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Call Updates

CNOOC Ltd - CEO - close: 87.42 change: +0.80 stop: 82.89

This has been a volatile week for crude oil. On Thursday crude oil futures surged more than 2% to breakout over $61 a barrel. Today crude oil decline back under $60 after the IEA cut their demand forecasts. Shares of CEO ignored the weakness in crude oil on Friday. The stock gapped open higher and closed with a 0.9% gain. The move was probably fueled by news that the company reached success with a new natural gas well in Bohai Bay, China. We are still bullish on the stock but we're not suggesting new positions at this time. Our target is the $89.50-90.00 range.

Suggested Options:
We are not suggesting new positions in CEO at this time.

Picked on November 09 at $ 85.52 *gap higher*
Change since picked: + 1.90
Earnings Date 10/31/06 (confirmed)
Average Daily Volume = 264 thousand

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Cerner Corp. - CERN - close: 49.03 chg: -0.24 stop: 46.90

Tech stocks, for the most part, were still inching higher on Friday. Unfortunately, shares of CERN continue to under perform the last few days. The overall pattern for CERN is still bullish given the breakout over resistance at $48.00 but the most recent candlestick on the weekly chart looks like a short-term bearish reversal (at the very least a failed rally). Friday's session doesn't tell us much. CERN traded sideways in a narrow 40-cent range for most of the day. A bounce from $49 near its 10-dma would be encouraging but we'd probably look for a dip and bounce near $48.00 before considering new positions. More conservative traders may want to adjust their stops closer to the $48 level. Our target is the $52.00-52.50 range.

Suggested Options:
We are not suggesting new positions at this time. Keep an eye on the $48 level.

Picked on October 30 at $ 48.05
Change since picked: + 0.98
Earnings Date 10/19/06 (confirmed)
Average Daily Volume = 662 thousand

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Deere & Co. - DE - close: 87.11 change: +0.51 stop: 83.99

Friday's trading in DE didn't help much. The stock produced a minor bounce on below average volume. Overall Wednesday's breakout still looks like a bullish entry point to buy calls. However, traders may want to be patient and try and buy a dip in the $86.50-86.00 region. We suspect that DE will rally into its November 21st earnings report. There is probably some resistance at its October high (90.47) but shares have more significant resistance near $92.00-92.50 from last May. We'll use a $91.50-92.00 target. We do not want to hold over the November earnings report.

Suggested Options:
We are suggesting the December calls.

BUY CALL DEC 85.00 DE-LQ open interest=7305 current ask $4.80
BUY CALL DEC 90.00 DE-LR open interest=5830 current ask $2.20

Picked on November 08 at $ 87.45
Change since picked: - 0.34
Earnings Date 11/21/06 (confirmed)
Average Daily Volume = 2.7 million

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Fomento Econo. - FMX - close: 102.47 chg: +1.64 stop: 97.99

This looks like a new bullish entry point on FMX. Traders bought the dip (twice) near $100.00 on Friday morning. The rebound put FMX back near its recent highs and shares look poised to hit new highs next week. The P&F chart looks very positive with a bullish triangle breakout pattern with a $121 target. Our stop loss is at $97.99 but more conservative traders might want to tighten theirs. Our target is the $107.00-110.00 range.

Suggested Options:
We are suggesting the December calls.

BUY CALL DEC 100.00 FMX-LT open interest=66 current ask $5.10
BUY CALL DEC 105.00 FMX-LA open interest=43 current ask $2.40

Picked on November 08 at $102.09
Change since picked: + 0.38
Earnings Date 10/27/06 (confirmed)
Average Daily Volume = 314 thousand

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GlobalSantaFe - GSF - close: 54.05 chg: -0.50 stop: 49.39

Oil service stocks tend to be more volatile than their oil producing peers. That was definitely the case on Friday. The IEA lowered their forecast on oil consumption and crude oil futures dropped back under $60 a barrel in what has been a volatile week for the commodity. Oil stocks fell lower but oil services under performed with a 1.8% decline in the OSX index. Shares of GSF closed with a 0.9% loss. We were looking for a bounce near the $54.00 level. GSF actually found short-term support near $53.50. The late afternoon bounce in GSF looks like a potential entry point to buy calls again. However, we are concerned that the three-day pattern in GSF and the OSX oil services index looks like a bearish reversal. Therefore we're not suggesting new bullish positions in GSF at this time. More conservative traders may want to tighten their stops. Our target is the $57.50-58.00 range.

