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Call Updates

Allegheny Tech - ATI - cls: 115.18 chg: +2.67 stop: 109.99*new*

The market's rebound on Friday was enough to fuel a 2.3% bounce in ATI. The initial bounce struggled at near $116 but traders were buying the dip again on Friday afternoon. This looks like a new entry point to buy calls on ATI but more conservative traders may want to put their stops under Thursday's low. We're raising our stop loss to $109.99. Our target is the $119.00-120.00 range. FYI: The Point & Figure chart forecasts a $122 target.

Suggested Options:
We're suggesting the June calls. Last week we mentioned how the option suffix for the 110 and 120 strikes look different than normal. Verify with your broker.

BUY CALL JUN 110 ATI-FX open interest=1294 current ask $8.60
BUY CALL JUN 115 ATI-FC open interest=2588 current ask $5.60
BUY CALL JUN 120 ATI-FY open interest=1066 current ask $3.50

Picked on May 08 at $113.45
Change since picked: + 1.73
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 2.4 million

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Bear Stearns - BSC - cls: 156.40 chg: +2.87 stop: 154.75

We are very tempted to buy this bounce in BSC. Friday's rebound pushed BSC to a 1.8% rally and a bullish breakout back above its simple 10-dma. On top of this the XBD broker-dealer index is bouncing from its trendline of support. More aggressive traders may want to buy calls now with a stop under last Thursday's low. We are going to refrain from jumping in now and stick to the plan, which is to wait for a breakout over resistance at $160. Our trigger to buy calls is at $160.25. Our target would be the $169.75-172.50 range. The Point & Figure chart is bullish with a triple-top breakout and a $184 target but the P&F chart also shows resistance at $160.

Suggested Options:
If BSC hits our trigger at $160.25 we would suggest the June or July calls.

BUY CALL JUN 155 BSC-FK open interest=1665 current ask $6.70
BUY CALL JUN 160 BSC-FL open interest= 770 current ask $4.10
BUY CALL JUN 165 BSC-FM open interest=1344 current ask $2.30

BUY CALL JUL 160 BSC-GL open interest=1488 current ask $5.90
BUY CALL JUL 165 BSC-GM open interest=4876 current ask $3.80
BUY CALL JUL 170 BSC-GN open interest=1907 current ask $2.30

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/27/07 (unconfirmed)
Average Daily Volume = 2.7 million

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Peabody Energy - BTU - cls: 50.53 change: +1.03 stop: 47.99

Coal stocks were able to rebound along with the rest of the market on Friday. There was no follow through on Thursday's bearish reversal. BTU's bounce back above the $50.00 level looks like a new entry point to buy calls again. BTU might look overbought if you study the weekly chart but on a more short-term basis the stock is breaking out from a three-week consolidation under resistance at $50.00. Our target is the $54.50-55.00 range. The P&F chart is very bullish with a $69 target. Our biggest concern with calls on BTU is M&A news. The risk is that BTU might announce it is acquiring one of its smaller rivals and normally shares of the acquirer go down on the announcement.

Suggested Options:
We are suggesting the June calls. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL JUN 45.00 BTU-FI open interest=19687 current ask $6.20
BUY CALL JUN 50.00 BTU-FJ open interest=14583 current ask $2.50
BUY CALL JUN 55.00 BTU-FK open interest= 4466 current ask $0.65

Picked on May 09 at $ 50.70
Change since picked: - 0.17
Earnings Date 07/19/07 (unconfirmed)
Average Daily Volume = 5.3 million

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Ctrip.com - CTRP - cls: 72.60 chg: +1.76 stop: 69.99 *new*

We are almost out of time with CTRP. The company is due to report earnings on May 16th after the closing bell. We plan to exit on Wednesday at the close to avoid holding over earnings - unless the stock hits our target first, which is the $74.50-75.00 range. Traders bought the dip near $70 on Friday and the big bounce looks like a short-term bullish reversal. We're inching our stop loss up to $69.99. Given our time frame we're not suggesting new positions.

