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Call Updates

Biogen Idec - BIIB - close: 46.39 change: +0.18 stop: 44.45

Biotech stocks didn't move much today either direction and neither did shares of BIIB. The stock spent Tuesday's session trading sideways. We don't see any change from our weekend update except that our market bias is turning more short-term negative especially after the after hours moves in Intel and Yahoo today. That being said it wouldn't surprise us to see BIIB dip toward the $45 level if the markets head south tomorrow. We would not suggest new bullish positions at this time. The Point & Figure chart remains bullish and points to a $62 target. Our target for BIIB is the $49.85-50.00 range.

Picked on December 27 at $ 46.11
Change since picked: + 0.28
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 3.2 million

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Caterpillar - CAT - close: 62.96 change: +0.63 stop: 57.95

Dow-component CAT bucked the trend today and hit new highs. The bulls can thank Citigroup for upgrading shares of CAT to a "buy" rating and raising their price target from $55 to $77. It is encouraging to note that traders took the optimistic view today. CAT was also downgraded this morning by Lehman Brothers who cut their rating to an "equal weight". Our target is the $64.75-65.00 range. The Point & Figure chart points to a $72 target.

Picked on January 08 at $ 60.45
Change since picked: + 2.51
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 4.0 million

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Fortune Brands - FO - close: 77.63 change: -0.32 stop: 76.45

Despite having two potential entry points on this stock we remain on the sidelines. Shares of FO merely traded sideways on Tuesday in a 55-cent range. We're listing FO as a call candidate in the newsletter but we have two triggers and it could end up being a put play. If FO breaks out of its neutral consolidation pattern and moves higher then we want to use a trigger at $78.65 to buy calls. More conservative traders may want to wait for a new four-week high above $79.30 or even wait for a move over $80 and its 100-dma since both levels ($80.00 and 100-dma) could offer overhead resistance. If triggered at $78.65 then our short-term target will be the $83.00-84.00 range. Our alternate entry will be at $76.35. If FO breaks down and hits our trigger at $76.35 then we want to buy puts and we'll target a decline 72.50-72.00 range. If triggered to the downside we'll use a stop loss at $78.55. We only have about three weeks before FO is expected to report earnings so we're trying to keep the targets reasonable. We do not want to hold over the earnings report. It is possible that FO could produce a very volatile session and hit both our triggers in the same day thus creating two positions. If that's the case we'll see where FO closes and adjust our strategy and probably close one side at a loss. Traders without the ability to monitor their positions during the day may want to just wait for the breakout to occur on a closing price basis before initiating a position.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/03/06 (unconfirmed)
Average Daily Volume = 803 thousand

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Gannett Co - GCI - close: 64.80 change: +0.52 stop: 61.99

GCI continued to show relative strength on Tuesday and added another 0.8% on above average volume, which is bullish. The stock is now challenging round-number resistance at $65.00 and technical resistance at the 100-dma. More conservative traders may want to wait for GCI to clear these two levels of resistance before considering bullish positions. Our target is going to be the $68.50-69.00 range. However, we do not want to hold any positions over the January 27th earnings report.

Picked on January 15 at $ 64.28
Change since picked: + 0.52
Earnings Date 01/27/06 (confirmed)
Average Daily Volume = 1.4 million

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Goldman Sachs - GS - close: 132.59 chg: -0.67 stop: 127.45

GS experienced some weakness this morning with a dip to the $130.59 level but the stock quickly rebounded. Over the weekend we suggested that a dip toward $130 could be used as a new bullish entry point. That strategy still stands however, the less than exciting earnings news after the bell tonight and the ensuing sell-off for the company's reporting earnings tonight does not bode well for the markets tomorrow. Traders may not want to initiate new bullish positions at the moment. Making us more cautious is the action today. GS rallied just high enough this afternoon to effectively fill the gap from this morning. Our target is the $134.80-135.00 range.

Picked on January 09 at $130.05
Change since picked: + 2.54
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Holly Corp. - HOC - close: 66.43 chg: +2.31 stop: 59.95

Concerns over a showdown with Iran over the country's ongoing nuclear development sent oil prices surging. It didn't help that the 8th largest exporter of oil, Nigeria, is also seeing new violence directed at oil companies. This sent the OIX oil index to a 1.8% gain. Shares of HOC out performed many of its peers with a 3.6% gain. The stock gapped open at $64.90 and then soared to over $66. Our trigger to buy calls was at $65.65. The move today has reversed the Point & Figure chart from a sell signal to a new buy signal with an $83 target. Our target is the $69.75-70.00 range. We do not want to hold over the February earnings report.

