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Call Updates

Dominion Res. - D - close: 77.09 chg: +0.93 stop: 74.75

Both utility stocks and natural gas stocks turned in significant gains today. Utilities were seen as a safe haven play and natural gas stocks soared after the commodity spiked to new highs on concerns there could be a shortage this winter. Dominion is both a utility and natural gas play and shares added 1.22%. This could be used as a more aggressive entry point to launch new calls plays in D. However, we would wait for a move over resistance at the 50-dma and 100-dma that have converged near 77.60. Our target is the $84.50-85.00 range.

Picked on November 27 at $ 78.24
Change since picked: - 1.15
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 1.8 million

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FMC Corp. - FMC - close: 53.67 chg: +0.19 stop: 51.95

Don't be fooled by today's bounce. FMC tried to rally this morning but couldn't hold its gains. We're surprised the stock showed any strength considering the rally in oil today. We expect FMC to dip back toward the $52.50 region. We would not suggest new bullish positions until we see a bounce. Our six-week target is the $59.85-60.00 range.

Picked on December 01 at $ 55.04
Change since picked: - 1.37
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 270 thousand

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Femsa Fomento - FMX - close: 68.27 chg: -0.90 stop: 67.75

FMX is slipping back toward the bottom of its trading range near $68. We remain on the sidelines. Our strategy is to use a trigger above resistance at $70.65 to open the play. If we are triggered we'll target a run into the $74.75-75.00 range. The P&F chart points to an $81 target.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 308 thousand

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Kerr Mcgee - KMG - close: 93.70 chg: +2.02 stop: 87.99 *new*

Crude oil broke out over round-number, psychological resistance at the $60.00 a barrel level today. This strength fueled a nice move in the oil stocks and KMG added 2.2% and closed near its highs for the session. We are raising our stop loss to $87.99. Our mid January target is the $98.50-100 range.

Picked on December 02 at $ 90.26
Change since picked: + 3.44
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume = 1.8 million

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Kinder Morgan - KMI - close: 93.91 chg: +0.84 stop: 87.45

The action in KMI is a surprise today. The stock added 0.9% but we expected a much bigger move considering the rise in natural gas today. Natural gas futures spiked to new all-time highs on concerns that we could see a shortage due to cold temperatures this winter. We remain bullish on KMI and expect the stock to breakout over the $95 level relatively soon if natural gas continues to climb. Our target is the $98.50-100 range.

Picked on December 02 at $ 92.75
Change since picked: + 1.16
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 749 thousand

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Polaris Ind. - PII - close: 49.91 change: -3.46 stop: 48.49

Thank you Banc of America. The firm downgraded PII to a "sell" rating this morning on worries that ATV sales will not meet expectations. The stock gapped down to open at $50.00 and then traded to $49.05 before rebounding. We are not suggesting new positions. More conservative traders may want to exit early or look for an oversold bounce back toward $52.50 to "fill the gap" and exit there. We do not want to hold over PII's mid January earnings report.

Picked on November 21 at $ 48.47
Change since picked: + 1.44
Earnings Date 01/12/06 (unconfirmed)
Average Daily Volume = 467 thousand

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Rockwell Autom. - ROK - cls: 59.18 chg: -0.40 stop: 55.75

There is still no change in ROK as it consolidates sideways under resistance at the $60 level. Our target is the $61-62 range but more conservative traders may want to exit near $60. We would not suggest new positions here.

Picked on November 03 at $ 55.90
Change since picked: + 3.28
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 804 thousand

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Sunoco Inc. - SUN - close: 83.64 chg: -0.01 stop: 76.45

In spite of all the strength in the oil sector today shares of SUN under performed. The stock was hit with a valuation downgrade from Merrill Lynch this morning before the open. We remain bullish on the stock, especially with crude oil over $60 a barrel now. A pull back to the $80-81 region can be used as a new bullish entry point. Our target is the $89.90-90.00 range.

