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Call Updates

Cummins Inc. - CMI - close: 90.83 chg: +0.77 stop: 87.75

CMI fared better than most on Monday. The stock dipped to $88.90 near its rising 10-dma before bouncing sharply this morning. The rebound back over the $90.00 level looks like a new bullish entry point to consider buying calls. Our target is the $97-100 range. However, technical traders may want to hesitate before initiating new long with the DJIA producing a new MACD sell signal on its daily chart today.

Picked on December 01 at $ 91.32
Change since picked: - 0.49
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 611 thousand

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Centex Corp. - CTX - close: 72.92 chg: -0.94 stop: 71.39

The rebound in homebuilders paused today as bond yields and interest rates (and thus mortgage rates) crept higher. Shares of CTX spent most of the session consolidating sideways and still in its upward channel. We are trying to limit our risk with a relatively tight stop loss so if CTX falls out of its bullish channel we'll be quickly stopped out. Readers may want to wait for a move over $73.50-74.00 before considering new long positions. Our target is the $78.50-80.00 range.

Picked on December 04 at $ 73.86
Change since picked: - 0.94
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 2.6 million

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Dominion Res. - D - close: 76.53 chg: +0.55 stop: 74.75

Shares of D are starting to rebound after testing technical support at its 200-dma on Friday. Today's move looks like a new bullish entry point to buy calls but traders should note that D still has some resistance near 78.30 and its simple 50-dma. Our target is the $84.50-85.00 range.

Picked on November 27 at $ 78.24
Change since picked: - 1.71
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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FMC Corp. - FMC - close: 54.12 chg: -1.29 stop: 51.95

FMC did not escape the profit taking today and shares fell 2.3% back under the $55 level and its simple 200-dma. We would not be surprised to see FMC dip back toward the simple 10-dma near $52.80-53.00 before rebounding higher. Traders may want to wait and see where FMC bounces before initiating new positions. This is especially true considering the rally in oil prices today. FMC is a chemical manufacturer and rising oil prices increases their costs and probably lowers their margins. Our six-week target is the $59.85-60.00 range.

Picked on December 01 at $ 55.04
Change since picked: - 0.92
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 270 thousand

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Hovnanian - HOV - close: 50.71 change: +0.01 stop: 48.99

HOV displayed some relative strength today. Many of the homebuilders slipped lower as interest rates ticked higher. HOV dipped toward the $50 level, consolidated there for a few hours, and then rebounded higher into the afternoon. This looks like a new bullish entry point, unfortunately, we're running out of time before HOV reports earnings on December 7th. We do not want to hold over the report. Our plan is to exit on Wednesday afternoon near the closing bell.

Picked on November 21 at $ 49.25
Change since picked: + 1.46
Earnings Date 12/07/05 (unconfirmed)
Average Daily Volume = 1.5 million

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Kerr Mcgee - KMG - close: 90.43 chg: +0.13 stop: 84.99

Oil stocks were a green spot in the markets today as crude oil rose toward the $60/bbl. Yet even the early strength in oil stocks could not hold and KMG drifted back toward the $90 level. We remain bullish and readers can choose to buy this dip or look for a bounce from the $90 level. Our mid January target is the $98.50-100 range.

Picked on December 02 at $ 90.26
Change since picked: + 0.17
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Kinder Morgan - KMI - close: 93.88 chg: +0.88 stop: 87.45

KMI fared better than some of its energy stock peers because of its exposure to natural gas. The XNG natural gas index rose 0.7% after a cold spell across much of the nation renewed concerns over supplies. Our target is the $98.50-100 range.

Picked on December 02 at $ 92.75
Change since picked: + 1.13
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 749 thousand

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NovAtel Inc. - NGPS - close: 28.73 chg: -1.39 stop: 27.95 *new*

This looks like bad news. NGPS broke down more significantly under the $30 level and technicals are looking even worse. The stock does have some support at the $28 level but more conservative traders may want to seriously consider exiting right here. If you're feeling more aggressive NGPS could bounce from the $28 level and give us a chance to exit near the $30 level. We're going to bet on a bounce from $28 but we're raising our stop loss to $27.95. We are not suggesting new positions.