Suggested Options:
We're not suggesting new plays in GSF at this time.

Picked on November 05 at $ 52.39
Change since picked: + 1.66
Earnings Date 11/01/06 (confirmed)
Average Daily Volume = 3.4 million

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Holly Corp. - HOC - close: 49.88 change: -1.07 stop: 47.95

The decline in oil futures also impacted shares of HOC. The stock lost just over 2% on Friday to reverse Thursday's gain. The technicals are starting to look mixed with the MACD on the daily chart poised to move lower versus the MACD on the weekly chart poised to produce a new buy signal. We would not suggest new bullish positions with HOC under $50.00 but aggressive traders might want to try and buy a bounce from $48 or $49 should one appear. Our target is the $54.90-55.00 range.

Suggested Options:
We're not suggesting new plays in HOC at this time.

Picked on November 05 at $ 50.75
Change since picked: - 0.87
Earnings Date 11/01/06 (confirmed)
Average Daily Volume = 1.1 million

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Petroleo Brasileiro - PBR - cls: 92.88 chg: +0.61 stop: 87.99*new*

PBR managed to post a minor gain in spite of the decline in the oil sector indices and crude oil futures. We remain optimistic but if you're looking for a new entry point then consider waiting for a dip back towards the $90 level. The technicals on the weekly chart are bullish while technicals on the daily chart are starting to near overbought zones. The P&F chart is bullish with a $104 target. Please note that we're raising the stop loss to $87.99. Our target is the $95.00-96.00 range. FYI: PBR is a Brazilian stock traded as an ADR here in the U.S. One risk traders are facing is the company's earnings report. We cannot find a specific date or even a history of recent earnings reports. The risk is that they announce a negative report while we're trading them.

Suggested Options:
If PBR offers a new entry point near $90 we'd consider the December or January calls.

Picked on November 06 at $ 90.05
Change since picked: + 2.83
Earnings Date 00/00/06 (unconfirmed)
Average Daily Volume = 2.5 million

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FreightCar Amer. - RAIL - close: 55.16 change: +0.32 stop: 53.49

Traders bought the dip in RAIL near $54.00 and its 10-dma and 50-dma. This looks like a new entry point to buy calls, especially given Friday's rebound in the transportation index. RAIL's P&F chart is bullish and points to a $68 target. Our target is the $59.75-60.00 range.

Suggested Options:
We are suggesting the December calls.

BUY CALL DEC 55.00 RQN-LK open interest=1463 current ask $2.95
BUY CALL DEC 60.00 RQN-LL open interest=1276 current ask $1.00

Picked on November 08 at $ 56.08
Change since picked: - 0.92
Earnings Date 10/26/06 (confirmed)
Average Daily Volume = 334 thousand

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Transocean - RIG - close: 75.67 change: -0.90 stop: 71.99

News that the IEA had reduced their forecast for oil consumption sent crude oil futures lower and that weighed on the oil service stocks. The OSX index lost 1.8% and shares of RIG fell 1.17% - back under its 200-dma. Overall the larger pattern for RIG looks bullish but we noticed that the newest candlestick on the weekly chart looks like a bearish reversal or failed rally. We would look for a new rebound over $76.00 or a new dip/bounce near $74.00 as a new entry point to buy calls. Before considering new plays readers should note that the daily chart for the OSX oil services index looks dangerous with the last three days producing what could be a bearish reversal pattern. Currently we have two targets for RIG. Our conservative target is the $79.50 level. Our aggressive target is the $84.00 level.

Suggested Options:
If RIG produces a new entry point we'd suggest the December or January calls.

Picked on November 05 at $ 75.07
Change since picked: + 0.60
Earnings Date 11/02/06 (confirmed)
Average Daily Volume = 7.6 million

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Schlumberger - SLB - cls: 63.30 chg: -1.67 stop: 60.95

Shares of SLB, another oil services stock, really under performed on Friday with a 2.5% decline. The overall pattern looks similar to RIG where the trend appears to be up but the trading over the last week looks like a bearish reversal (see weekly chart). If you're looking for a new entry point we would wait for a dip and bounce near $62 and its 200-dma or for a new rise past the $65.00 level. Bear in mind that our target is the $67.50-68.00 range. Currently the P&F chart is bullish with a $75 target but its upward momentum is in jeopardy. Readers should note that the recent trading in the OSX oil services index might be a short-term bearish reversal.