Picked on December 02 at $ 81.75
Change since picked: + 1.89
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 2.8 million

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Tractor Supply - TSCO - cls: 54.90 chg: +0.33 stop: 52.75

TSCO managed a decent bounce from a test of support at its rising 10-dma today. As long as the major indices aren't crashing we could see TSCO make another run towards our target in the $57.00-58.00 range next week. We are not suggesting new positions at this time.

Picked on November 30 at $ 52.75
Change since picked: + 2.15
Earnings Date 01/18/06 (unconfirmed)
Average Daily Volume = 428 thousand

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Walter Inds. - WLT - close: 50.23 change: +0.07 stop: 47.95

WLT displayed some minor volatility today with a dip to $49.17 followed by a rally to $51.15 and then a drift back toward the $50 level. Aggressive traders may want to consider new calls on a bounce from the $50 level. We're not feeling that confident to open new plays with the major averages looking unstable. Our target is the $57.00-58.00 range.

Picked on November 20 at $ 51.50
Change since picked: - 1.27
Earnings Date 10/26/05 (confirmed)
Average Daily Volume = 927 thousand
 

Put Updates

Magna Int. - MGA - close: 66.11 chg: +0.11 stop: 70.31

We don't see any change from our previous update on MGA. The stock is still flirting with support near the $66.00 level. Shares look short-term oversold and due for a bit of a bounce. Our target is the $63-62 range.

Picked on December 04 at $ 68.14
Change since picked: - 2.03
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 318 thousand

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Netflix - NFLX - close: 27.50 chg: +0.12 stop: 28.55

NFLX could be nearing the breaking point. The consolidation near support in its rising channel is beginning to narrow. The stock spent the entire session in a 32-cent range today. This heavily shorted stock could see some strong selling if it broke down under support at the bottom of its rising channel. 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: 81.71 chg: +1.31 stop: n/a

We see no change from our previous update on ABC. We are not suggesting new positions. Our estimated cost for our strangle is $2.80. Our target is $5.00 but we have less than two weeks before December options expire. Currently the December $80 calls (ABC-LP) are trading at $2.00bid/$2.15ask.

Picked on October 16 at $ 74.81
Change since picked: + 6.95
Earnings Date 11/03/05 (confirmed)
Average Daily Volume = 900 thousand

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Amer. Eagle Out. - AEOS - cls: 20.84 chg: +0.50 stop: n/a

The retail sector was mostly lower today as investors worried over rising gasoline and heating bills affecting spending. Yet despite this negativity the oversold bounce in AEOS continues and the intraday chart suggests there is more strength ahead tomorrow. Watch for the 10-dma to act as overhead resistance. 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 $2.30bid/$2.35ask.

Picked on November 13 at $ 25.47
Change since picked: - 4.63
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 63.31 chg: +0.81 stop: n/a

ANF is shaking off any retail bearishness and continuing to rebound from the $60 level. The stock is poised to assault resistance at the $65.00 level soon. We have less than 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: + 3.64
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 2.7 million

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Blue Coat Sys. - BCSI - cls: 45.33 chg: +0.89 stop: n/a

We don't see any change from our previous update on BCSI. The stock is still trading inside its $44-46 trading range and our suggested entry window to launch new strangles. We're going to narrow that entry window to $44.50-45.50. 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. Remember we have less than seven weeks left before January options expire.

Picked on December 04 at $ 45.43
Change since picked: - 0.10
Earnings Date 11/15/05 (confirmed)
Average Daily Volume = 416 thousand

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Chicago Merc. Exchg. - CME - cls: 358.06 chg: +11.06 stop: n/a

Thursday was just another volatile day for shares of CME. The stock rebounded sharply after yesterday's breakdown under multiple levels of support. We have less than 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. Some of our readers may want to plan an exit near the 100-dma no matter what the value of our strangle position is. Currently the CMJ-MA puts are trading at $15.20bid/$15.20ask (that's not a typo).

