Option Investor
Play Updates

In Play Updates and Reviews

Printer friendly version

Call Updates

Aetna - AET - close: 97.60 change: -0.72 stop: 93.99

Attention! There was no follow through today on Friday's bullish surge higher. This could just be normal profit taking but more conservative traders may want to seriously consider exiting right now! We only have two days left before the company reports earnings and we don't want to hold over the report. Our plan is to exit on Wednesday, February 8th at the closing bell. Our target remains the $99.00 level.

Picked on January 30 at $ 94.05
Change since picked: + 3.55
Earnings Date 02/09/06 (confirmed)
Average Daily Volume = 1.7 million


Cummins Inc. - CMI - close: 102.01 change: +1.91 stop: 96.95

CMI continues to rally and the stock has broken out to new highs. This looks like a new momentum entry point for calls but the action in the major indices makes us nervous about opening new bullish positions. Our target is the $107.00-108.00 range. We will leave our stop loss under Friday's low.

Picked on February 2 at $101.01
Change since picked: + 1.00
Earnings Date 01/30/06 (confirmed)
Average Daily Volume = 742 thousand


Express Scripts - ESRX - close: 89.76 chg: -2.14 stop: 87.45

Uh-oh! This looks like danger. There was no follow through on Friday's rebound in ESRX. The stock gapped lower this morning and has closed under what should have been round-number support at the $90.00 level. Short-term technical oscillators are bearish. More conservative investors may need to seriously consider exiting early right here. There is still some technical support at the 50-dma currently near $87.65 so we're going to leave the play open but we're not suggesting new positions.

Picked on January 29 at $ 92.42
Change since picked: - 2.66
Earnings Date 02/22/06 (unconfirmed)
Average Daily Volume = 2.1 million


Universal Health - UHS - close: 49.70 chg: +1.03 stop: 48.49

We are still just spectators here with UHS. The stock dipped to the $48 level this morning and quickly bounced. UHS now looks poised to breakout over resistance at the $50.00 level. Our trigger to buy calls is at $50.51. If triggered then we'll target a rally into the $54.50-55.00 range. The P&F chart is bullish with a $61 target. We do not want to hold over the late February earnings report.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/27/06 (confirmed)
Average Daily Volume = 613 thousand

Put Updates

Ambac Fincl. - ABK - close: 75.85 change: -0.24 stop: 78.05

ABK continues to look bearish. We do not see any change from our weekend play description. There is some short-term technical support at its exponential 200-dma and simple 100-dma near the $74 level. We do expect a bounce there. Our target is $71.00. Our time frame is four to six weeks, probably sooner.

Picked on February 05 at $ 76.09
Change since picked: - 0.24
Earnings Date 01/25/06 (confirmed)
Average Daily Volume = 463 thousand


Intl Bus. Mach. - IBM - close: 79.51 change: -0.46 stop: 82.05

The play is now open. IBM continues to sink on Monday and hit a new three-month low at $78.93. Our trigger to buy puts was at $79.49. Volume came in more than 50% above the daily average, which could be interpreted as bearish. Our target is the $75.25-75.00 range.

Picked on February 06 at $ 79.49
Change since picked: + 0.02
Earnings Date 01/17/06 (confirmed)
Average Daily Volume = 6.0 million


Johnson Controls - JCI - cls: 67.99 chg: +0.08 stop: 72.01

We do not see any change from our weekend update on JCI. The stock looks ready to fall towards our target in the $65.50-65.00 range, above its exponential 200-dma. Currently the Point & Figure chart looks pretty bearish with a $57 target.

Picked on January 25 at $ 69.90
Change since picked: - 1.91
Earnings Date 01/20/06 (confirmed)
Average Daily Volume = 955 thousand


MGIG Invest. - MTG - close: 62.99 change: -1.24 stop: 66.05

Our put play in MTG is now open. The stock continued to sink on Monday and broke down below support near $64.00 and its simple 200-dma. Volume came in above average on the decline. Our trigger to buy puts on MTG was at $63.70. Our target is the $58.00-57.50 range.

Picked on February 06 at $ 63.70
Change since picked: - 0.71
Earnings Date 01/12/06 (confirmed)
Average Daily Volume = 833 thousand


Meritage Homes - MTH - close: 60.40 chg: -0.11 stop: 62.05

The homebuilding sector was weak today but shares of MTH tried hard to resist the pull lower. Today's action looks like a failed rally but we are not convinced the bounce is over and would not open new bearish positions right here. Watch for another decline under $59 or even $58 before opening new positions. Our target is the $52.00-50.00 range.

