Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

Call Updates

KB Home - KBH - close: 50.98 change: -1.69 stop: 49.99

The homebuilders struggled on Friday in spite of positive news that December new home sales rose stronger than expected. KBH suffered an additional setback after news surfaced that the SEC was probing the company's options practices in a formal inquiry. Shares of KBH dropped almost 2.2% and closed near its rising 50-dma. Given the SEC news more conservative traders may want to exit early right here! We are not suggesting new bullish positions at this time but more aggressive traders may want to consider buying a bounce from here. Our target is the $54.90-55.00 range.

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

Picked on January 21 at $ 51.74
Change since picked: - 0.76
Earnings Date 03/19/07 (unconfirmed)
Average Daily Volume = 2.2 million

---

Mohawk Ind. - MHK - close: 78.52 chg: -1.04 stop: 77.45 *new*

If the homebuilders are experiencing some profit taking then it's natural to see flooring provider MHK ticking lower. The stock dropped 1.3% on Friday and closed near short-term support at the bottom of its four-week rising (bullish) channel. We would use a bounce above the $78.00 level as a new bullish entry point. More conservative traders may want to wait for a new relative high over $80 before initiating positions. Please note that we are adjusting the stop loss to $77.45. Our target is the $84.00-85.00 range. We do not want to hold over the February earnings report. FYI: We do want to note that the latest candlestick on the weekly chart looks like a failed-rally top so it's important to wait for a rebound.

Suggested Options:
We are suggesting the March calls but plan to exit ahead of the February earnings report. Look for a bounce above $78 as an entry point.

BUY CALL MAR 75.00 MHK-CO open interest= 20 current ask $5.70
BUY CALL MAR 80.00 MHK-CP open interest=4020 current ask $2.70
BUY CALL MAR 85.00 MHK-CQ open interest= 37 current ask $0.95

Picked on January 21 at $ 78.38
Change since picked: + 0.14
Earnings Date 02/16/07 (confirmed)
Average Daily Volume = 557 thousand

---

Altria Group - MO - close: 88.00 change: +0.15 stop: 86.85 *new*

Shares of MO inched higher on Friday. We are quickly running out of time. MO is due to report earnings on Wednesday morning, January 31st. We do not want to hold over the report so we plan to exit on Tuesday afternoon at the closing bell. More conservative traders may just want to exit now. We suspect that MO will trade sideways ahead of its earnings report since most of the excitement about MO announcing its Kraft spin-off is probably already built into the stock price. We're not suggesting new positions. Our target has been the $92.50-95.00 range. Please note that we are adjusting the stop loss to $86.85.

Suggested Options:
We are not suggesting new positions in MO.

Picked on January 04 at $ 87.65
Change since picked: + 0.35
Earnings Date 01/31/07 (confirmed)
Average Daily Volume = 8.8 million

---

Marathon Oil - MRO - close: 88.82 change: -0.04 stop: 86.75*new*

We are also running out of time with our MRO play. The company is due to report earnings on the morning of February 1st. Thus we'll plan to exit on January 31st at the closing bell. We are surprised that MRO didn't show more strength on Friday as crude oil posted another gain. The stock traded sideways between short-term support near $88 and short-term resistance near $90. If we had more time a bounce near $88 could be used as a new entry point but we're not suggesting new positions. Our target is the $93.50-94.00 range. Please note that we're adjusting the stop loss to $86.75.

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

Picked on January 22 at $ 88.05
Change since picked: + 0.77
Earnings Date 02/01/07 (confirmed)
Average Daily Volume = 3.7 million

---

OM Group - OMG - close: 47.97 change: +1.80 stop: 43.89

Chemical producer OMG displayed plenty of relative strength on Friday. The stock shot higher and closed with a 3.9% gain. We could not find anything specific to account for the sharp rebound but we're not complaining. On Thursday we suggested that a rebound above $47.40 would be a new entry point to buy calls. If you missed it we'd now look for a new relative high over $48.30 as an entry point. Our target is the $54.00-55.00 range. We do not want to hold over the early March earnings. FYI: The P&F chart points to a $57 target.

Suggested Options:
We are suggesting the March calls.

