Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

Call Updates

Avery Dennison - AVY - cls: 66.48 chg: 0.31 stop: 64.90

AVY continued to rally on Friday but the momentum ran out of gas near $67.00, which has been resistance for the past couple of weeks. Friday's move now looks like a potential bearish failed rally pattern. The two-month trend is still bullish but the next short-term move might be another dip towards the $65.50 area. We're going to keep our stop loss under $65.00 and the 200-dma. More conservative traders may want to inch theirs up toward last week's low (around $65.30). Speaking of conservative traders, if you fall into that category, you may want to wait for a breakout over $67.00 before opening new positions. A move over $67.00 would reverse the P&F chart into a new buy signal. Our target is the $69.75-70.00 range. We do not want to hold over the late July earnings report.

Suggested Options:
If AVY provides a new entry point we'd suggest the August calls.

Picked on June 11 at $ 66.05
Change since picked: 0.43
Earnings Date 07/24/07 (unconfirmed)
Average Daily Volume = 728 thousand

---

BP Plc. - BP - close: 72.14 change: 0.34 stop: 68.75 *new*

Oil stocks continue to march higher and Friday's rally in crude over $70 a barrel is certainly bullish for the sector. BP is still posting gains and is starting to look a little short-term overbought. If you're looking for a new entry point wait for a dip back towards $71 or $70.50. The 10-dma near $70 should be short-term support. We are adjusting the stop loss to $68.75. The P&F chart points to a $90 target. Our target is the $74.85-75.00 range. More aggressive traders may want to aim higher. FYI: We do see some resistance near $73.50.

Suggested Options:
July options have more volume and open interest but if BP provides a new entry point we'd suggest the August calls since we may need to hold them up to the earnings report in late July.

Picked on June 22 at $ 70.25
Change since picked: 1.89
Earnings Date 07/24/07 (unconfirmed)
Average Daily Volume = 3.5 million

---

Chevron Corp. - CVX - close: 84.24 chg: 0.06 stop: 79.90

We remain bullish on the oil stocks, especially with crude oil's breakout over the $70.00 level. Shares of CVX pulled back on Friday afternoon after hitting a new record high. We would still consider new call positions here but if the major market averages continue to dip next week then CVX might slip toward the $83.00-82.00 zone, which we would use as a new entry point to buy calls. We're keeping our stop loss under $80.00 at $79.90. More conservative traders might want to start inching their stop higher but keep it under the simple 50-dma (currently at $80.90). CVX's Point & Figure chart is positive with a bullish catapult breakout buy signal and a $120 price target. Our target is the $89.00-90.00 range.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 80.00 CVX-HP open interest= 627 current ask $5.80
BUY CALL AUG 85.00 CVX-HQ open interest=3361 current ask $2.55
BUY CALL AUG 90.00 CVX-HR open interest=1183 current ask $0.80

Picked on June 18 at $ 83.75
Change since picked: 0.49
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume = 9.1 million

---

Deere Co - DE - close: 120.74 change: 1.36 stop: 116.90

DE held up relatively well on Friday considering Thursday's bearish close and the Friday afternoon sell-off. The stock is still struggling under its 10-dma and the $122 level but DE is also holding its bullish trend of higher lows (see chart). DE's longer-term trend is up but the trend is getting so old almost any pause pulls the technical indicators into bearish signals. We are suggesting that readers wait for a new rise past $122 before initiating new bullish positions. If you're feeling cautious then consider raising your stop loss toward the $118 level or last week's low (118.57). We have two targets. Our first target is the $129.50-130.00 range. Our second, more aggressive target is the $134.00-135.00 range.

Suggested Options:
If DE provides a new entry point (over $122) we would suggest either the August or September calls. We plan to exit ahead of the mid August earnings report.

Picked on June 20 at $123.55
Change since picked: - 2.81
Earnings Date 08/15/07 (unconfirmed)
Average Daily Volume = 2.6 million

---

Global SantaFe - GSF - cls: 72.25 chg: -0.25 stop: 68.86

GSF has spent the last couple of weeks consolidating sideways but remains inside its bullish channel higher. We're not suggesting new positions at this time since our target is the $74.50-75.00 range. However, more aggressive traders may want to aim higher and use a breakout over $74 as a new entry point. Should GSF bounce from the $70 level again then we could see readers launching new call positions. Our target is the $74.50-75.00 range. The P&F chart points to an $87 target.

Suggested Options:
If GSF provides a new entry point we would suggest the August calls.

Picked on June 03 at $ 68.86
Change since picked: 3.39
Earnings Date 08/01/07 (unconfirmed)
Average Daily Volume = 4.8 million

---

Russell 2000 iShares - IWM - cls: 82.96 chg: -0.46 stop: 81.35

The Russell 2000 and the iShares that follow it have shown some volatility this past week. Unfortunately, there was almost no follow through on Wednesday's big rebound. Thursday and Friday's session has produced two failed rallies near $84.20. Plus, Friday's session has produced another reversal - this time a bearish engulfing candlestick pattern. We are also seeing a four-week, bearish trend of lower highs, which is going to compete with the IWM's bullish trend of higher lows. We would wait and watch for another bounce above the $81.50 zone before considering new positions. Our target is the $86.50-87.50 range.

