on November 21 at $ 49.25
Change since picked: + 0.84
Earnings Date 12/07/05 (unconfirmed)
Average Daily Volume = 1.5 million

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NovAtel Inc. - NGPS - close: 29.86 chg: -0.30 stop: 27.75

Uh-oh. NGPS did not participate in the market's rally today. Instead shares closed under round-number, psychological support at the $30 level today. That's bad news for the bulls. More conservative traders may want to exit early right here. You can always re-enter the play later. We might consider exiting early if NGPS doesn't rebound soon. Our target is the $35.00-36.00 range by year-end.

Picked on November 21 at $ 30.45
Change since picked: - 0.54
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 292 thousand

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Polaris Ind. - PII - close: 52.90 change: +3.46 stop: 47.99 *new*

Positive news for retail sales and consumer spending today helped lift the markets and propel shares of PII through resistance at the $50 level and its 100-dma. Volume came in almost twice the average on today's breakout for PII. Our target is the $54.00-55.00 range. We are raising our stop loss to $47.99.

Picked on November 21 at $ 48.47
Change since picked: + 4.43
Earnings Date 01/12/06 (unconfirmed)
Average Daily Volume = 467 thousand

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Rockwell Autom. - ROK - cls: 59.42 chg: +2.99 stop: 55.75 *new*

Wow! The tables have turned for shares of ROK. The stock has rebounded very sharply today with volume coming in more than twice the average today. This is a new seven-month high and ROK is nearing what could be resistance at the $60.00 level. More conservative traders may want to plan on an exit near the $60 mark. Currently our target is the $61.00-62.00 range under its 52-week highs. We're going to raise the stop loss to $55.75 just under Tuesday's lows.

Picked on November 03 at $ 55.90
Change since picked: + 3.52
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 804 thousand

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Tractor Supply - TSCO - cls: 54.28 chg: +0.42 stop: 49.95

TSCO continues to climb and cracked over the $54 level today. Volume was again very strong. Our six-week target is the $57-58 range.

Picked on November 30 at $ 52.75
Change since picked: + 1.53
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 428 thousand

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Walter Inds. - WLT - close: 51.33 change: +0.98 stop: 45.95

The market strength has helped fuel the rebound in WLT from the $50 region. This looks like a new bullish entry point. The P&F chart looks very bullish with a $67 target. We believe shares can run into the $57-58 range before year's end.

Picked on November 20 at $ 51.50
Change since picked: - 0.17
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 927 thousand
 

Put Updates

Netflix - NFLX - close: 27.11 chg: -0.43 stop: 28.55

The action in NFLX was very interesting today. The market's rally failed to cause much fear in the high amount of shorts in the stock. NFLX's lack of participation in the rally certainly suggest more weakness ahead. Currently our strategy is to catch any breakdown with a trigger to buy puts at $25.99. If triggered we'll target a drop to the $22.50 mark. Alternatively, traders might want to consider buying calls if NFLX continues to bounce from its channel and passes the $29.50 or $30.00 levels.

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 1.4 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: 79.41 chg: -0.94 stop: n/a

ABC reaffirmed its earnings guidance today. The company outlook wasn't quite as rosy as investors would like or traders just used the news to do some profit taking. Whatever the case ABC was moving the wrong direction today. The $78 level should be short-term support. We are not suggesting new strangle positions at this time. Our current strangle involves 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.

Picked on October 16 at $ 74.81
Change since picked: + 4.65
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 20.82 chg: -1.94 stop: n/a

We reported last night that AEOS issued an earnings warning and the stock was trading lower and poised to gap down. Gap down it did and the stock lost 8.5% on very big volume. The stock is nearing its September lows. Watch for an oversold bounce. We are not suggesting new strangle positions at this time. 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. FYI: currently the January $22.50 puts are trading at $2.40bid/$2.50ask.

Picked on November 13 at $ 25.47
Change since picked: - 4.65
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 61.74 chg: +0.42 stop: n/a

ANF produced some volatility today after reporting same-store sales growth of +23%, which was above analyst estimates. The stock dipped intraday to its simple 200-dma before rebounding sharply. 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: + 2.94
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Chicago Merc. Exchg. - CME - cls: 368.50 chg: +14.35 stop: n/a

CME continues to trade in very volatile fashion. Today the stock produced a 4.05% rebound. CME reported its version of same-store sales with a press release stating that November's trading volume for its daily derivatives rose 27 percent from a year ago. We are not suggesting new strangle positions at this time. Our current play involves the January $400 calls (CMJ-AK) and the January $350 puts (CMJ-MA). Our estimated cost was $26.70. We're aiming for a rise to $40.00 in the strangle before January options expire.