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

Picked on April 29 at $ 70.63
Change since picked: + 1.97
Earnings Date 05/16/07 (confirmed)
Average Daily Volume = 389 thousand

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General Dynamics - GD - cls: 80.15 chg: +0.64 stop: 77.75

The Friday bounce in GD was kind of weak. The larger pattern in the stock remains bullish but last week's trend was bearish with a series of lower highs. We would suggest readers waiting for a new rally past $81.00 or to a new high over $81.55 before starting new call positions. We have two targets. Our conservative target will be the $84.75-85.00 range. Our aggressive target will be the $89.00-90.00 range. The P&F chart has produced a triple-top breakout buy signal with a $96 target.

Suggested Options:
If GD bounces we would suggest the June or August calls.

Picked on April 29 at $ 80.27
Change since picked: - 0.12
Earnings Date 04/25/07 (confirmed)
Average Daily Volume = 1.4 million

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Lehman Brothers - LEH - cls: 75.35 chg: +0.47 stop: 74.85

LEH may be in trouble! The stock only managed a meager bounce on Friday (+0.6%) and under performed the XBD index (+1.2%). Almost any dip under $75.00 is going to stop us out at $74.85. More aggressive traders may want to widen their stop to under the 200-dma (near $74.50). We would rather readers roll out of LEH and into another stronger brokerage stock like GS or MER. At this point we are suggesting that readers wait for a rally past $77.00 or $77.50 in LEH before considering new call positions. The P&F chart is bullish with a $100 target but it's struggling with overhead resistance.

Suggested Options:
If LEH provides a new entry point (above $77) we would suggest the June or July calls.

Picked on May 06 at $ 77.30
Change since picked: - 1.95
Earnings Date 07/18/07 (unconfirmed)
Average Daily Volume = 5.9 million

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Marathon Oil - MRO - cls: 107.39 chg: +1.84 stop: 101.95 *new*

The rally in MRO continues. Shares rebounded 1.7% and set a new closing high on Friday. We remain bullish on the stock with shares above $105. If you don't feel like chasing it here wait for a potential dip into the $105.50-106.00 region. We have two targets. Our conservative target is the $109.85-110.00 range. Our aggressive target will be the $114.00-115.00 range. FYI: The P&F chart points to $110 and MRO has a 2-for-1 split coming up on June 19th. Please note that we're raising the stop loss to $101.95.

Suggested Options:
If MRO provides another entry point we would suggest the June or July calls.

Picked on May 08 at $105.55
Change since picked: + 1.84
Earnings Date 07/31/07 (unconfirmed)
Average Daily Volume = 3.8 million

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Terex - TEX - cls: 82.34 change: +1.58 stop: 77.95

Most of TEX's gains came at the open on Friday. Shares gapped open higher at $81.60 and eventually closed up with a 1.9% gain. Volume came in at a healthy clip, which is bullish. We couldn't find anything specific to account for the gap higher on Friday. The new highs over the last two days has produced a new triple-top breakout buy signal on the P&F chart, which already pointed to a $105 target. We remain bullish here and readers can choose to open positions now or wait for another dip in the $81-80 range. Our target is the $87.00-90.00 range.

Suggested Options:
We are suggesting the June calls although Julys would also work.

BUY CALL JUN 80.00 TEX-FP open interest= 458 current ask $5.10
BUY CALL JUN 85.00 TEX-FQ open interest= 990 current ask $2.45

Picked on May 09 at $ 81.16
Change since picked: + 1.18
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 1.2 million

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WATSCO - WSO - cls: 56.75 change: +0.17 stop: 53.95

WSO is another bullish breakout and momentum play. The stock broke through resistance at the $55.00 level several days ago. Meanwhile the P&F chart has produced a very bullish pattern called a bullish triangle breakout, which has a $68 target. If you're looking for a new entry point on WSO watch for a dip into the $55.50-55.00 zone near its rising 10-dma. Our target is the $59.50-60.00 range.

Suggested Options:
If WSO provides a new entry point we suggest the June calls.

Picked on May 06 at $ 55.73
Change since picked: + 1.02
Earnings Date 07/19/07 (unconfirmed)
Average Daily Volume = 382 thousand
 

Put Updates

AvalonBay - AVB - cls: 123.84 chg: +4.71 stop: 125.26

Many of the REIT stocks were rebounding strongly on Friday as rumors about more M&A in the group began to circulate again. Shares of AVB might be a potential takeover target given the sharp spike seen on Friday morning. AVB should have resistance near $125 but more conservative traders may want to exit early now just to protect themselves. We're not suggesting new put positions at this time.