Suggested Options:
If the IWM provides another entry point we would suggest the August calls.

Picked on June 24 at $ 82.85
Change since picked: 0.11
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 71.6 million

---

Manpower - MAN - cls: 92.24 change: -1.52 stop: 89.90

MAN has struggled to build on any rally attempt over the past couple of weeks. Traders continue to sell in the $94-95 range. Yet investors are still buying dips near $91.00 making Friday's session a new entry point for nimble traders. More conservative traders may want to tighten their stops toward $91.00. Meanwhile readers may want to wait for a breakout over $95 before considering new positions. If you are feeling really cautious after Friday's market pull back you could always exit now and then just re-enter on a breakout later. The P&F chart has a triple-top breakout buy signal with a $110 target. Currently our target is the $99.50-100.00 range.

We considered an alternative strategy to take advantage of MAN's sideways consolidation since a breakout will happen eventually. Our first thought was a strangle play on MAN with the August $95 calls and the August $90 puts but that would cost more than $6.00 at this point, which seems too expensive.

Suggested Options:
If MAN breaks out over $95 we'd suggest the August calls.

Picked on June 20 at $ 94.15
Change since picked: - 1.91
Earnings Date 07/20/07 (unconfirmed)
Average Daily Volume = 829 thousand

---

Pacific Ethanol - PEIX - cls: 13.20 chg: 0.31 stop: 11.90

PEIX displayed relative strength on Friday with a 2.4% gain. The stock was higher midday as it hit $13.50 before paring its gains. Volume has picked up on the two-day rally and we don't think it's window-dressing given PEIX's performance last quarter. The stock may be turning the corner. The latest energy bills before congress and the senate had a lot of positives for the ethanol industry so PEIX may have just produced a significant bottom this past month. We are still suggesting new positions here although patient traders might look for another dip near $12.75 as an alternative entry point. We want to warn readers that there is potential resistance at the 50-dma (13.85), the 100-dma (14.95) and the 200-dma (15.60). We are aiming for a rally to the 200-dma. We'll plan to exit in the $15.50-15.60 range for now. FYI: We cannot find a future earnings date for PEIX but suspect it will be in August or September.

Suggested Options:
We are suggesting the August calls since July options expire in three weeks. September strikes would probably work well too.

BUY CALL AUG 12.50 PFQ-HV open interest=284 current ask $1.30
BUY CALL AUG 15.00 PFQ-HC open interest=730 current ask $0.35

BUY CALL SEP 12.50 PFQ-IV open interest=2508 current ask $1.65
BUY CALL SEP 15.00 PFQ-IC open interest=3211 current ask $0.60

Picked on June 24 at $ 12.83
Change since picked: 0.37
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 892 thousand

---

Penn National Gaming - PENN - cls: 60.09 chg: 0.20 stop: n/a

It has been just over two weeks since PENN announced it was being bought for $6.1 billion in cash by Fortress (FIG) and Centerbridge Partners. The deal values PENN at $67 a share. Many believe that there will be more suitors to drive the price higher and PENN actually has 45 days from June 15th to solicit more bids. We were suggesting high-risk, speculative call positions on the idea that additional companies would make a bid for PENN. It remains a potential strategy for readers but we can't explain why shares have sold off to the $60 level. It looks like PENN might have been trading lower in association with shares of FIG, which have fallen sharply over the last couple of weeks. Yet the buyout offer was an all cash deal so movement in FIG's stock shouldn't be an issue. FIG's share price actually bounce on Wednesday and Thursday this past week but PENN did not bounce so we might be seeing plain old profit taking after PENN's big gap higher.

Suggested Options:
We would suggest the August calls.

Picked on June 17 at $ 62.12
Change since picked: - 2.03
Earnings Date 07/26/07 (unconfirmed)
Average Daily Volume = 1.0 million

---

SanDisk - SNDK - cls: 48.94 change: 0.30 stop: 44.85

Target achieved. SNDK rallied to $49.61 intraday, which was enough to hit our conservative target in the $49.50-50.00 range. SNDK continues to show relative strength and closed up 0.8%. We remain bullish but SNDK is facing potential resistance at $50.00 so we're not suggesting new positions at this time. Our aggressive target is the $52.50-55.00 range. We don't want to hold over the mid July earnings report.