Suggested Options:
If SLB offers another entry point we'd consider the December or January calls.

Picked on November 05 at $ 63.50
Change since picked: - 0.20
Earnings Date 10/20/06 (confirmed)
Average Daily Volume = 9.8 million

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Vimpel Comm. - VIP - close: 65.91 chg: +0.05 stop: 62.49

We remain cautiously optimistic on VIP. The stock acts like it wants to move higher and given the chance we think it will. Unfortunately, VIP is also overbought and could be a big target for profit taking should the major averages turn lower. Shares of VIP are relatively close to our target in the $67.50-70.00 range so we're not suggesting new plays. We are going to repeat our earlier suggestion that more conservative traders may want to take some money off the table now. Don't forget that we're dealing with a rising environment of risk due to the earnings report. The company is expected to report this month but we can't find a specific date. Estimates for when VIP will announce range from November 7th to November 23rd.

Suggested Options:
We are not suggesting new call positions in VIP at this time.

Picked on October 12 at $ 62.17
Change since picked: + 3.74
Earnings Date 11/17/06 (unconfirmed)
Average Daily Volume = 1.0 million
 

Put Updates

Advanced Micro Dev. - AMD - cls: 21.07 chg: +0.18 stop: 22.05

The SOX semiconductor index appears to have produced the right shoulder in a bearish head-and-shoulders pattern. The defining moment looks like Thursday's failed rally under the SOX's 200-dma. Unfortunately, there was no follow through lower on Friday. Instead the SOX bounced with a 1% gain lending strength to the NASDAQ. Shares of AMD followed with a 0.8% bounce albeit on relatively low volume. We suspect that AMD will turn lower given its trendline of resistance (see chart) but we are suggesting that readers wait for a new decline under support at $20.00 before initiating new positions. Our concern is that AMD is building on a trendline of higher lows (see chart). Our target is the $17.50-17.00 range.

Suggested Options:
We would wait for a decline under $20 before considering new plays. We prefer the December puts.

Picked on October 29 at $ 20.86
Change since picked: + 0.21
Earnings Date 10/18/06 (confirmed)
Average Daily Volume = 23.0 million

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Amazon.com - AMZN - close: 39.26 chg: +0.42 stop: 40.25

It would appear that the bulls are still in control of AMZN. Thursday saw the stock's rally fail under the $40 level but Friday did not produce any sort of follow through lower. Short-term technicals may be at overbought levels but they can always grow more overbought. Right now we are expecting another rally attempt at the $40 mark. The recent breakout and close over resistance at the $39.00 level is negative for the bears and more conservative traders may want to exit early to limit losses. If you're looking for a new entry point watch for another failed rally under $40 or $39.80 or as an alternative wait for a decline under short-term support at the rising 10-dma. Our target is the $35.00-34.00 range.

Suggested Options:
If AMZN produces a new entry point we'd suggest the December or January puts.

Picked on October 29 at $ 38.24
Change since picked: + 1.02
Earnings Date 10/24/06 (confirmed)
Average Daily Volume = 7.9 million

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Cardinal Health - CAH - cls: 62.05 chg: -1.26 stop: 64.85

Our bearish put play in CAH is finally open. The stock has slowly withered lower and broken support at $63.00 and again near $62.35. Driving CAH under the $62 level on Friday appears to have been an analyst downgrade. Volume on the decline was strong, which is good news for the bears. Our suggested trigger to buy puts was at $61.99. Now that the play is open our target is the $58.00-57.50 range. Be prepared for a bounce on CAH's initial test of the $60 level.

Suggested Options:
We are suggesting the December or January puts.

BUY PUT DEC 65.00 CAH-XM open interest=1722 current ask $3.40
BUY PUT DEC 60.00 CAH-XL open interest=3409 current ask $0.85

BUY PUT JAN 65.00 CAH-MM open interest=5500 current ask $3.80
BUY PUT JAN 60.00 CAH-ML open interest=3563 current ask $1.40

Picked on November 10 at $ 61.99
Change since picked: + 0.06
Earnings Date 10/27/06 (confirmed)
Average Daily Volume = 1.3 million

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Capital One Finc. - COF - cls: 77.52 chg: +1.10 stop: 80.05

Bulls are trying to make a comeback in COF. On Thursday the stock produced a bearish failed rally under its 50-dma (and the $78 level). Unfortunately, Friday failed to see any follow through lower. COF rebounded with a 1.4% gain. We're growing concerned that COF is finding too much support in the $76 region. We're not suggesting new positions and more conservative traders may want to exit early or tighten their stop toward the $79 or $78 levels. Our target is the $75.10-75.00 range.