Picked on November 21 at $ 30.45
Change since picked: - 1.72
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 292 thousand

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Polaris Ind. - PII - close: 52.90 change: -0.34 stop: 48.49

Sellers tried to take PII lower today and the stock gapped lower to open at $52.19. Fortunately, PII quickly rebounded and volume came in well above the average. Our target is the $54.00-55.00 range.

Picked on November 21 at $ 48.47
Change since picked: + 4.44
Earnings Date 01/12/06 (unconfirmed)
Average Daily Volume = 467 thousand

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Companhia Vale de Rio - RIO - close: 44.10 chg: -0.98 stop: 41.85

RIO continued to consolidate today. Watch for a bounce from the $43.00 level as a new potential entry point to buy calls. More conservative traders may want to ratchet up their stops toward $43, which is near the multi-week trend of higher lows. The company announced it will hold, and broadcast, its analyst day on Thursday, December 8th. More conservative traders might wait for a new move over $45 before initiating new positions.

Picked on December 02 at $ 45.45
Change since picked: - 1.35
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.7 million

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Rockwell Autom. - ROK - cls: 59.39 chg: +0.38 stop: 55.75

ROK displayed some relative strength and hit a new relative high at $59.73 today. Our target is the $61-62 range but more conservative traders may want to exit near $60, which could be round number, psychological resistance. We would not suggest new positions here.

Picked on November 03 at $ 55.90
Change since picked: + 3.49
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 804 thousand

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Sunoco Inc. - SUN - close: 83.75 chg: +0.93 stop: 76.45

Oil refiners were a bright spot in the markets today and SUN added 1.12% to close at a new all-time high. We don't see any changes from our previous update. Our target is the $89.90-90.00 range.

Picked on December 02 at $ 81.75
Change since picked: + 2.00
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 2.8 million

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Tractor Supply - TSCO - cls: 55.52 chg: +0.37 stop: 51.45

TSCO continues to ignore the weakness in the retail sector and shares hit a new four-month high today. If TSCO pulls back then the $53.00-52.50 level should act as support. Our five-week target is the $57-58 range.

Picked on November 30 at $ 52.75
Change since picked: + 2.77
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 428 thousand

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Walter Inds. - WLT - close: 51.39 change: -0.42 stop: 45.95

Weakness in the major averages seemed to stall the bounce in WLT today. The stock continues to look bullish and we are targeting a run into the $57-58 range by year-end.

Picked on November 20 at $ 51.50
Change since picked: - 0.11
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 927 thousand
 

Put Updates

Magna Int. - MGA - close: 67.47 chg: -0.67 stop: 70.31

MGA continues to sink and its technical picture is looking pretty bearish. However, the stock is testing short-term support near $67. We would not be surprised by a bounce tomorrow. Readers can watch for a failed rally under $69 as a new bearish entry point to buy puts. Our target is the $63-62 range.

Picked on December 04 at $ 68.14
Change since picked: - 0.67
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 318 thousand

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Netflix - NFLX - close: 27.70 chg: +0.01 stop: 28.55

NFLX continues to consolidate sideways along the bottom of its rising channel. This heavily shorted stock could see some strong selling if it broke down under this support. Alternatively traders may want to consider buying calls if NFLX trades over $29.50 or $30.00. More aggressive traders may even want to get bullish on a move over $29.00 in an attempt to catch the next short squeeze. Our strategy involves a trigger to buy puts at $25.99. If triggered we'll target a drop to the $22.50 mark.

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: 81.00 chg: +1.54 stop: n/a

ABC showed lots of relative strength today with a 1.9% gain and a new all-time high over the $80 level. The ABC-LP Dec. $80 calls are trading at $1.60bid/$1.75ask. Our estimated cost is $2.80. Our current target is $5.00 but we have less than two weeks before December options expire.

Picked on October 16 at $ 74.81
Change since picked: + 6.24
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 20.57 chg: -0.43 stop: n/a

AEOS posted another loss. We're not suggesting new plays. 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 $2.50bid/$2.60ask.