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

Picked on June 17 at $ 46.40
Change since picked: 2.54
Earnings Date 07/19/07 (unconfirmed)
Average Daily Volume = 7.6 million
 

Put Updates

Allegheny Tech - ATI - cls: 104.88 chg: -0.47 stop: 110.15

It looks like the oversold bounce from the $100 level is beginning to fade. Shares of ATI are still under short-term resistance at its 10-dma and its five-week trendline of lower highs. This could be a new entry point for puts but if you're opening new positions now we'd suggest a tighter stop loss - maybe around $107.55 or $106.55. ATI has already hit our initial target in the $100.50-100.00 range. Currently we're aiming for our aggressive target in the $95.50-95.00 range.

Suggested Options:
If you choose to open new positions now we would suggest the August puts.

Picked on June 12 at $106.70
Change since picked: - 1.82
Earnings Date 07/25/07 (unconfirmed)
Average Daily Volume = 2.1 million

---

Gilead Sciences - GILD - cls: 38.80 chg: -0.79 stop: 40.85

The bounce in the BTK biotech index has stalled. Meanwhile shares of GILD lost 2% and has produced both a failed rally and a three-day bearish reversal pattern under the $40.00 level. We're not suggesting new positions at this time but GILD might be vulnerable to a pull back near the 200-dma around $36.00. Our post-split target is $37.62-36.25. Aggressive traders may want to aim lower (see today's chart). More conservative traders may want to lower their stop closer to the $40 level.

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

Picked on June 07 at $ 39.95 *split adjusted
Change since picked: - 1.15
Earnings Date 07/18/07 (unconfirmed)
Average Daily Volume = 4.1 million

---

Las Vegas Sands - LVS - cls: 76.39 chg: 1.89 stop: 78.05

Some positive analyst comments on Friday suggesting that the recent weakness in LVS was "unwarranted" helped fuel a 2.5% rally on strong volume. Shares hit $78.00 intraday, almost hitting our stop loss. More conservative traders may want to exit early and abandon the play given the bullish reversal this past week. We're not suggesting new positions. Our target is the $70.50-70.00 range. More aggressive traders may want to aim lower and raise their stop giving LVS more room to maneuver.

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

Picked on June 17 at $ 76.78
Change since picked: - 2.28
Earnings Date 08/01/07 (unconfirmed)
Average Daily Volume = 3.0 million

---

Mettler Toledo - MTD - cls: 95.51 chg: 0.03 stop: 99.11

We don't see any real changes from our recent updates on MTD. The stock broke down under multiple levels of support and its bullish trend around June 19th. Shares dipped to technical support at the 100-dma and produced an oversold bounce. The bounce is struggling and it looks like MTD is going to roll over from here. We see it as a new entry point for puts. However, MTD still has the 100-dma to contend with. Our target is the $90.50-90.00 range. FYI: The P&F chart has reversed into a new triple-bottom breakdown sell signal with an $87 target (was $91).

Suggested Options:
We are suggesting the August puts.

BUY PUT AUG 100.0 MTD-TT open interest=12 current ask $5.70
BUY PUT AUG 95.00 MTD-TS open interest=30 current ask $2.75
BUY PUT AUG 90.00 MTD-TR open interest=10 current ask $1.15

Picked on June 19 at $ 96.75
Change since picked: - 1.24
Earnings Date 07/26/07 (unconfirmed)
Average Daily Volume = 215 thousand

---

QUALCOMM - QCOM - cls: 43.39 change: -0.07 stop: 44.05

We remain very wary of QCOM. In spite of being on the losing end of its legal dispute with BRCM over patent infringement and having the ITC issue a two-year ban on importation of phones with the offending chipset, shares of QCOM are not showing a lot of weakness. If anything the stock looks poised to breakout higher. We are not suggesting new positions at this time and more conservative traders may just want to cut their losses right here. If the markets show any strength on Monday-Tuesday this week we would expect QCOM to stop us out. The only thing that would tempt us to buy puts again would be a breakdown under $42.00 or $41.00 and even then the bears would be facing potential technical support at the 200-dma near $40.00.

Suggested Options:
We're not suggesting new positions on QCOM.

Picked on June 10 at $ 41.87
Change since picked: 1.52
Earnings Date 07/18/07 (unconfirmed)
Average Daily Volume = 18.0 million
 

Strangle Updates

None
 

Dropped Calls

Ashland - ASH - cls: 63.95 change: -0.07 stop: 59.95

Target achieved. Friday proved to be a very volatile day for ASH. The stock broke out higher past the 200-dma and hit an intraday high at $65.31. Unfortunately, ASH gave it all back and closed in the red. The move looks like a bearish failed rally pattern on the daily chart. Yet today's intraday strength has reversed the Point & Figure chart into a new buy signal. Our target was the 200-dma ($64.50 mark). We'd keep an eye on a bounce near $63 or $62 as potential entry points for new positions if the markets continue to rally.

Picked on June 10 at $ 61.49
Change since picked: 2.46
Earnings Date 07/23/07 (unconfirmed)
Average Daily Volume = 657 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

Play Update Archives