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Call Updates

BP Prudhoe Bay - BPT - close: 74.09 chg: -0.21 stop: 72.45

Energy stocks traded lower on Friday in spite of a bounce in crude oil futures. The profit taking was widespread across the market. Shares of BPT had been inching higher during the first half of Friday but the rally stalled at $74.70, under resistance at the $75.00 level. The overall pattern still looks bullish with BPT's chart suggesting an eventual breakout over resistance at the $75.00 mark. This past week we did see BPT breakout past technical resistance at the 50-dma and 200-dma but it didn't amount to much (yet). Currently we are suggesting a trigger to buy calls at $75.05. If we are triggered our target is the $79.00-80.00 range. FYI: A move over $75 would produce a new Point & Figure chart buy signal.

Suggested Options:
We are suggesting the December calls. Our trigger to open positions is at $75.05.

BUY CALL DEC 70.00 BPT-LN open interest=214 current ask $5.50
BUY CALL DEC 75.00 BPT-LO open interest=467 current ask $2.10
BUY CALL DEC 80.00 BPT-LP open interest=605 current ask $0.60

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 421 thousand

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Cerner Corp. - CERN - close: 47.66 chg: +0.46 stop: 46.45

It has taken longer than expected but shares of CERN are finally seeing some upward follow through on the October 20th bullish reversal. Technical indicators are bullish and CERN Looks poised to breakout over resistance and the top of its trading range near $48.00. We are suggesting a trigger to buy calls at $48.05. If triggered then our target is the $52.00-52.50 range. The $50.00 mark might offer some round-number resistance so expect a pull back on the initial test of $50. FYI: The Point & Figure chart projects a $76 target.

Suggested Options:
We are suggesting the December calls. November options expire in three weeks. Our trigger to open plays is at $48.05.

BUY CALL DEC 45.00 CQN-LI open interest=512 current ask $3.90
BUY CALL DEC 47.50 CQN-LW open interest=478 current ask $2.25
BUY CALL DEC 50.00 CQN-LJ open interest=402 current ask $1.15

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/19/06 (confirmed)
Average Daily Volume = 662 thousand

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Frontier Oil - FTO - close: 29.85 change: +0.05 stop: 27.99*new*

Be careful with FTO. The stock has struggled to build on any rally attempts lately. Friday saw FTO produce its third failed rally in three days near its 100-dma in the $30.50 region. We seriously considered an early exit right here and more conservative traders may want to think about jumping out. The rally in oil stocks looks tired and we are expecting a dip in the Monday-Tuesday time frame this week. The problem is that the dip could turn into a correction if the rest of the market suddenly heads south with any speed. Shares of FTO should still have some support near $28.00 (bottom of the previous trading range) and the 200-dma (now at $28.41). We're raising the stop loss to $27.99. We're not suggesting new bullish positions on FTO unless the stock can breakout over the $30.50 level. Our short-term target is the $32.50-33.00 range. It's short-term because we want to exit ahead of FTO's November 7th earnings report. FYI: The P&F chart is still bearish. Plus, the weekly chart might be building a big (bearish) head-and-shoulders pattern.

Suggested Options:
We are not suggesting new positions on FTO at this time.

Picked on October 15 at $ 28.90
Change since picked: + 0.95
Earnings Date 11/07/06 (confirmed)
Average Daily Volume = 3.2 million

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NTL Inc. - NTLI - close: 27.23 chg: -0.27 stop: 25.99

After two days of gains the rebound in NTLI paused as the market experienced some widespread profit taking. Traders bought the dip in NTLI near $27.00 and the pull back looks like a new entry point to buy calls. Volume has been very big on the recent rally, which is a bullish signal. We have less than two full weeks before NTLI is expected to report earnings (still unconfirmed). Traders should bear that in mind if you're considering positions here. Our target is the $29.90-30.00 range. We do not want to hold over the early November (8th?) earnings report.

Suggested Options:
We are suggesting the November calls since we plan to exit before they expire. December strikes would also work.

BUY CALL NOV 25.00 NUD-KE open interest=2324 current ask $2.70
BUY CALL NOV 27.50 NUD-KY open interest=5306 current ask $1.00
BUY CALL NOV 30.00 NUD-KF open interest=1307 current ask $0.35

Picked on October 26 at $ 27.41
Change since picked: - 0.18
Earnings Date 11/08/06 (unconfirmed)
Average Daily Volume = 2.4 million

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Vimpel Comm. - VIP - close: 65.07 chg: -0.99 stop: 61.90

VIP displayed some impressive strength earlier this past week with the stock breaking out to new record highs. VIP traded over $67 on Thursday morning before finally succumbing to profit taking. Friday's weakness was another round of profit taking spurred on by general weakness in the U.S. markets that afternoon. Technically the pull back has been on low volume, which is bullish. We'd look for a dip toward the 10-dma or the $64.00 level. Broken resistance at $64.00 should offer some support. Our target is the $67.50-70.00 range. We're not suggesting new positions at this time although a bounce from $64 could be used as a new entry point. We plan to exit ahead of the mid-November earnings report. FYI: We are seeing a bearish divergence between the price action and the RSI on VIP's daily chart.

Suggested Options:
We're not suggesting new positions at this time.

Picked on October 12 at $ 62.17
Change since picked: + 2.90
Earnings Date 11/17/06 (unconfirmed)
Average Daily Volume = 1.0 million
 

Put Updates

Alcon Inc. - ACL - close: 107.34 chg: -1.03 stop: 110.41

ACL is moving our direction and closer to a new relative low. The stock broke down this past week after investors became disappointed with the latest earnings results. We suggested that more aggressive traders might want to buy puts on the failed rally under $110 on Wednesday. We are suggesting a trigger to open plays at $105.75, which is under last Tuesday's low. If triggered our target is the $100.10-100.00 level. We would consider this play slightly more aggressive due to the wide stop loss we're suggesting. Keep an eye on the DRG drug index. The DRG spent about six days failing to breakout past the 363 level and now the sector index is falling sharply. Short-term technicals have turned negative for the group but the overall bullish up trend is still intact (for now).

