Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

Call Updates

Fortune Brands - FO - close: 72.00 change: -0.47 stop: 69.74

The market weakness should be cause for alarm. While FO is holding up relatively well we do expect it to turn lower if the markets continue to sink. Right now we'd expect a dip to the simple 10-dma near $71.00. Or if the sell-off gets really bad then FO might fall toward the $70.00 level. Wait for the decline to occur and then signs of a bounce before considering new bullish positions. Our target is the $74.00 level. We do not want to hold over the July earnings report (21st - unconfirmed).

Picked on July 06 at $ 71.30
Change since picked: + 0.70
Earnings Date 07/21/06 (unconfirmed)
Average Daily Volume = 674 thousand

---

Halliburton - HAL - close: 74.88 chg: -0.70 stop: 71.99

A lot of oil service stocks out performed the market today. Unfortunately any rally attempt in HAL was squashed by news that the U.S. Army was dropping its multi-billion contract with HAL. The stock traded sideways with an intraday bearish pattern of lower highs. We're going to leave HAL as a bullish candidate on the newsletter for now but we're looking for other oil service plays to add to the newsletter.
We are labeling this a slightly more aggressive play because of our time frame. We do not want to hold over HAL's earnings report on July 20th. Further crimping the time we have for the play to work is our decision to use a trigger. We want to use a trigger at $76.05 to open call plays. Conservative traders may want to use a tighter stop. We are going to have two targets. Our conservative target will be the $79.85 mark. Our aggressive target will be the $82.00 level. Please note that HAL is due to split 2-for-1 on July 17th.

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 7.9 million

---

Investment Tech - ITG - close: 52.59 chg: +1.59 stop: 48.95

Watching the market today was were a bit worried by the weakness in financials and the bearish breakdown in the broker-dealer sector index. Fortunately, ITG continues to show relative strength. The stock added over 3.1% on above average volume. We do not see any specific news to account for the stock's strength today. There was one headline confirming that ITG would report earnings on August 3rd. Our short-term target will be the $54.95-55.00 range. More aggressive traders might want to aim higher and use a wider stop (under $48.00).

Picked on July 11 at $ 51.00
Change since picked: + 1.59
Earnings Date 08/03/06 (confirmed)
Average Daily Volume = 700 thousand

---

Rio Tinto - RTP - close: 211.14 chg: -2.57 stop: 205.90

Gold futures continued to rise today as tensions heat up in the Middle East with two more Israeli soldiers kidnapped and Iran about to be referred to the U.N. Security Council for punishment. Yet the rise in gold was not enough to fuel a breakout in RTP. The stock remains under its 50-dma and shares slipped 1.2%. We are repeating our comments from yesterday that more conservative traders might want to wait for the breakout past the 50-dma and the $215.00 level. The Point & Figure chart points to a $240 target. We are going to aim for a rally into the $225.00-228.00 range. We do not want to hold over the early August earnings report. Please note that RTP can be a volatile stock so expect the big intraday moves.

Picked on July 11 at $213.71
Change since picked: - 2.57
Earnings Date 08/03/06 (unconfirmed)
Average Daily Volume = 492 thousand
 

Put Updates

Apple Computer - AAPL - close: 52.96 chg: -2.69 stop: 58.55

AAPL dropped to a new relative low on above average volume with today's 4.8% decline. AAPL received some negative analyst comments about its expected revenue numbers today that really fueled the decline. We are not suggesting new plays at this time. The P&F chart remains bearish with a $44 target. We are targeting a decline into the $50.50-50.00 range.

Picked on June 28 at $ 56.85
Change since picked: - 3.89
Earnings Date 07/19/06 (unconfirmed)
Average Daily Volume = 33.1 million

---

Air Products Chem. - APD - close: 63.92 chg: -0.99 stop: 65.01

It doesn't get any closer. APD hit $65.00 this morning before turning lower. Shares closed with a 1.5% decline and closed under the 50-dma. We remain somewhat cautious here but if the major averages continue to sink we'd expect APD to follow suit. We're leaving the stop loss at $65.01. Our target is the $59.00-58.00 range.

Picked on July 09 at $ 62.95
Change since picked: + 0.97
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.2 million

---

Apollo Group - APOL - close: 49.47 chg: -0.69 stop: 52.01 *new*

Wednesday's decline under $49.50 looks like a new entry point to buy puts on APOL. We're going to lower our stop loss to $52.01. Our target is the $45.50-45.00 range.

