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Call Updates

Apple Inc. - AAPL - cls: 144.15 change: +3.84 stop: 135.99*new*

The gloom from Thursday's news that Steve Jobs had been subpoenaed over the option backdating scandal has already been forgotten. Positive analyst comments and estimates for AAPL's earnings due to strong sales of the iphone and its computers lifted shares to a 2.7% gain. Shares closed at a new two-week high and look poised to challenge resistance at the early September high soon. The intraday high on Friday was $144.65. We have two targets. Our first, more conservative target is the $144.75-145.00 range. Our second, more aggressive target is the $149.00-150.00 range. Please note that we're adjusting our stop loss to $135.99. This is still a wide, aggressive stop and readers might want to use a tighter stop for their own positions. The P&F chart is still bullish with a $180 target. We do not want to hold over the mid October earnings report.

Suggested Options:
If AAPL provides another dip and bounce near the $140 region then we would suggest new positions using the October calls.

Picked on September 17 at $140.25
Change since picked: + 3.90
Earnings Date 10/18/07 (unconfirmed)
Average Daily Volume = 39.9 million

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Broadcom - BRCM - cls: 36.12 change: -0.28 stop: 33.95

Shares of BRCM have been under performing rival QCOM this past week. BRCM's trend of higher lows is bullish but readers can wait for a dip and bounce near $35.50 or a new relative high over resistance at $37.00 as a new entry point. We have been cautioning readers that the $37 level has been somewhat significant resistance in the past. More conservative readers will definitely want to wait for a new high over $37. Our target is the $39.85-40.00 range. The Point & Figure chart is bullish with a $49 target. Please note that we do not want to hold over the mid October earnings report.

Suggested Options:
If BRCM provides another entry point (see above) we would use the October calls.

Picked on September 12 at $ 35.85
Change since picked: + 0.27
Earnings Date 10/10/07 (unconfirmed)
Average Daily Volume = 11.0 million

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Citigroup - C - clos: 47.51 change: +0.31 stop: 45.65 *new*

Last week's rally in the financials seemed to fade pretty quickly. Shares of C surged from $46 to $49 and ended up retracing half of its gains. Overall we are still optimistic on the financials after last Tuesday's fed meeting but Friday's news about the Harman deal going bust could definitely cast a long shadow over the sector. Looking at C we see Friday's intraday bounce near $47.00 as a new bullish entry point to buy calls. We're going to try and reduce our risk by raising the stop loss to $45.65 near last week's low. Our initial target is the $49.85-50.00 range but we might decide later to add a more aggressive target at the 200-dma. Please note that we do not want to hold over the October 19th earnings report.

Suggested Options:
We would suggest the October calls.

BUY CALL OCT 45.00 C-JI open interest=11905 current ask $3.40
BUY CALL OCT 47.50 C-JW open interest=30160 current ask $1.55
BUY CALL OCT 50.00 C-JJ open interest=24372 current ask $0.50

Picked on September 16 at $ 46.64
Change since picked: + 0.87
Earnings Date 10/19/07 (confirmed)
Average Daily Volume = 40.7 million

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Intl. Bus. Mach.- IBM - cls: 116.78 chg: -0.08 stop: 113.90

IBM's closing numbers on Friday weren't that bad but the internal action for Friday's session looks bearish. We would expect another dip toward the $115 region soon. Shares of IBM continue to have resistance near $119 (and probably the $120) level. A bounce near $115 could be used as a new entry point but more conservative traders might want to wait for a new relative high. The stock has already hit our $118-120 target range. Our second, more-aggressive target is the $124.00-125.00 zone. FYI: The Point & Figure is very bullish with a $177 target. We do not want to hold over the mid October earnings report.

Suggested Options:
If IBM provides another entry point we'd suggest the October calls.

Picked on August 26 at $113.24
Change since picked: + 3.54
Earnings Date 10/17/07 (unconfirmed)
Average Daily Volume = 9.5 million

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Stryker - SYK - cls: 68.01 change: -0.23 stop: 65.90

Unfortunately, we're still in a wait-and-see mode with SYK. We are suggesting that readers wait for a breakout to a new high and use a trigger at $70.65 to open positions. If triggered at $70.65 our target is the $74.90-75.00 range. Given the length of SYK's consolidation we would actually aim higher, maybe the $77.50-80.00 range, but we don't have much time and plan to exit ahead of the mid October earnings report. The P&F chart is bullish with an $83 target. FYI: There was a huge surge in volume on Friday with most of it coming in during the last hour of trading. We couldn't find any news but it looks like SYK was part of the index rebalancing.

Suggested Options:
If SYK hits our trigger to buy calls at $70.65 then we would suggest the October calls.

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/17/07 (confirmed)
Average Daily Volume = 1.4 million

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Thornburg Mtg - TMA - cls: 13.33 chg: -0.17 stop: 11.90 *new*

We are running out of patience with TMA. The stock failed to rally with the markets last week. You may recall that TMA, a high-quality mortgage lender, has been painted with the same broad brush strokes of worry and fear that is plaguing the entire industry. Yet TMA doesn't have any subprime exposure. At this point we would think twice about opening new positions. In an attempt to reduce our risk we're raising the stop loss to $11.90. We have two targets for TMA. Our first target is the $16.25-16.50 zone. Our second target is the $17.50-19.00 range. The P&F chart has reversed into a new buy signal with a $19.50 target. We do not want to hold over the mid October earnings report.