BUY CALL MAR 45.00 OMG-CI open interest=2568 current ask $5.20
BUY CALL MAR 50.00 OMG-CJ open interest= 706 current ask $2.45

Picked on January 25 at $ 48.05
Change since picked: - 0.08
Earnings Date 03/02/07 (unconfirmed)
Average Daily Volume = 770 thousand

---

Teleflex - TFX - close: 65.24 chg: -0.50 stop: 64.75

Warning! The bulls may be in serious trouble here. The stock's bullish breakout from two weeks ago has reversed and shares of TFX are struggling to hold support near $65.00 and its rising 50-dma. We were almost stopped out on Friday with the intraday low at $64.77. Many of the technical indicators have turned bearish. More conservative traders may want to exit now or consider an exit on a bounce towards the 10-dma near $66.50. We are not suggesting new bullish positions until we see TFX break its short-term trend of lower highs. Our target is the $71.00-72.00 range. FYI: The P&F chart points to an $81 target. We plan to exit ahead of the mid February earnings report.

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

Picked on January 14 at $ 67.11
Change since picked: - 1.87
Earnings Date 02/14/07 (unconfirmed)
Average Daily Volume = 202 thousand
 

Put Updates

Celgene Corp. - CELG - close: 53.96 chg: +0.03 stop: 55.26 *new*

A negative earnings report from biotech titan Amgen (AMGN) pulled the biotech sector lower. Shares of AMGN gapped open lower. Weakness in the industry pulled CELG to an intraday low of $52.69. Unfortunately for the bears CELG bounced from its lows and we're running out of time. The company is due to report earnings on February 1st. We plan to exit on Wednesday at the closing bell to avoid the announcement. Due to our time frame we are adjusting the stop loss to $55.26. We'll also adjust the target to $51.50-51.00.

Suggested Options:
We are not suggesting new positions in CELG.

Picked on January 18 at $ 54.98
Change since picked: - 1.02
Earnings Date 02/01/07 (confirmed)
Average Daily Volume = 4.4 million

---

Whole Foods - WFMI - close: 42.51 chg: -0.54 stop: 45.51 *new*

Shares of WFMI lost close to 3.3% on the week following the bearish breakdown under support near $45.00. There doesn't appear to be any support for the stock until the $40 level, which is why we're aiming for the $40.25-40.00 range. One could argue that WFMI is clearly oversold but momentum is in favor of the bears. The stock should have short-term resistance at its 10-dma near $44.42. We're adjusting the stop loss to $45.51. We do not want to hold over the February earnings report. FYI: The P&F chart points to a $26 target.

Suggested Options:
We are not suggesting new put positions in WFMI at this time but a failed rally under the 10-dma could be used as a new entry point.

Picked on January 19 at $ 44.85
Change since picked: - 2.34
Earnings Date 02/21/07 (unconfirmed)
Average Daily Volume = 3.3 million
 

Strangle Updates

None
 

Dropped Calls

ciShares China Index - FXI - close: 105.50 chg: +0.95 stop: 103.99

We have been stopped out of FXI at $103.99. It looks like the sell-off in the U.S. markets on Thursday influenced a sharp round of profit taking in the Chinese markets. The Hang Seng index plunged 388 points (-1.88%) on Friday after hitting new highs the day before. This led shares of FXI to an intraday low of $102.85 on Friday.

Picked on January 14 at $105.40
Change since picked: + 0.10
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 1.3 million

---

Leap Wireless - LEAP - close: 65.59 change: +1.25 stop: 57.95

Target achieved. Shares of LEAP continued to buck the trend and surged to another new high on Friday. The stock hit $66.07 in afternoon trading. Our target was the $66.00-67.00 range. Volume continues to be strong on the rally, which is good news for the bulls. We would keep an eye on LEAP for new entry points. A dip toward the $62.00 region might be a potential entry since broke resistance tends to form new support.

Picked on January 24 at $ 61.09
Change since picked: + 4.50
Earnings Date 03/15/07 (unconfirmed)
Average Daily Volume = 437 thousand

---

Lehman Brothers - LEH - cls: 81.07 change: +0.11 stop: 79.95

We have been stopped out of LEH at $79.95. Trading in LEH mirrored the action in the XBD broker-dealer index. There was a spike lower at the open and then the sector managed a bounce from its lows. Overall the movement in the XBD index has turned bearish with a potential short-term double top and the Wednesday-Thursday bearish reversal. Shares of LEH might try and bounce from round-number support near $80 but it could be a tough fight to post any gains if the sector continues lower.

Picked on January 11 at $ 80.25
Change since picked: + 0.82
Earnings Date 03/15/07 (unconfirmed)
Average Daily Volume = 3.4 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

Play Update Archives