Picked on January 17 at $ 65.65
Change since picked: + 0.78
Earnings Date 02/06/06 (unconfirmed)
Average Daily Volume = 303 thousand

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Lehman Brothers - LEH - close: 134.81 chg: -0.84 stop: 129.45

Volume was very low on LEH's 0.6% pull back today. This would suggest that there isn't a lot of conviction behind the selling today. However, tomorrow could be a rough day for the markets. Don't be surprised to see LEH dip to its simple 10-dma near $131.50. A bounce from the 10-dma could be used as a new entry point. More conservative traders may actually want to consider taking some money off the table right here. The P&F chart points to a $177 target. We are going to maintain our target in the $138.50-140.00 range. We are raising our stop loss to $129.45.

Picked on January 09 at $131.05
Change since picked: + 3.76
Earnings Date 03/14/06 (unconfirmed)
Average Daily Volume = 2.3 million

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Ipsco Inc. - IPS - close: 84.85 change: +0.92 stop: 81.95

Steel stocks turned in a decent session and IPS added just over one percent on slightly better than average volume. While the move today is bullish the intraday chart does show two failed rallies near $85.30 today. We would hesitate to open new bullish positions here. Meanwhile in the news IPS announced that it will report year-end results on February 6th. We do not want to hold positions over the report. Our target is the $89.00-90.00 range.

Picked on December 30 at $ 83.55
Change since picked: + 1.30
Earnings Date 02/06/06 (confirmed)
Average Daily Volume = 396 thousand

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Lennar Corp. - LEN - close: 63.43 chg: -0.56 stop: 61.90

Homebuilding stocks were weak again for the third day in a row. The DJUSHB index has fallen back under the 1000 level and is nearing what could be short-term support at the 980 level. The HGX index shows a similar pattern with a pull back to what looks like support. Therefore we're not willing to abandon bullish positions in LEN yet but neither are we suggesting new plays. The P&F chart is very positive with a bullish triangle breakout and a $75 target. Our target now is the $69.50-70.00 range before February options expire.

Picked on January 09 at $ 64.01
Change since picked: - 0.58
Earnings Date 03/16/06 (unconfirmed)
Average Daily Volume = 2.6 million

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Selective Ins. - SIGI - close: 55.45 chg: +0.26 stop: 53.79

SIGI continues to move higher but the stock remains under resistance at the simple 50-dma and the $56.00 level. We want to catch a breakout over resistance at $56.00 and its simple 50-dma (55.75). Our trigger to buy calls will be $56.05. If triggered our target will be the $59.50-60.00 range. We only have a couple of weeks for the play to perform since we don't want to hold a position over the end of January earnings report. FYI: SIGI might announce a stock split with its earnings report. The company last split its stock in December 1997 in the $50-52 region.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/31/06 (unconfirmed)
Average Daily Volume = 163 thousand

Put Updates

DRS Tech. - DRS - close: 47.41 change: -1.39 stop: 51.01

The sell-off continued in shares of DRS and the play is now open. The stock broke down below its exponential 200-dma and closed the session with a 2.8% decline on rising volume that was almost double the daily average (a bearish signal). Our trigger to buy puts in DRS was at $47.95. Our target is a decline into the $45.00-44.00 range. More aggressive traders may want to use a lower target. We do not want to hold over the February earnings report.

Picked on January 17 at $ 47.95
Change since picked: - 0.54
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 275 thousand

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Expeditors Intl. - EXPD - cls: 66.38 change: -0.49 stop: 68.55

The sudden rise in oil prices really hit the airline stocks hard today, which in turn weighed on the transportation sector. Shares of EXPD dipped under support near $66.00 but managed to rebound. The low today was $65.81. Our trigger to buy puts is at $65.80 so we're still on the sidelines. We will target a decline into the $61.00-60.00 range. We do not want to hold any positions over the mid February earnings report.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 972 thousand

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Scotts Miracle grow - SMG - cls: 46.08 che: -0.18 stop: 47.05

SMG is inching lower. The pattern looks bearish but the speed, or lack thereof, that SMG is moving lower does not make it very attractive as an option play right now. Aggressive traders may want to consider new put positions here. We would prefer to open new put positions on a decline under the $46.00 level, which did occur today on an intraday basis. We do not want to hold over SMG's January 24th (unconfirmed) earnings report, which would give new positions less than five trading days to perform. Our target is the $41.50-41.25 range.

Picked on January 01 at $ 45.24
Change since picked: + 0.84
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume = 354 thousand

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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Amer. Eagle Out. - AEOS - cls: 25.25 chg: -0.18 stop: n/a

We see no change from our weekend update. Our strangle play in AEOS is pretty much dead. There are three trading days left before January options expire. For this strangle play to have a chance at exiting at breakeven or better then AEOS needs to trade above $29.50 or under $20.00. We are 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 have changed our target to breakeven at $2.35.