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

Picked on April 30 at $124.45
Change since picked: - 0.61
Earnings Date 04/26/07 (confirmed)
Average Daily Volume = 770 thousand

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Equinix - EQIX - cls: 82.53 chg: +1.47 stop: 86.05

Warning! The volume wasn't very strong on Friday but EQIX still produced a bullish reversal. Traders bought the dip near short-term support at $80 and the move ended up with a bullish engulfing candlestick pattern. EQIX is testing the 10-dma and will soon test potential resistance at the 100-dma and 50-dma overhead. We're not suggesting new positions at this time but a failed rally under the 50-dma (around $85) could be a new entry point. It's worth noting that EQIX is presenting at a couple of investor conferences this week on the 15th and 17th. Our target is the $75.25-75.00 range. Aggressive traders may want to aim closer to $70 but be aware that the 200-dma might offer new technical support. FYI: The P&F chart points to a $70 target.

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

Picked on May 06 at $ 82.83
Change since picked: - 0.30
Earnings Date 04/26/07 (confirmed)
Average Daily Volume = 515 thousand

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Essex Property - ESS - cls: 127.58 chg: +2.20 stop: 130.05

Rumors of more consolidation in the REIT sector combined with some positive analyst comments on Friday morning to push ESS sharply higher. Shares rallied straight to resistance near $129-130 and its 50-dma and 200-dma. We are still waiting for a breakdown under support at $125.00. Our suggested trigger to actually buy puts is at $124.65, which is under the March 2007 low. There is potential support near $120 but if triggered our target is the $115.50-115.00 range. FYI: The P&F chart points to a $100 target.

Suggested Options:
If triggered at $124.65 we would suggest the June or July puts.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/02/07 (confirmed)
Average Daily Volume = 281 million

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Itron - ITRI - cls: 67.89 change: +1.69 stop: 70.01

The bears may be in trouble on ITRI. There was no follow through on Thursday's bearish reversal under the 10-dma. Instead the market's widespread rebound fueled a 2.5% gain in ITRI and shares broke out over its 10-dma. Now the recent consolidation is starting to look like a sharp, bullish flag pattern. ITRI should still have resistance in the $68-70 range but we're not suggesting new positions at this time. Wait for a new decline under $66.00 before jumping in again. More conservative traders may want to exit early if they see ITRI trade over $68.50 or more. Our target is the $60.50-60.00 range.

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

Picked on May 08 at $ 65.85
Change since picked: + 2.04
Earnings Date 05/02/07 (confirmed)
Average Daily Volume = 547 thousand

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Las Vegas - LVS - cls: 79.51 change: +2.31 stop: 85.01

LVS just erased most of our unrealized gains with a 2.99% rebound on Friday. We shouldn't be too surprised. Our recent comments were warning readers to expect an oversold bounce soon. So far the $80 level is holding as support but we should be prepared for a rebound toward the $10-dma near $82.00. Wait for a failed rally to appear before opening new positions. Our target is the $71.50-70.00 range. Currently the P&F chart sports a triple-bottom breakdown sell signal with a $75 target.

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

Picked on May 07 at $ 79.85
Change since picked: - 0.34
Earnings Date 05/02/07 (confirmed)
Average Daily Volume = 2.1 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.)

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Lockheed Martin - LMT - cls: 98.84 change: +0.24 stop: n/a

We are down to our last five days with this strangle on LMT. May options expire after the 18th. At this point we need to see LMT trade to $101.50 or 88.50 just to breakeven. We're not suggesting new strangle plays at this time. The suggested options we had listed were the May $100 calls (LMT-ET) and the May $90 puts (LMT-QR). Our estimated cost was $1.50. We want to sell if either option rises to $2.00 or more (note the change in target price).

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

Picked on April 22 at $ 95.40
Change since picked: + 3.44
Earnings Date 04/24/07 (confirmed)
Average Daily Volume = 1.7 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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