Picked on November 13 at $ 25.47
Change since picked: - 4.90
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 61.42 chg: -0.68 stop: n/a

ANF continues to drift toward the $60 level, which should be support. We have about seven weeks to go before January options expire. 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: + 1.75
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Blue Coat Sys. - BCSI - cls: 45.77 chg: +0.34 stop: n/a

BCSI continues to consolidated sideways near the $45 level. We see no changes from our previous update. Our suggested entry window is the $46-44 range but the closer to $45.00 the better. We're suggesting the January $50 call and the January $40 put. Our estimated cost is $3.25. We're aiming for a rise to $5.50.

Picked on December 04 at $ 45.43
Change since picked: + 0.00
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 416 thousand

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Chicago Merc. Exchg. - CME - cls: 362.00 chg: -7.80 stop: n/a

CME sank back toward the $360 level and its simple 50-dma during today's 2.1% loss. We have about seven weeks left before January options expire. 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: -13.90
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 36.32 chg: -0.20 stop: n/a

Shares of DHI experienced some profit taking this morning but the stock was bouncing back by the close. 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: + 3.76
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 48.73 chg: -0.95 stop: n/a

Good news. It looks like our patience might finally be rewarded here with FS. The stock lost another 1.9% and closed at a new low. More importantly it has fallen out of its three-week long consolidation near the $50 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. FYI: the FS-MJ puts are trading at $2.65bid/$2.85ask.

Picked on November 08 at $ 55.37
Change since picked: - 5.38
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Lear Corp - LEA - close: 27.18 chg: +0.09 stop: n/a

We see no changes from our previous update on LEA. We have about seven weeks left and by keeping the play open we're betting that LEA will trade near $24-23 before the options expire. 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). Our estimated cost was $1.60. We are targeting a rise to $3.20 or more. FYI: the LEA-ME puts are trading at $1.00bid/$1.10ask.

Picked on November 06 at $ 30.24
Change since picked: - 3.06
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 96.96 change: -0.56 close: n/a

We don't see any changes from our previous update on LTR. 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. Currently the LTR-LS calls are trading at $$2.40bid/$2.65ask.

Picked on October 23 at $ 89.94
Change since picked: + 7.05
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 23.30 chg: -0.90 stop: n/a

Hmmm.. PAY produced a failed rally at the $25.00 level on Friday. Today's 3.7% decline pulled the stock down toward the $23 level and filled the gap higher from Friday morning. Will bulls buy the dip here or has PAY produced sort of a double-top? We have about seven weeks left before January options expire. 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. Currently the PAY-AX calls are trading at $2.00bid/$2.25ask.

Picked on October 12 at $ 19.98
Change since picked: + 3.32
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.80 chg: -0.60 stop: n/a

We see no change from our previous update on PDLI. This is shaping up to be a losing position. 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 have adjusted our target to breakeven at $1.80.

Picked on October 30 at $ 27.70
Change since picked: + 0.10
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 18.30 change: +0.23 stop: n/a

We don't see any change from our previous update on SPC. We have two weeks left before December options expire. To make this play a winner we need to see SPC trade under the $16 level in the next couple of weeks. More conservative traders may want to plan an exit near breakeven. 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. Currently the SPC-XW puts are trading at $0.25bid/0.35ask.

Picked on November 08 at $ 20.63
Change since picked: - 2.14
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand

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Questar Corp. - STR - close: 76.59 chg: +0.80 stop: n/a

Strength in natural gas stocks has pushed STR back toward the middle of its previous trading range. If natural gas continues to climb then STR could easily breakout over the 50-dma and then the $80 level. There are seven weeks left before January options expire. 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: + 0.34
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 52.22 chg: -0.63 stop: n/a

TXI dipped to $50.70 near its 10-dma and 50-dma but bulls bought the dip and pushed the stock back above the $52 level. Volume came in well above its average. 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: + 2.65
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 104.49 chg: +2.69 stop: n/a

Strength in crude oil helped push VLO over short-term resistance near $103 and its simple 50-dma. The stock is now challenging resistance at its two-month trendline of lower highs. If the energy sector continues to rally then we'll obviously be looking for the call side of our strangle to be the winner. 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: + 3.49
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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