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Call Updates

Broadcom - BRCM - cls: 36.44 change: -0.16 stop: 34.45 *new*

We are leaning towards an early exit in BRCM. We have had the stock on our play list for two and a half weeks and shares haven't made much progress. The stock is challenging resistance near $37.00 but the momentum is definitely stalling. The technical indicators are hinting at a correction or pull back lower soon. Volume has definitely dried up the last few days. We are raising our stop loss to $34.45 but we suggest that readers consider exiting early instead. Odds are good that BRCM will test $36.00 or last week's low near $35.70 before moving higher. Our BRCM 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:
We are not suggesting new positions at this time.

Picked on September 12 at $ 35.85
Change since picked: + 0.59
Earnings Date 10/10/07 (unconfirmed)
Average Daily Volume = 11.0 million

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Citigroup - C - clos: 46.67 change: -0.21 stop: 45.79 *new*

The technical indicators on Citigroup are a mixed bag. Meanwhile looking at the action in the price has it's own conflicting signals. The bounce from the $46.00 level is a higher low and looks like an entry point for bullish positions. Yet volume on the rebound has been very low, which is bearish. Furthermore C has struggled with technical resistance at its 50-dma the last several days. We're not very optimistic here. After reading the market wrap for this weekend it might make more sense to just exit early right now. We're going to inch up our stop loss to $45.79 and we're not suggesting new positions at this time. Our initial target is the $49.85-50.00 range. Please note that we do not want to hold over the October 19th earnings report.

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

Picked on September 16 at $ 46.64
Change since picked: + 0.03
Earnings Date 10/19/07 (confirmed)
Average Daily Volume = 40.7 million

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Ceradyne - CRDN - cls: 75.74 change: +0.01 stop: 71.74

The defense sector was one of the market's best performing sectors in the third quarter. That's going to make them a potential target for profit taking this week if the fund managers do any window "undressing". Shares of CRDN continue to look strong but don't be surprised if shares dip back toward their 10-dma around $73.20. We would watch for a dip, or preferably a bounce, as a new entry point to buy calls. Our short-term target is the $79.50-80.00 range. The P&F chart is bullish with a $92 target.

Suggested Options:
If CRDN provides a new entry point we would suggest using the November calls.

Picked on September 25 at $ 74.61
Change since picked: + 1.13
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 653 thousand

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Intl. Bus. Mach.- IBM - cls: 117.80 chg: +0.09 stop: 113.90

Shares of IBM closed near multiyear highs and look poised to breakout higher. We don't see any changes from our previous comments. Readers might want to consider new bullish positions on a rise past $119 or $120. The stock has already hit our first target in the $118-120 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 an entry point with a new relative high then we would suggest the November calls. However, we would not hold over the mid October earnings report.

Picked on August 26 at $113.24
Change since picked: + 4.56
Earnings Date 10/17/07 (unconfirmed)
Average Daily Volume = 9.5 million

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L-3 Comm. - LLL - cls: 102.14 chg: -0.54 stop: 95.99

Defense stock LLL closed near its all-time highs but remains stuck near resistance in the $102.50 region. We believe that LLL will be able to breakout higher. However, odds are pretty good that the markets could see some profit taking this week. We would watch for LLL to dip back toward the $100 level as a new bullish entry point to buy calls. An alternative entry would be to wait for a new high over $103. Our target is the $107.50-110.00 range. More aggressive traders may want to aim higher. The P&F chart points to a $115 target.

Suggested Options:
If LLL provides a new entry point (see above) we would suggest the November calls.

Picked on September 25 at $100.96
Change since picked: + 1.18
Earnings Date 10/25/07 (confirmed)
Average Daily Volume = 904 thousand

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Lockheed - LMT - cls: 108.49 change: +1.70 stop: 102.45*new*

LMT was an exception to the languid market on Friday. Shares rallied past their late July highs to score a new all-time high. We are adjusting our stop loss to $102.45. We remain bullish on LMT but we're not suggesting new positions at this time. Don't be surprised if LMT sees some profit taking next week as fund managers might be tempted to do some window "undressing". Our target is the $109.50-110.00 range. We are seriously considering adding a second, more aggressive target given the strength in the defensive sector and LMT. More aggressive traders may want to aim higher. The P&F chart points to a $117 target. We do not want to hold over the late October earnings.