Picked on July 09 at $ 49.92
Change since picked: - 0.45
Earnings Date 09/19/06 (unconfirmed)
Average Daily Volume = 1.4 million

---

Intl. Bus. Mach. - IBM - cls: 75.48 chg: -0.99 stop: 78.75

It's a battle for every inch but slowly the bears are pulling IBM lower. The stock lost 1.29% on above average volume and its MACD is poised to produce a new sell signal. Fueling the decline today were bearish comments from J.P.Morgan who cut their revenue estimates for IBM. We are not suggesting new put plays. Currently our target is the $73.50 level. More aggressive traders might want to aim lower in the $72-70 region.

Picked on June 06 at $ 78.75
Change since picked: - 3.19
Earnings Date 07/18/06 (unconfirmed)
Average Daily Volume = 5.2 million

---

IDEXX Labs - IDXX - close: 73.14 chg: -0.73 stop: 77.01

Traders might want to consider exiting here for a profit. IDXX is testing the June lows near $73.00. We are not suggesting new plays at this time. Our conservative target at $75.25 has already been hit and we're now aiming for the $72.00 level.

Picked on June 12 at $ 77.95
Change since picked: - 4.85
Earnings Date 07/28/06 (unconfirmed)
Average Daily Volume = 144 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.)

---

D.R.Horton - DHI - close: 22.83 change: -0.18 stop: n/a

Homebuilders continue to sink. The DJUSHB index lost 2.9% today. Unfortunately for us shares of DHI only fell 0.78%. Please note that the stock is outside of our suggested entry range to open strangle plays. Our estimated cost was about $1.70. Right now we're planning to exit if either option rises to $2.55 or more. The options in our strangle are the August $25 call (DHI-HE) and the August $22.50 put (DHI-TX).

Picked on July 09 at $ 23.90
Change since picked: - 1.07
Earnings Date 07/20/06 (confirmed)
Average Daily Volume = 3.7 million

---

KB Home - KBH - close: 42.40 change: -1.60 stop: n/a

KBH was one of the worst performing stocks in the homebuilding sector today. Shares of KBH lost 3.6% and its MACD is nearing a new sell signal. The stock is outside our suggested entry range to open strangles so we're not suggesting new plays. Our estimated cost was about $1.45. The options we suggested were the August $50 call (KBH-HJ) and the August $40 put (KBH-TH). We would like to exit if either option rises to $2.45 or more.

Picked on July 09 at $ 45.76
Change since picked: - 3.36
Earnings Date 09/14/06 (unconfirmed)
Average Daily Volume = 2.4 million
 

Dropped Calls

Bear Stearns - BSC - cls: 135.33 chg: -3.03 stop: 134.95

We have been stopped out of BSC at $134.95. Investors are growing nervous and they sold the financial stocks today. The XBD broker-dealer index lost 2.2% and broke down under its 200-dma. Participating in the sell-off was BSC. Shares lost 2.18% to close near the $135.00 level and its 50-dma. We warned readers that we expected a dip toward the $135 level. Unfortunately, there was a late day intraday spike to $134.91, which stopped us out.

Picked on June 29 at $137.51
Change since picked: - 2.18
Earnings Date 09/14/06 (unconfirmed)
Average Daily Volume = 1.5 million

---

Google - GOOG - close: 417.25 chg: - 7.31 stop: 399.00

The sell-off in tech stocks is getting pretty ugly and we don't think it's over yet. Shares of GOOG lost 1.7% and have closed under their 10-dma. GOOG did receive some analyst comments today. One firm was bearish while the other was bullish so it was a wash. The trend in GOOG remains bullish but short-term momentum indicators are starting to look bearish. We would expect a dip to the $410 level or maybe the $400 region and right now we don't want to suffer that kind of pull back so we're suggesting that our readers exit early!

Picked on June 21 at $401.00
Change since picked: +16.25
Earnings Date 07/20/06 (confirmed)
Average Daily Volume = 9.8 million

---

Komag Inc. - KOMG - close: 44.21 change: -1.53 stop: 44.49

We have been stopped out of KOMG at $44.49. The stock is another casualty of the tech stock sell-off, especially hardware. There were a lot of bearish analyst comments on tech and the hardware stocks today.

Picked on July 06 at $ 47.54
Change since picked: - 3.33
Earnings Date 07/26/06 (unconfirmed)
Average Daily Volume = 1.1 million

---

Union Pacific - UNP - close: 88.23 chg: -2.00 stop: 88.49

We have been stopped out of UNP at $88.49. Railroad stocks were hammered pretty hard today with most of them under performing the Dow Transportation sector index's 1.45% decline. UNP lost 2.2% on above average volume. The move today in UNP, and several other railroad stocks, looks like a bearish breakdown worth investigating for potential put plays.

Picked on June 29 at $ 91.54
Change since picked: - 3.31
Earnings Date 07/20/06 (unconfirmed)
Average Daily Volume = 1.6 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

Play Update Archives