Picked on February 02 at $ 58.76
Change since picked: + 1.64
Earnings Date 01/26/06 (confirmed)
Average Daily Volume = 560 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.)


Building Materials - BMHC - cls: 78.60 chg: +0.33 stop: n/a

Wall Street expects BMHC to report earnings of $2.33 a share. The report is due out tomorrow morning. We're expecting to see shares launch into a new direction on the news. 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: - 2.35
Earnings Date 02/07/06 (confirmed)
Average Daily Volume = 527 thousand


Encana Corp. - ECA - close: 47.65 chg: +0.87 stop: n/a

Oil stocks were bouncing higher today as tensions continue to build over Iran. We're not suggesting new positions in ECA right now. 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: + 2.09
Earnings Date 02/15/06 (confirmed)
Average Daily Volume = 4.4 million


Google Inc. - GOOG - close: 385.10 chg: +3.54 stop: n/a

As always there is plenty of news surrounding GOOG. We won't report on all of it but it is noteworthy that the stock only bounced to a minor gain after being upgraded from a "sell" to a "hold" this morning. Yet another analyst firm reiterated their belief that GOOG will be added to the S&P 500. We want to remind readers that this is a very aggressive play and we have less than two weeks left before February options expire. If you're concerned about an oversold bounce, which is a very real threat to us right now, then consider exiting early to minimize any losses.

Picked on January 29 at $433.49
Change since picked: -48.40
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 11.1 million


Ryland Group - RYL - close: 69.63 change: -1.37 stop: n/a

RYL is still trading under its 200-dma. We're not suggesting new positions. Our play involves the April $80 calls (RYL-DP) and the April $70 puts (RYL-PN). Our estimated cost is $7.00. Our target is $12.00.

Picked on January 22 at $ 75.19
Change since picked: - 5.56
Earnings Date 01/24/06 (confirmed)
Average Daily Volume = 1.1 million

Dropped Calls

Apple - AAPL - close: 67.30 change: -4.55 stop: 69.99

News reports are blaming the 6.3% decline in AAPL on Monday was caused by fears of a slow down in the company's sales growth. At least two analyst firms tried to defend the stock but they failed to have any affect on the share price, which closed near its lows for the session. We would have been stopped out at $69.99 when shares broke support at the $70.00 mark.

Picked on January 30 at $ 75.00
Change since picked: - 7.70
Earnings Date 01/18/06 (confirmed)
Average Daily Volume = 27.1 million

Dropped Puts

Phelps Dodge - PD - close: 165.19 chg: +6.70 stop: 167.15

Watch out! PD has reversed course again. The stock's strength was probably fueled by another new high for copper prices today and a bullish upgrade for fellow metal producer Alcoa (AA). We want to remind readers that this was labeled an aggressive, higher-risk play. We remain more fundamentally bullish on PD but our short-term strategy was to try and time a pull back toward stronger support since PD looks overbought and extended. There has been no confirmation of last Thursday's bearish reversal pattern. If you did buy puts it might be a good idea to bail out. Shares of PD were pretty strong throughout the entire session today. We have to choose - do we exit here at $165 or do we wait and see if we get stopped out at $167.15. We are going to choose to exit early.

Picked on February 02 at $158.10
Change since picked: + 7.09
Earnings Date 01/31/06 (confirmed)
Average Daily Volume = 2.6 million


XM Sat.Radio - XMSR - close: 23.55 chg: -0.79 stop: 27.01

Amazing! We keep thinking that XMSR has sunk low enough to produce an oversold bounce and it keeps sinking lower. Today's decline was fueled by an analyst firm lowering their price target to $37 for the stock. Volume continues to be very strong on the decline. Our target was the $21.00 level but we're choosing to exit early. Our reason is XMSR's earnings report. We do not know when the company will report. The most convincing data suggests that XMSR is expected to report earnings this week but we can't find any confirmation. Another source suggests XMSR will report next week. We'd hate to have the company report and then see shares rocket higher so we're choosing to exit early. More aggressive traders may want to keep the play open but we would not hold over the report once the date becomes known.

Picked on January 30 at $ 26.43
Change since picked: - 2.88
Earnings Date 02/09/06 (unconfirmed)
Average Daily Volume = 5.0 million

Dropped Strangles


Play Update Archives