Suggested Options:
We would hesitate to open new bullish positions in TMA.

Picked on September 16 at $ 13.63
Change since picked: - 0.30
Earnings Date 10/15/07 (unconfirmed)
Average Daily Volume = 5.4 million
 

Put Updates

None
 

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: 117.32 chg: +1.86 stop: n/a

Shares of BSC held up pretty well this past week after reporting a disappointing earnings cycle. The stock's consolidation under resistance near $120 seemed to narrow in the last couple of days. It would seem that most analysts and market pundits are saying that the worst is behind BSC and that's why shares are holding up. However, at least one analyst firm was reiterating their "sell" rating on the stock on Friday. We're not suggesting new positions at this time. Currently our strangle involves the October $115 call (BSC-JC) and the October $95 put (BVD-VS). Our estimated cost was $9.50 and we want to sell if either option hits $14.00 or more. This should be considered a more aggressive play.

Suggested Options:
We are not suggesting new strangles on BSC at this time.

Picked on September 09 at $105.37
Change since picked: +11.95
Earnings Date 09/20/07 (confirmed)
Average Daily Volume = 8.7 million

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Dow Jones Industrial Avg. - DJX - cls: 138.20 chg: +0.53 stop: n/a

The Dow Jones Industrial Average (DJIA) continued to rally on Friday. This lifted the DJX, a 1/100th version of the DJIA, to a 0.38% gain. Our aggressive September options strangle on the DJX has now expired. We were fortunate with Friday's intraday gains in the September options. Our estimated cost on the September $137 call and the September $132 put was $1.25. On Thursday night we adjusted our exit to close the September strangle at breakeven ($1.25). The intraday high on the September $137 call (DJY-IG) was $1.33 allowing us to exit. We are not suggesting new positions on the October version of our strangle. The options listed for our October strangle were the October $137 calls (DJY-JG) and the October $132 puts (DJW-VB) with an estimated cost of $4.75. We want to sell if either option hits $6.75.

Suggested Options:
We're not suggesting new strangles on the DJX at this time.

Picked on September 16 at $134.43
Change since picked: + 3.77
Earnings Date 00/00/00
Average Daily Volume = million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

AutoZone - AZO - cls: 113.91 change: -0.12 stop: n/a

Our speculative strangles on AZO did not pan out. Shares did see a post-earnings move but it wasn't big enough. Our suggested strangles involved the September $115 calls (AZO-IC) and the September $105 puts (AZO-UA) with an estimated cost of $2.50. Our second combo suggested the September $120 calls (AZO-ID) and the September $100 puts (AZO-UT) with an estimated cost of $0.95.

Picked on September 16 at $109.90
Change since picked: + 4.01
Earnings Date 09/18/07 (confirmed)
Average Daily Volume = 812 thousand

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Diamonds - DIA - cls: 137.90 chg: +0.20 stop: n/a

Our strangle play on the DIA, which is an ETF on the Dow Jones Industrial Average, has expired. The DJIA and thus the DIA did see some big moves midweek but not quite big enough to hit our target. We wanted to salvage some capital so Thursday night we adjusted our exit to $1.50. Fortunately, the September $137 call (DAZ-IG) hit an intraday high of $1.70. Our estimated cost on the strangle was $2.05.

Picked on August 30 at $132.57
Change since picked: + 5.33
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 20.8 million

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Lehman Brothers - LEH - cls: 62.70 chg: +0.39 stop: n/a

LEH produced a strong 10% rally last Tuesday on the earnings and FOMC news. Yet it wasn't enough for our aggressive, short-term strangle. We gambled with the September strikes and lost. We suggested the September $65 calls (LES-IM) and the September $55 puts (LES-UK). Our estimated cost was $1.55.

Picked on September 16 at $ 59.50
Change since picked: + 3.20
Earnings Date 09/18/07 (confirmed)
Average Daily Volume = 15.4 million

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S&P 100 Index - OEX - cls: 713.35 chg: + 3.54 stop: n/a

Time has run out for our September strangle on the OEX. It wasn't looking good as of Thursday so we adjusted our exit to breakeven at $14.30. Fortunately, the September $700 calls (OEZ-IT) hit an intraday high of $15.29 on Friday allowing us to exit the play (@ $14.30). Our strangle strategy suggested using the September 700 call (OEZ-IT) and the September 660 put (OEY-UL).

Picked on August 30 at $680.46
Change since picked: +32.89
Earnings Date 00/00/00
Average Daily Volume = 1306 thousand

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Financial SPDR - XLF - cls: 34.60 chg: -0.12 stop: n/a

We were expecting some big moves in the financial sector this past week with the FOMC meeting and multiple brokerage earnings report. While the XLF did see a nice rally on Tuesday and Wednesday it wasn't enough for our strangle. We had suggested a speculative, higher-risk play using September options, which have expired. Our suggested strangle used the September $35 calls (XLF-II) and the September $33 puts (XLF-UG) with an estimated cost of $0.65.

Picked on September 16 at $ 33.98
Change since picked: + 0.62
Earnings Date 00/00/00
Average Daily Volume = 69.1 million
 

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