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Call Updates

Encana - ECA - close: 69.60 change: -1.63 stop: 67.75

Friday's sharp market sell-off pushed ECA lower just one day after the stock broke out over resistance at the $70.00 level. Shares lost 2.2% and erased Thursday's gains. We remain bullish on ECA but readers can look for a dip into the $69.00-68.50 zone as a potential entry point. Our short-term target is the $74.85-75.00 range. FYI: The P&F chart is bullish with a $92 target.

Suggested Options:
We are still suggesting the February calls. Remember, it's up to the individual trader to decide which month and which strike price best suits your trading style and risk tolerance.

BUY CALL FEB 65.00 ECA-BM open interest= 36 current ask $6.20
BUY CALL FEB 70.00 ECA-BN open interest=439 current ask $3.00
BUY CALL FEB 75.00 ECA-BO open interest=287 current ask $1.15

Picked on January 03 at $ 70.10 *triggered
Change since picked: - 0.50
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million

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Energen - EGN - close: 64.39 change: -0.85 stop: 63.45

The situation with EGN is not looking healthy! Market weakness this week had killed the stock's bounce attempt. EGN remains in its bullish up trend and shares are consolidating against support near $64.00, the bottom of its rising channel, and its simple 50-dma. The challenge here is that EGN has developed a bearish pattern of lower highs that is suggesting the stock is going to breakdown under support. More conservative traders may want to raise their stops closer to the $64.00 level. What would really be frustrating would be to see EGN dip to $63 or $62 and then rebound back into its channel. Unfortunately, we can't take the chance that it doesn't rebound. A slip under the 50-dma would look like a sell signal for a decline toward $60.00. If EGN surprises us and bounces on Monday then readers can use it as a new entry point but shares do have short-term resistance near $66. Our target is the $69.50-70.00 range. The P&F chart is bullish with a $74 target.

Suggested Options:
If EGN provides another entry point we would suggest the February calls. However, we do not want to hold over the late January earnings report.

Picked on December 18 at $ 65.32
Change since picked: - 0.93
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 700 thousand

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Express Scripts - ESRX - cls: 73.52 chg: -1.01 stop: 69.89

We certainly can't be disappointed with ESRX. The stock has continued to show relative strength. Shares hit another all-time high at $75.67 before eventually succumbing to market weakness. We would look for a dip in the $72.50-72.00 zone as a new bullish entry point to buy calls. Our target is the $77.50-80.00 range. The P&F chart is very bullish with a $97 target.

Suggested Options:
If ESRX provides another entry point we would suggest the February calls. Remember that we do not want to hold over the early February earnings report.

Picked on December 23 at $ 71.09
Change since picked: + 2.43
Earnings Date 02/07/08 (unconfirmed)
Average Daily Volume = 2.5 million

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Hologic - HOLX - close: 71.12 chg: +0.79 stop: 66.45 *new*

HOLX continues to impress. The stock ignored the market's implosion on Friday and shares of HOLX hit new highs at $72.88. The stock did pare its gains by the close but still posted a 1.1% gain. Considering this market environment it would not hurt to take some money off the table with a little profit taking of your own. We are going to inch up our stop loss to $66.45. HOLX has already hit our initial target in the $69.50-70.00 range. Our more aggressive target is the $74.00-75.00 range. FYI: The P&F chart is bullish and points to an $87 target. FYI: HOLX is due to present at an investor conference in San Francisco on January 9th.

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

Picked on December 18 at $ 66.22
Change since picked: + 4.90
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Noble Energy - NBL - close: 78.83 chg: -1.49 stop: 77.45

Traders need to turn more cautious on NBL. Shares slipped back toward the bottom of its two-week trading range. Furthermore we're seeing new sell signals on the daily chart's MACD and RSI indicators. Broken resistance at $78.00 should be new support. Watch for another dip or bounce near $78.00 as a potential entry point for new calls - but readers may want to consider adjusting their stops closer to the $78.00 level. Our target is the $84.50-85.00 range. The P&F chart is bullish with an $86 target.

Suggested Options:
If NBL provides a new entry point we would suggest the February calls.

Picked on December 19 at $ 78.25
Change since picked: + 0.58
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 1.5 million
 

Put Updates

Air Methods - AIRM - close: 48.77 chg: -0.13 stop: 51.50

Hmm... we added AIRM on Thursday night with a suggested trigger to buy puts at $47.95. The intraday low on Friday just happened to be $47.95. Yet if we look at an intraday chart we don't see AIRM trading under $48.05. We've been playing these "bad ticks" so we're going to open the play but we suggest readers wait for a real decline under $48.00 before initiating new positions. What worries us is the lack of movement on Friday. The market crashed and AIRM only loses 13 cents? That doesn't inspire any confidence if you're a bear. Our target is the $44.10-44.00 range since the $44 level should be support. More aggressive traders may want to aim for the 200-dma near $41-42. The P&F chart is bearish with a $39 target. Something to be aware of is AIRM's high degree of short interest. The most recent data put short interest at almost 16% of the stock's very small 10.6 million-share float. We normally don't play stocks that have an average daily volume under 250,000 shares. AIRM's volume is under that amount. The combination of low volume and high short interest probably makes this a higher-risk, more aggressive play.

Suggested Options:
We are suggesting the February puts. Our suggested trigger to open positions is $47.95.

