Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

Call Updates

B.P.Prudhoe Bay - BPT - close: 75.91 chg: +0.51 stop: 73.75

News that OPEC had decided to cut production by another 500 million barrels effective February 1st sent crude oil soaring to more than $63 a barrel. This stoked the fire under the energy stocks and the OIX index rose 1.6% while the OSX oil services index rose 1.28%. Shares of BPT continue to bounce from support near $75.00. The rise past $75.75 looks like a new bullish entry point to buy calls. Our target is the $79.75-80.00 range. The P&F chart is bullish with an $85 target.

Picked on November 29 at $ 75.25
Change since picked: + 0.66
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 219 thousand

---

Centex - CTX - close: 56.07 change: -0.57 stop: 54.95 *new*

We remain defensive on CTX. The DJUSHB housing index fell 0.17% but the HGX housing index rose 0.9%. Shares of CTX under performed both of them with a 1% decline and another failed rally this morning. The stock's and the sector's relative weakness today is not very inspiring and we would strongly consider just exiting early and looking for bullish candidates in different sectors. Technically a bounce from the $55.50-55.00 region could still be used as a new entry point but we would hesitate to open new plays in CTX right now. We are raising our stop loss to $54.95. Currently we have two targets. Our conservative target is the $59.50-60.00 range. Our aggressive target is the $63.50-64.00 range. Be aware that the bottom of CTX's April 2006 gap down near $57.25 might be resistance as may the to of its gap near $60.00. FYI: The Point & Figure chart points to a $77 target.

Picked on December 03 at $ 55.89
Change since picked: + 0.18
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.0 million

---

Diamond Offshore - DO - close: 84.43 chg: +2.27 stop: 79.95 *new*

Today's OPEC production cut news pushed crude oil sharply higher and oil stocks responded positively. DO rose 2.7% and is quickly nearing our target in the $85.00-86.00 range. We are raising our stop loss to $79.95. More aggressive traders might want to aim higher than our suggested target. The P&F chart points to a $92 target.

Picked on December 03 at $ 80.59
Change since picked: + 3.84
Earnings Date 01/26/07 (unconfirmed)
Average Daily Volume = 3.8 million

---

Enerplus - ERF - close: 46.62 change: +0.41 stop: 44.95

The strength in oil stocks gave ERF another boost and the stock is slowly pushing past resistance in the $46.50-47.00 region. The technical picture still looks worrisome but the rally in oil, if it continues, should help ERF breakout past the 50-dma. The Point & Figure chart is bullish and points to a $64 target but shows potential resistance near $52. We are aiming for a rise into the $50.00-51.00 range.

Picked on November 29 at $ 46.01
Change since picked: + 0.61
Earnings Date 11/10/06 (confirmed)
Average Daily Volume = 973 thousand

---

KB Home - KBH - close: 51.60 change: -0.19 stop: 49.95

KBH, like many of the homebuilders, under performed the market today. We are wary of this relative weakness and the technical picture for KBH continues to worsen. Conservative traders may want to consider an early exit to cut any losses now. We're not ready to close this play early just yet KBH still trading above support near $50.00 and its simple 200-dma, however we would not suggest new positions at this time but keep your eye on a bounce from the $50 level.

Picked on December 03 at $ 52.04
Change since picked: - 0.44
Earnings Date 03/00/07 (unconfirmed)
Average Daily Volume = 2.7 million

---

L-3 Comm. - LLL - close: 83.86 change: +1.83 stop: 79.99

The widespread market strength and news that LLL had authorized a $500 million stock buy back program helped the stock to a 2.2% gain. Volume came in above average on the rally, which is usually a bullish sign. Shares are testing their December highs and look poised to move higher. Our target is the $88.00-90.00 range.

Picked on December 04 at $ 83.81
Change since picked: + 0.05
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 840 thousand

---

Lockheed Martin - LMT - cls: 90.25 change: +0.31 stop: 88.99

Shares of LMT managed a minor bounce today and it might be the beginning of the end for its two-week consolidation. The technical picture is still negative at this point but a bounce past $90.60 or $91.00 could be used as a new bullish entry point. More conservative traders who are still in the play may want to tighten their stops toward $90. We have two targets. Our conservative target is the $94.85-95.00 range. Our more aggressive target is in the $99-100 range.

Picked on November 29 at $ 90.62
Change since picked: - 0.37
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million

---

Sepracor - SEPR - close: 56.44 chg: -0.31 stop: 55.74

Relative weakness in SEPR today only reinforces our comments yesterday that more conservative traders may want to exit early right now. Shares lost 0.5% and continue to churn between $56 and $58. Right now the technical picture has grown bearish. We're not suggesting new positions. Our target for SEPR is the $59.50-60.00 range.

Picked on November 19 at $ 54.69
Change since picked: + 1.75
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 2.3 million

---

Valero Energy - VLO - close: 54.95 change: +0.41 stop: 53.99

We were on the verge of dumping VLO. The stock's performance had grown more and more bearish but today brought a reprieve. The OPEC news fueled a rally in crude oil and that funneled into strength for the energy stocks. VLO under performed most of its peers and shares are still struggling with technical resistance with its 100-dma and exponential 200-dma still overhead. We would wait for a rally past $55.50 before considering new call positions. FYI: Before the bell this morning VLO was downgraded to a "hold".