Suggested Options:
November puts have more open interest but they expire in three weeks so we're suggesting the December puts. Our trigger is at $105.75.

BUY PUT DEC 110.00 ACL-XB open interest= 64 current ask $5.40
BUY PUT DEC 105.00 ACL-XA open interest= 35 current ask $2.85
BUY PUT DEC 100.00 ACL-XT open interest= 0 current ask $1.30

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/23/06 (confirmed)
Average Daily Volume = 520 thousand

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StanCorp. - SFG - close: 45.55 change: +0.61 stop: 46.01

SFG's rally on Friday was a surprise. Shares erased Thursday's post-earnings sell-off and did so on strong volume. Looking at the intraday chart most of the volume flooded in on Friday afternoon. The overall pattern still looks bearish so we're going to keep SFG as a bearish candidate for now. However, if shares close over $46 we'll drop it as a candidate. We're reposting our Thursday new play comments here:

The last couple of earnings seasons have been rough for SFG. The stock has experienced some major sell-offs (see chart). Shares managed to avoid a big sell-off when SFG announced earnings Thursday but unfortunately for shareholders the trend still appears to be down. The company reported earnings and the EPS numbers were a bit better than analysts expected but revenues were light and the company said fiscal year numbers would be toward the low end of previous guidance. This was effectively an earnings warning going forward. The stock lost 1.2% on strong volume and looks poised to challenge and probably breakdown under support at the $44.00 level. Short-term technicals are bearish and SFG has been trading in a very wide, long-term bearish channel for months. The P&F chart points to a $36 target but appears to have some support near $39.00. We are suggesting a trigger to buy puts at $43.89, which is under support at $44.00 and its September 25th low (43.92). If triggered at $43.89 our target is the $40.25-40.00 range. More aggressive traders may want to aim lower toward the bottom edge of its channel.

Suggested Options:
November puts have more open interest but they expire three weeks. Therefore we're suggesting the December puts. You the individual trader should decide which month and strike price works best for your trading style and risk. Our suggested entry point is $43.89.

BUY PUT DEC 45.00 SFG-XI open interest= 25 current ask $1.75
BUY PUT DEC 40.00 SFG-XH open interest= 0 current ask $0.50

Picked on October xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/06 (confirmed)
Average Daily Volume = 267 thousand

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Univ.Forest Prod. - UFPI - cls: 45.26 chg: -0.27 stop: 50.01

Shares of UFPI continue to slink lower following the bearish, earnings-inspired breakdown from its three-month trading range about two weeks ago. The stock is currently testing round-number support at the $45.00 level. We were concerned that UFPI would bounce from the $45 mark but so far any bounce attempt has been anemic. At the moment we would suggest readers wait for a new relative low under $44.98 (we'd suggest 44.95) before opening new put positions. Or as an alternative you could look for a failed rally near its 10-dma near $47.50. More conservative traders may want to tighten their stop loss and reduce their risk. We're aiming for a decline into the $41.00-40.00 range. Our wide stop loss makes this a more aggressive play.

Suggested Options:
The November and January puts have more open interest but we're against using the November strikes for new plays because they expire in three weeks. Currently we're suggesting the December strikes.

BUY PUT DEC 50.00 UAD-XJ open interest= 3 current ask $5.60
BUY PUT DEC 45.00 UAD-XI open interest= 0 current ask $2.35
(we don't see any Dec. 40 puts available yet)

Picked on October 24 at $ 46.13
Change since picked: - 0.82
Earnings Date 10/16/06 (confirmed)
Average Daily Volume = 192 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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Bear Stearns - BSC - cls: 149.21 chg: -4.09 stop: n/a

Shares of BSC experienced a sharp reversal on Friday. The stock lost 2.66% on above average volume. The decline is a bearish breakdown under its 10-dma, the $150.00 level and its two-month trendline of higher lows. Friday's decline also produced a new sell signal on the daily chart's MACD indicator. Friday afternoon offered several chances to open new strangle positions very close to the $150.00 level. If you missed the chance it may not be too late but we'd try to keep new strangle positions in the $149.00-151.00 range. The closer to $150.00 the better. The options in our strangle are the November 155 call (BSC-KK) and the November 145 put (BSC-WI). Our estimated cost was $4.00. We're planning to exit if either option rises to $6.00 or more.

Suggested Options:
If you choose to open new plays you might want to consider the December strikes over the Novembers. November options expire in three weeks. A similar strangle using December $155 calls and $145 puts would cost about $6.00. You would need to adjust your target accordingly. Aggressive players might just want to speculate on just buying puts.

Picked on October 22 at $150.19
Change since picked: - 0.98
Earnings Date 12/14/06 (unconfirmed)
Average Daily Volume = 1.6 million

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ConocoPhillips - COP - close: 61.19 chg: -0.65 stop: n/a

Lack of a strong post-earnings move has put a crimp in our strangle play on COP. The stock is reversing lower after a failed rally near its 200-dma. We still have three weeks left for this strangle strategy to play out but we'd be against opening new positions using November options. Our estimated cost was about $1.15. We are suggesting an exit if either option rise to $2.00 or more. Our suggested options were the November $65 call (COP-KM) and the November $55 put (COP-WK).

Suggested Options:
We're not suggesting new positions in COP at this time.

Picked on October 15 at $ 60.03
Change since picked: + 1.16
Earnings Date 10/25/06 (confirmed)
Average Daily Volume = 9.8 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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