Suggested Options:
We are not suggesting new positions in COF at this time.

Picked on October 31 at $ 79.33
Change since picked: - 1.81
Earnings Date 10/18/06 (confirmed)
Average Daily Volume = 2.4 million

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Centex - CTX - close: 50.59 change: +1.79 stop: 52.55

CTX erased four days of losses with Friday's 3.6% bounce. We may be witnessing a short squeeze sparked by another decline in bond yields, which influence mortgage rates. The latest data put short interest at almost 10% of its 117 million-share float. The breakout back above $50 and its 100-dma is definitely bad news for the bears. Shares were somewhat oversold and due for a bounce but more conservative traders may want to exit early and limit losses anyway. We're keeping the play open since CTX appears to have additional resistance near $52 and its 50-dma. Aggressive traders could try and open positions on a failed rally under $52 but we would suggest waiting for a new decline under $50.00 or $49.75 before starting new plays. Our target is the $45.50-45.00 range.

Suggested Options:
We are not suggesting new plays in CTX at this time.

Picked on November 07 at $ 49.75
Change since picked: + 0.84
Earnings Date 01/23/06 (unconfirmed)
Average Daily Volume = 2.1 million

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Freeport McMoran - FCX - cls: 58.82 chg: -2.01 stop: 62.01

Gold and mining stocks gave back a lot of Thursday's big gains. Shares of FCX under performed its peers with a 3.3% loss and gave back all of its gains from Thursday. The decline on Friday helped produce a new sell signal on the daily chart's MACD indicator. The decline back under $60 and $59 looks like a new entry point to buy puts. However, the afternoon bounce on Friday suggests FCX may make another attempt at a rebound. We would wait and watch for a failed rally under $60.00 as a potential entry point to start new plays. We have two targets on FCX. Our conservative target is the $55.25-55.00 range. Our aggressive target is the $51.00-50.00 range.

Suggested Options:
Traders can choose to open positions now or wait for a failed rally under $60.00. We would use the December or January puts.

Picked on November 08 at $ 59.05
Change since picked: - 0.23
Earnings Date 10/17/06 (confirmed)
Average Daily Volume = 3.7 million

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Lehman Brothers - LEH - cls: 72.18 chg: +0.79 stop: 75.55

The broker-dealer stocks bounced on Friday after Thursday's rough decline. Shares of LEH added 1.1% on above average volume. We remain bearish but the short-term oversold bounce may not be over yet. We're not suggesting new plays at this time but a failed rally near $74 could be used as a new entry point. Our target is the $70.25-70.00 range.

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

Picked on November 05 at $ 74.43
Change since picked: - 2.25
Earnings Date 12/13/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Pantry Inc. - PTRY - close: 51.82 change: +0.83 stop: 54.05*new*

We are running out of time with PTRY. The company is due to report earnings on the morning of Thursday, November 16th. We do not want to hold over the report so we're planning to exit on Wednesday at the closing bell. Given our time frame we're adjusting the stop loss to $54.05 and we're not suggesting new positions. We're also adjusting our target to $50.25.

Suggested Options:
We are not suggesting new plays at this time.

Picked on October 29 at $ 54.05
Change since picked: - 2.23
Earnings Date 11/16/06 (confirmed)
Average Daily Volume = 383 thousand

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Univ.Forest Prod. - UFPI - cls: 45.32 chg: +1.32 stop: 46.13*new*

Uh-oh! The oversold bounce in UFPI was just a little too strong for our comfort level on Friday. The stock bounced to a 3% gain and closed back above the $45 level. The move helped the daily chart's MACD indicator produce a new buy signal. More conservative traders might actually want to consider an early exit to avoid a loss given Friday's unexpected show of strength. We are adjusting our stop loss to $46.13 and we're not suggesting new positions. Our target has been the $41-40 range.

Suggested Options:
We are not suggesting new plays in UFPI.