Picked on November 13 at $ 25.47
Change since picked: - 0.22
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Abercrombie&Fitch - ANF - close: 62.94 chg: -0.82 stop: n/a

We see no change from our weekend update. Murphy's law is alive and well. When ANF was above the $65 level we had a chance that shares might spike higher and give us an opportunity to exit at breakeven ($5.15). Friday's action may have just doomed the strangle play. ANF was downgraded Friday morning and the stock gapped lower to open at $65.00 and close with a 3.58% loss. We have three trading days before January options expire. The options in our strangle are the January $65 calls (ANF-AM) and the January $55 puts (ANF-MK). Our target has been adjusted to breakeven at $5.15.

Picked on November 13 at $ 59.67
Change since picked: + 3.27
Earnings Date 02/14/06 (unconfirmed)
Average Daily Volume = 2.7 million


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Blue Coat Sys. - BCSI - cls: 40.87 chg: -0.93 stop: n/a

BCSI is moving the right direction today with a 2.2% decline but we need to see the stock decline under the $37 level pretty soon! Last week we adjusted our target to breakeven at $3.25. We are not suggesting new plays. Our current play involves the January $50 call and the January $40 put.

Picked on December 04 at $ 45.43
Change since picked: - 4.56
Earnings Date 02/23/06 (unconfirmed)
Average Daily Volume = 416 thousand

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Building Materials - BMHC - cls: 76.32 chg: -1.58 stop: n/a

BMHC lost another 2% today after the recent failed rally under its trendline of resistance. We are not suggesting new strangle positions at this time. The options in our strangle play are the March $90 calls (BGU-CR) and the March $70 puts (BGU-ON). Our estimated cost is $8.20. Our target is $12.50 by March expiration.

Picked on December 18 at $ 80.95
Change since picked: - 4.73
Earnings Date 02/07/06 (unconfirmed)
Average Daily Volume = 527 thousand

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Chicago Merc. Exchg. - CME - cls: 382.00 chg: -0.24 stop: n/a

We see no change from our weekend update on CME. Time is almost up for our strangle in CME. At the moment if we have any hope of exiting near breakeven we need to see CME trade under $340 or above $410 and do it pretty quickly. Odds of that happening don't seem very high at the moment. We are not suggesting new plays. Our current play involves the January $400 calls (CMJ-AK) and the January $350 puts (CMJ-MA).

Picked on November 20 at $375.90
Change since picked: + 6.10
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 879 thousand

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Encana Corp. - ECA - close: 48.33 chg: +2.42 stop: n/a

Worries over Iran and Nigeria sent crude oil prices higher today and ECA responded with a sharp move higher. The stock added 5.2% to breakout from its three-week consolidation pattern. We are no longer suggesting new strangle positions. Our strategy involves the April $50 calls (ECA-DJ) and the April $40 puts (ECA-PH). Our estimated cost is $3.45. We are aiming for a rise to $5.95.

Picked on January 10 at $ 45.56
Change since picked: + 2.47
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million

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Four Seasons - FS - close: 54.75 chg: -0.06 stop: n/a

We see no change from our weekend update. January option expiration is just three trading days away and we see no reason that FS will move much from its current $54-55 trading range. Unfortunately, that means our strangle play will close with a loss. The options in our strangle were the January $60 calls (FS-AL) and the January $50 puts (FS-MJ). We have adjusted our target to breakeven at $2.60.

Picked on November 08 at $ 55.37
Change since picked: - 0.62
Earnings Date 02/26/06 (unconfirmed)
Average Daily Volume = 319 thousand

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Questar Corp. - STR - close: 83.08 chg: +1.96 stop: n/a

Oil wasn't the only commodity rising today. Natural gas also produced a bounce and shares of STR responded with a 2.4% gain. We are running out of time for our STR strangle. We have adjusted our target to breakeven at $5.10. Our strangle involves the January $80 calls (STR-AP) and the January $70 puts (STR-MN). Take note - the rise today has pushed the Jan. $80 calls (STR-AP) higher and they're currently trading at $3.10bid/$3.40ask. More conservative traders may want to exit right here to reduce their losses. Or if you think STR will make rise toward resistance at $85 before Friday's close consider waiting and try exiting near $85.

Picked on November 20 at $ 76.25
Change since picked: + 6.83
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 716 thousand

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Texas Ind. - TXI - close: 52.00 chg: -0.98 stop: n/a

We see no change from our weekend update. TXI is still stuck in its trading range and that's bad news for our strangle play. The options in our strangle are the January $55 calls (TXI-AK) and the January $45 puts (TXI-MI). Our target has been reduced to breakeven at $2.70. A move into the $57-58 range might be enough to get our strangle there.

Picked on November 27 at $ 49.57
Change since picked: + 2.43
Earnings Date 01/05/06 (confirmed)
Average Daily Volume = 354 thousand

Dropped Calls

None
 

Dropped Puts

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Dropped Strangles

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