Picked on November 20 at $375.90
Change since picked: - 7.40
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 36.01 chg: +0.57 stop: n/a

DHI bounced higher along with the rest of the homebuilders but the stock remains inside its short-term consolidation pattern. We are not suggesting new strangles at this time. Our current play 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: + 3.45
Earnings Date 11/16/05 (confirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 50.22 chg: +0.32 stop: n/a

FS continues to trade sideways in its trading range near the $50.00 level. The 32-cent bounce doesn't look like much of a rally compared to the rest of the market. If we don't see a breakout move one way or the other pretty soon (a few days) we'll exit early to avoid further losses. 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: - 4.43
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Lear Corp - LEA - close: 27.85 chg: +0.01 stop: n/a

Shares of GM managed a 3% bounce today despite declining car sales figures for November. Meanwhile LEA failed to move at all, which is bearish considering the market-wide rally. 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.

Picked on November 06 at $ 30.24
Change since picked: - 2.39
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 97.40 change: +0.82 close: n/a

LTR managed a rebound given the market strength today. We don't see any changes from our previous update. We're not suggesting new plays. 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 plan to exit if our strangle rises to $5.00 or if shares of LTR hit 99.90.

Picked on October 23 at $ 89.94
Change since picked: + 7.61
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 23.25 chg: +0.35 stop: n/a

PAY continued to bounce today and appeared to breakout above its three-week trend of lower highs. However, the real move should be happening tomorrow. After the closing bell today PAY reported earnings and bested estimates by 3 cents a share. The stock was trading near $24 in after hours markets. We're not suggesting new positions. Our current 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.

Picked on October 12 at $ 19.98
Change since picked: + 3.27
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.75 chg: -0.10 stop: n/a

The lack of movement in PDLI is troubling. The stock needs to breakout out of this short-term trading range pretty quickly. We are not suggesting new strangle positions. The options in our 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.

Picked on October 30 at $ 27.70
Change since picked: + 0.05
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 18.25 change: +0.25 stop: n/a

The market's strength fueled a minor bounce in SPC today. We don't see any changes from our previous updates. We are not suggesting new strangle positions at this time. 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.

Picked on November 08 at $ 20.63
Change since picked: - 2.19
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand

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Questar Corp. - STR - close: 75.99 chg: +1.43 stop: n/a

Natural gas futures turned in a pretty strong session rising more than 3%. This in turn fueled a bounce in STR, which added 1.9%. STR may very well reverse course and breakout higher. What's important is that STR needs to pick a direction and move. If shares continue to churn sideways for another couple of weeks it will kill our strangle position. We are no longer suggesting strangle positions in the stock. Our strangle involves the January $80 calls (STR-AP) and the January $70 puts (STR-MN). Our estimated cost was $5.10 and we're aiming for a rise to $9.50 or more.

Picked on November 20 at $ 76.25
Change since picked: - 0.26
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 52.47 chg: +2.59 stop: n/a

The market rally propelled TXI up and out from its two-month sideways consolidation. The breakout also pushed TXI above its simple 50-dma. We are not suggesting new strangle positions. The options in our strangle are the January $55 calls (TXI-AK) and the January $45 puts (TXI-MI). Our estimated cost is $2.70. We're looking for a rise to $5.00 or more. TXI is due to report earnings around December 15th.

Picked on November 27 at $ 49.57
Change since picked: + 2.90
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 101.10 chg: +4.90 stop: n/a

Oil stocks turned in a solid performance and shares of VLO out performed its peers with a 5% rebound back above the $100 level. VLO needs to breakout of this $95-102.50 trading range for our strangle to grow. We are not suggesting new strangle plays any longer. Our current play involves the January $110 calls (VLO-AB) and the January $90 puts (VLO-MR). Our estimated cost was $5.85 and we're aiming for a rise to $9.50. VLO is due to split 2-for-1 on December 16th so our post-split target will be a rise to $4.75.

Picked on November 21 at $101.00
Change since picked: + 0.10
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

Phelps Dodge - PD - cls: 142.53 chg: +6.86 stop: 124.99

Target achieved. Actually our target has been surpassed. PD was upgraded before the opening bell and the stock spiked higher over the $140 level very quickly. Our target was the $139.90-140.00 range.

Picked on November 18 at $131.25
Change since picked: +11.28
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 2.7 million
 

Dropped Puts

None
 

Dropped Strangles

Hutchinson Tech. - HTCH - cls: 28.80 chg: +0.21 stop: n/a

Today's market rally helped push HTCH toward resistance near the $30.00 level. While the stock did not hold all of its gains the intraday strength was enough to push the January $30 calls (UTQ-AF) to our adjusted target at $1.65. A couple of weeks ago when HTCH failed to produce much of a post-earnings move we adjusted our target for the strangle from $3.00 to breakeven at $1.65. More aggressive players may want to think about leaving the play open since there are several weeks left before January options expire. Keep in mind that HTCH looks short-term overbought and just produced a failed rally at resistance so the stock will probably pull back to its 10-dma before continuing higher.

Picked on October 26 at $ 24.89
Change since picked: + 3.92
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 666 thousand
 

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