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

Picked on September 24 at $103.81 *gapped higher
Change since picked: + 4.68
Earnings Date 10/24/07 (unconfirmed)
Average Daily Volume = 2.7 million

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Stryker - SYK - cls: 68.76 change: -0.12 stop: 66.49 *new*

We are not willing to give up yet on SYK as a bullish candidate. The stock has spent the last couple of weeks consolidating between $67 and $69 and shares look like they're poised to breakout higher. We are waiting for a breakout to a new high and we're suggesting a trigger to buy calls at $70.65. Our biggest challenge right now is our time frame. SYK is due to report earnings on October 17th and we do not want to hold over the earnings report. 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. The P&F chart is bullish with an $83 target. FYI: We're adjusting the stop loss to $66.49.

Suggested Options:
If SYK hits our trigger to open positions at $70.65 we would suggest using the November 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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Terex - TEX - cls: 89.02 change: -0.87 stop: 81.99

TEX has been very strong the last couple of weeks and shares were able to hold on to their gains into the end of the third quarter. The pattern remains bullish but we would not be surprised to see some profit taking and a dip back toward $85 or its 10-dma around $84.60. We would wait for a pull back before considering new bullish positions. More conservative traders might want to use a higher stop loss. The P&F chart is very bullish with a $100 target. There will likely be some resistance near $90 but our target is the $94-95 range.

Suggested Options:
We are not suggesting new positions at this time. If TEX provides a new entry point we'd suggest using the November calls.

Picked on September 25 at $ 86.50
Change since picked: + 2.52
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 1.8 million

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Whole Foods - WFMI - cls: 48.96 change: +0.82 stop: 44.85*new*

All we needed was another 26 cents. WFMI hit an intraday high of $49.49 on Friday and eventually closed up 1.7%. After such a strong performance last week WFMI looks like a target for some profit taking this week. We would not be surprised to see a dip back toward $46 or least the $47 region. We are adjusting our stop loss to $44.85. The trend continues to look bullish but we're not suggesting new positions at this time. Our first target is the $49.75-50.00 range. Our second target is the $52.50-55.00 zone. We do not want to hold over the early November earnings report. FYI: There was some news out late Friday that WFMI's president was moving to Safeway. We're not sure if this is going to have an impact on WFMI or not. Sometimes companies will try to hide significant news at late or odds hours, like a Friday night, hoping that investors won't notice when the market reopens.

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

Picked on September 26 at $ 46.26
Change since picked: + 2.70
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 3.2 million
 

Put Updates

Alexander & Baldwin - ALEX - cls: 50.13 chg: +0.74 stop: 52.01

We remain cautious on ALEX. The close over $50.00, which should have been resistance, is not a good sign for the bears. If we thought the market was going to rise this week we'd probably drop ALEX right here. However, our expectation is for the major indices to be flat to down and thus we're expecting ALEX to roll over under its 200-dma near $51.00. At this time we'd watch for a new decline under $49.70 or $49.50 as a new entry point to buy puts. The P&F chart is already bearish with a $36 target. There is some support near $47.50 but we're aiming for a decline into the $45.50-45.00 range. We do not want to hold over the late October earnings.

Suggested Options:
If ALEX provides a new entry point we would use the November puts.

Picked on September 23 at $ 49.50
Change since picked: + 0.63
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 337 thousand

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Cephalon - CEPH - cls: 73.06 chg: +0.21 stop: 74.25

Unfortunately, CEPH didn't move much this week. There was an intraday breakdown under support near $72.00 on the FDA warning but there wasn't any follow through on it. At the same time CEPH can't seem to build on any of its bounce attempts and the stock has a bearish pattern of lower highs. While the play is currently "open" we're not suggesting new positions at this time. Wait for a new decline under $72.00 or even a new relative low under $71.00 before considering new put positions. Our target is the $68.00-67.00 range. More aggressive traders could aim for the $65 region. The P&F chart is very bearish with a $50 target. Remember that any time we play a biotech stock it should be considered higher-risk. There is always the chance that an unexpected headline about a successful or failed clinical trial or FDA decision could send the stock violently one direction or the other.

Suggested Options:
If CEPH provides a new entry point we would suggest the November puts.

Picked on September 26 at $ 71.70
Change since picked: + 1.36
Earnings Date 11/01/07 (unconfirmed)
Average Daily Volume = 1.5 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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Dow Jones Industrial Avg. - DJX - cls: 138.96 chg: -0.17 stop: n/a

The DJIA is struggling to maintain its upward momentum and most market pundits are expecting volatility in October, which suggests some corrections ahead. We only have three weeks left before October options expire. Given these conditions more conservative traders may want to strongly consider an early exit right here and cut their losses. The October $137 calls are still trading in the $3.40-3.50 range and the $132 puts are in the $0.35-0.40 range. 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 positions in the DJX at this time.

Picked on September 16 at $134.43
Change since picked: + 4.53
Earnings Date 00/00/00
Average Daily Volume = million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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