Picked on November 20 at $375.90
Change since picked: -17.38
Earnings Date 01/24/06 (unconfirmed)
Average Daily Volume = 879 thousand

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D.R.Horton - DHI - close: 35.81 chg: +0.75 stop: n/a

Homebuilding stocks rallied strongly today following an impressive earnings report from Toll Brothers (TOL). The markets seemed to ignore TOL's bearish forecast for 2006. We are not suggesting new strangles in DHI 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: + 3.25
Earnings Date 02/15/06 (unconfirmed)
Average Daily Volume = 3.2 million

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Four Seasons - FS - close: 47.70 chg: -0.31 stop: n/a

FS sank to another new low today but managed to rally from its worst levels of the session. We see no changes from our previous update. 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 $3.00bid/$3.30ask.

Picked on November 08 at $ 55.37
Change since picked: - 6.41
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 319 thousand

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Lear Corp - LEA - close: 27.59 chg: +0.06 stop: n/a

We don't see any changes from our previous update on LEA. The stock traded in a narrow 45-cent range today. We have less than 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 $0.70bid/$0.85ask.

Picked on November 06 at $ 30.24
Change since picked: - 2.65
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 1.8 million

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Loews - LTR - close: 97.28 change: +1.46 close: n/a

LTR continued to rebound from the $95 level as we expected it might. The stock is now poised to finish its run toward the $100 level. 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 $2.45bid/$2.75ask.

Picked on October 23 at $ 89.94
Change since picked: + 7.34
Earnings Date 10/27/05 (confirmed)
Average Daily Volume = 602 thousand

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Verifone Holdings - PAY - cls: 23.34 chg: +0.18 stop: n/a

We don't see any changes from our previous update on PAY. We have less than 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 $1.85bid/$2.25ask.

Picked on October 12 at $ 19.98
Change since picked: + 3.36
Earnings Date 12/01/05 (confirmed)
Average Daily Volume = 259 thousand

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Protein Design Labs - PDLI - cls: 27.90 chg: +0.50 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: + 0.20
Earnings Date 11/01/05 (confirmed)
Average Daily Volume = 1.8 million

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Spectrum Brands - SPC - close: 17.88 change: +0.04 stop: n/a

We see no changes from our previous update on SPC. 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 $0.30bid/0.35ask.

Picked on November 08 at $ 20.63
Change since picked: - 2.75
Earnings Date 11/10/05 (confirmed)
Average Daily Volume = 576 thousand

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Questar Corp. - STR - close: 79.50 chg: +1.47 stop: n/a

Is this the real thing? STR has broken out over its simple 50-dma following its earlier breakout over its trend of lower highs. If natural gas continues to climb then we can expect STR to push past the $80 level and make a run for the October highs. There are less than 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: + 3.25
Earnings Date 01/26/05 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 51.18 chg: +0.58 stop: n/a

We do not see any changes from our previous update on TXI. We are not suggesting new strangle positions but traders looking for a new play might consider a strangle with the April options. 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: + 1.61
Earnings Date 12/15/05 (unconfirmed)
Average Daily Volume = 354 thousand

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Valero Energy - VLO - close: 106.56 chg: +2.58 stop: n/a

Today's 2.48% gain in VLO appears to have pushed the stock over its two-month trendline of resistance. We are not suggesting new strangle plays. 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: + 5.56
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 10.7 million
 

Dropped Calls

Cummins Inc. - CMI - close: 86.63 chg: -1.92 stop: 87.75

It looks like the energy rally has spooked another round of profit taking across the rest of the market. The DJIA lost another 0.5% and shares of CMI failed to find support at the $88 level like it did in late November. We have been stopped out at $87.75.

Picked on December 01 at $ 91.32
Change since picked: - 4.69
Earnings Date 01/30/06 (unconfirmed)
Average Daily Volume = 611 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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