Picked on October 24 at $ 46.13
Change since picked: - 0.81
Earnings Date 10/16/06 (confirmed)
Average Daily Volume = 192 thousand

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Washington Group. - WGII - cls: 56.30 chg: +1.83 stop: 58.51*new*

WGII was bouncing early Friday but then the rally suddenly surged higher late afternoon accompanied by a big wave of volume. The momentum stalled just over the $57 level and the stock pulled back from its highs to close under the 10-dma and 200-dma. We could not find any specific news to account for the afternoon rise. The close back above the $56 level is a challenge for us since that puts WGII back in its $56-58 trading range. We would expect the 50-dma near $58.50 to act as resistance so we're lowering our stop loss to $58.51. However, given the unexpected strength and the big volume behind it more conservative traders may want to consider an early exit to avoid further losses. Our target has been the $51-50 range.

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

Picked on November 08 at $ 55.40
Change since picked: + 0.90
Earnings Date 11/06/06 (confirmed)
Average Daily Volume = 195 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: 147.16 chg: +2.75 stop: n/a

We are down to our last five days with this BSC strangle play. The stock is trending lower but Friday's bounce helped shares recoup a lot of Thursday's big sell-off. November options expire after this Friday. Given our time frame we're adjusting our target to breakeven at $4.00 (estimated cost). The options in our play were the the November 155 call (BSC-KK) and the November 145 put (BSC-WI).

Suggested Options:
We're not suggesting new strangles in BSC.

Picked on October 22 at $150.19
Change since picked: - 3.03
Earnings Date 12/14/06 (unconfirmed)
Average Daily Volume = 1.6 million

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Caterpillar - CAT - close: 59.60 chg: +0.40 stop: n/a

Entry point alert! CAT bounced back into our $59.50-60.50 suggested entry point range to open new strangle plays. The intraday chart suggests that CAT will continue to bounce on Monday morning so we might get another (preferred) entry at the $60.00 mark. The options in our strangle are the December $65 call (CAT-LM) and the December $55 put (CAT-XK). Our estimated cost was about $0.75. We want to exit if either options rises to $1.50.

Suggested Options:
See play description.

Picked on November 08 at $ 60.10
Change since picked: - 0.50
Earnings Date 01/19/06 (unconfirmed)
Average Daily Volume = 7.7 million

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Cephalon - CEPH - close: 73.84 change: -0.44 stop: n/a

Traders bought the dip in CEPH on Friday. The stock rebounded sharply from its lows near $72.35. We are not suggesting new strangle plays in CEPH. The options in our strangle are the December $75 call (CQE-LO) and the December $65 put (CQE-XM). Our estimated cost was $3.45. We plan to see if either option rises to $4.90 or more.

Suggested Options:
We're not suggesting new strangles in CEPH.

Picked on October 29 at $ 69.35
Change since picked: + 4.49
Earnings Date 11/02/06 (confirmed)
Average Daily Volume = 2.0 million

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ConocoPhillips - COP - close: 63.09 chg: -0.22 stop: n/a

We only have five days to see COP trade over $65 or under $55 to give this strangle play a chance to exit at breakeven or better. November options expire after Friday. We're not suggesting new positions. Our target is breakeven at $1.15 but more conservative traders may want to try and exit at a fraction of our estimated cost (50%, 75%, etc) to salvage their capital. Our suggested options were the November $65 call (COP-KM) and the November $55 put (COP-WK).

Suggested Options:
We are not suggesting new strangle plays.

Picked on October 15 at $ 60.03
Change since picked: + 3.06
Earnings Date 10/25/06 (confirmed)
Average Daily Volume = 9.8 million

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Blue Nile - NILE - cls: 35.87 chg: +0.34 stop: n/a

The last several days have seen NILE's oversold bounce fail but shares are struggling to fall through the $35.30 region. Overall the pattern looks negative. We're not suggesting new positions at this time. Our estimated cost was $2.40 and we're planning to sell if either side of our strangle rises to $3.90. The options in our suggested strangle are the January $45 call (JWU-AI) and the January $35 put (JWU-MG).

Suggested Options:
We are not suggesting new strangle plays.

Picked on October 29 at $ 38.92
Change since picked: - 3.05
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

None
 

Dropped Puts

Alcon Inc. - ACL - close: 100.12 chg: -2.23 stop: 110.01

Target achieved. Drug stocks continued to sell-off for their third day in a row following the democrats win in congress on Tuesday. Shares of ACL plunged another 2.2% and managed to hit an intraday low of $99.00. Our target was the $100.10-100.00 range.

Picked on October 31 at $105.75
Change since picked: - 5.63
Earnings Date 10/23/06 (confirmed)
Average Daily Volume = 520 thousand
 

Dropped Strangles

None
 

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