Picked on December 03 at $ 55.85
Change since picked: - 0.90
Earnings Date 01/30/07 (unconfirmed)
Average Daily Volume = 14.3 million

---

MEMC Electronic - WFR - close: 42.82 change: +0.32 stop: 39.49

Strength in shares of AMD helped lead a strong rally for the semiconductors. The SOX index rose 1.8%. We would have expected a bigger reaction in shares of WFR but the stock produced a less than impressive bounce from its rising 10-dma. The overall trend is still bullish and we would consider new positions here. Our target is the $47.50-50.00 range. The P&F chart is bullish with a $48 target.

Picked on December 10 at $ 42.40
Change since picked: + 0.42
Earnings Date 01/25/07 (unconfirmed)
Average Daily Volume = 4.4 million
 

Put Updates

Expeditors Intl.- EXPD - close: 43.79 chg: +1.29 stop: 45.05*new*

The transports stocks ignored the rise in oil today and the Dow Jones Transportation index closed up 1.5%. The rally prompted some bargain buying and/or some short covering in EXPD as the stock bounced to a 3% gain. The rebound in EXPD today stalled near potential support at $44.00 and its 10-dma and 100-dma. We warned readers earlier that the stock look poised for a bounce so this shouldn't be a surprise. A failed rally from here could be used as a new entry point. However, the rally in the major averages looks significant and we would not want to open new put plays if the markets are going to start setting new relative highs again. We are going to adjust our stop loss to $45.05. Our short-term target is the $40.15-40.00 range. More aggressive traders may want to aim for the August lows.

Picked on December 10 at $ 43.68
Change since picked: + 0.11
Earnings Date 02/06/07 (unconfirmed)
Average Daily Volume = 1.4 million

---

Genzymme - GENZ - close: 61.08 change: +0.89 stop: 64.05 *new*

The widespread market rally today inspired a bounce in GENZ but the rebound failed near its descending 10-dma. This actually looks like a potential entry point for new bearish plays but we hesitate to open new positions with so much strength in the broader markets. Please note that we are going to lower our stop loss to $64.05. The Point & Figure chart looks pretty bearish with a quadruple-bottom breakdown sell signal with a $49 target. Our target is the $58.00-56.00 range.

Picked on December 03 at $ 62.77
Change since picked: - 1.69
Earnings Date 02/15/07 (unconfirmed)
Average Daily Volume = 1.9 million

---

NewMarket - NEU - close: 59.11 change: -0.51 stop: 62.01 *new*

Shares of NEU continue to show relative weakness. The trading today produced another bearish failed rally pattern near its 10-dma with a close back under $60 and its 100-dma. We are going to alter our plan and suggest new put positions now. We'll drop the stop loss to $62.01. Our new target will be the $54.00-53.50 range. More conservative traders can stick to the old plan and use a trigger to open plays at $58.25 but we'd still use the new target since the rising 200-dma could be technical support.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/07 (unconfirmed)
Average Daily Volume = 275 thousand

---

Yahoo! Inc. - YHOO - close: 26.87 chg: +0.27 stop: 27.05

A strong rally for tech stocks and a 1.6% gain for the INX Internet index inspired some more buying in YHOO. We remain on the sidelines waiting for a breakdown under support near $26 and its 50-dma. We're suggesting a trigger to buy puts at $25.85. If triggered our target is the $22.65 level near the October low. More aggressive traders may want to aim lower.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/16/07 (unconfirmed)
Average Daily Volume = 29.3 million

---

YUM Brands - YUM - close: 58.86 change: +0.26 stop: 60.51

YUM is still trying to produce an oversold bounce and shares added 0.4% today. The stock should have resistance at its 50-dma and the $60 level directly overhead so readers can watch for a failed rally near $59.00 or $60.00 as a new bearish entry point to buy puts. Our target is the $55.75-55.00 range.

Picked on December 12 at $ 58.49
Change since picked: + 0.37
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 1.6 million
 

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.)

---

Caterpillar - CAT - close: 62.12 chg: +0.63 stop: n/a

There is no change from our previous updates on CAT. December options expire after tomorrow. Our estimated cost was about $0.75. The options in our strangle are the December $65 call (CAT-LM) and the December $55 put (CAT-XK).

Picked on November 08 at $ 60.10
Change since picked: + 2.02
Earnings Date 01/19/06 (unconfirmed)
Average Daily Volume = 7.7 million

---

Blue Nile - NILE - cls: 35.58 chg: +0.19 stop: n/a

The rally in NILE seemed to struggle all day especially around the $35.60 level. Shares do appear to have potential resistance near $36.00 and its 50-dma. More conservative traders may want to exit now following the smallcap index news. 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).

Picked on October 29 at $ 38.92
Change since picked: - 3.34
Earnings Date 10/30/06 (confirmed)
Average Daily Volume = 226 thousand
 

Dropped Calls

Biosite - BSTE - close: 48.51 change: -0.40 stop: 47.95

We have run out of patience with BSTE and we're suggesting an early exit to limit any losses. The stock produced a failed rally this morning and closed with a 0.8% loss while most of the market was in rally mode. We don't want to continue any bullish positions with this show of relative weakness. We will keep an eye on BSTE for a breakout over $50.00 down the road.

Picked on December 05 at $ 50.05
Change since picked: - 1.54
Earnings Date 02/07/07 (unconfirmed)
Average Daily Volume = 263 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

Play Update Archives