BUY PUT FEB 50.00 UDU-NJ open interest= 3 current ask $3.60
BUY PUT FEB 45.00 UDU-NI open interest=28 current ask $1.45

Picked on January 04 at $ 47.95 *bad tick-entry
Change since picked: + 0.00
Earnings Date 03/06/08 (unconfirmed)
Average Daily Volume = 149 thousand

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Allegheny Tech. - ATI - cls: 82.81 chg: -3.25 stop: 88.75 *new*

With recession fears looming the material stocks like ATI got hammered on Friday. The stock dropped 3.78% and closed right near support at $82.50. More conservative types might want to do a little profit taking right here. We're still looking for a drop into the $80.50-80.00 range. Please note that we're adjusting the stop loss to $88.75.

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

Picked on December 31 at $ 86.75
Change since picked: - 3.94
Earnings Date 01/24/08 (unconfirmed)
Average Daily Volume = 2.0 million

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Boeing - BA - close: 85.82 change: -1.16 stop: 90.15

Once again BA is testing support in the $86.00-85.60 region. The stock looks poised to move lower but this is where we should expect a bounce. We highly recommend that readers do some profit taking right here. We're not suggesting new positions at this time. If BA does not breakdown under $85 on Monday we might consider an early exit and just close the play. We have two targets. Our first target is the $85.55-85.00 range. Our second target is the $81.50-80.00 zone. The P&F chart is bearish with a $75 target.

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

Picked on December 04 at $ 91.43 *triggered/gap down
Change since picked: - 5.61
Earnings Date 01/31/08 (unconfirmed)
Average Daily Volume = 7.0 million

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Essex Property - ESS - close: 87.74 chg: -4.26 stop: 95.34*new*

Target exceeded. Many of the REIT stocks just got hammered on Friday. Shares of ESS gapped open lower and broke down below round-number support at the $90.00 level. The stock closed at new two-year lows. Our first target was the $90.25-90.00 range. Please note that we're adjusting our stop loss to $95.34. If you have not taken some money off the table you need to do so now. Our second target is the $85.50-85.00 zone. We do not want to hold over the early February earnings report. FYI: Our biggest risk is a short squeeze. The most recent data puts short interest at close to 16% of the 22.9 million-share float. That is a relatively high amount of short interest and a small float. This does raise the risk for this play.

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

Picked on December 30 at $ 95.34
Change since picked: - 7.60
Earnings Date 02/04/08 (unconfirmed)
Average Daily Volume = 315 thousand

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ICU Medical - ICUI - close: 35.19 change: -0.20 stop: 37.05

We would have expected a much bigger decline in ICUI on Friday given the market-wide weakness. The lack of a real follow through lower makes us nervous. The trend is still bearish so we're going to keep the play open but we would not place any large bets here. Right now I'm contemplating an adjustment to the stop loss toward $36.60. We are listing a trigger to buy puts at $34.90. If triggered our target is the $32.50-32.00 range. The P&F chart is bearish with a $31 target. Please note we are labeling this an aggressive, higher-risk play because of the stock's very low volume and its short interest. The most recent data put short interest at more than 21% of the very small 12.3 million-share float. That raises the risk of a short squeeze should the stock suddenly shoot higher.

Suggested Options:
We are suggesting the February puts. Unfortunately, we don't have a lot of choices. We'd like to see some $37.50 of $32.50 strikes but they're not listed.

BUY PUT FEB 35.00 QPD-NG open interest= 66 current ask $1.70

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/29/08 (unconfirmed)
Average Daily Volume = 80 thousand

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Sears Holding - SHLD - cls: 101.42 chg: -4.80 stop: 107.75

Shares of SHLD got slammed back to support near $100 on Friday. The fact that support near $100 held is good news if you're a bull. We still expect some weakness on Monday. If shares of SHLD do not breakdown under the November $98.25 low then we will strongly consider closing the play early. SHLD has already hit our initial target in the $100.50-100.00 zone multiple times. We are not suggesting new bearish positions at this time. A breakdown under $98 would look like a new bearish entry point for puts. The P&F chart is bearish with a $78 target. Our aggressive target is the $92.50-90.00 zone. FYI: Longer-term traders may want to aim for $80, especially on a new relative low.

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

Picked on December 11 at $110.28
Change since picked: - 8.86
Earnings Date 10/27/07 (unconfirmed)
Average Daily Volume = 3.3 million

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Shire Plc - SHPGY - close: 65.57 change: -1.01 stop: 70.05

Target achieved. SHPGY dipped to $65.18 on Friday. Our first target was the $65.25-65.00 range. The trend is still bearish in SHPGY but more conservative traders may want to exit early right now. Next week begins a massive healthcare/drug/biotech conference and the three sectors could see enough positive news to turn higher. We are not suggesting new positions in SHPGY at this time. The $65 level is round-number, psychological support so this is where we would expect a bounce. The $68.00 level should be overhead resistance. Our second, more aggressive target is the $62.00-60.00 zone. The Point & Figure chart is bearish with a $54 target. FYI: Any time we play a biotech or even a drug stock we're dealing with a higher-risk situation. We are at risk that some FDA decision or some clinical trial news could send the stock gapping one direction or the other.

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

Picked on December 13 at $ 68.07 *triggered/gap down entry
Change since picked: - 2.50
Earnings Date 02/00/08 (unconfirmed)
Average Daily Volume = 956 thousand

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Vornado Realty Trust - VNO - cls: 82.79 chg: -1.78 stop: 90.05

VNO, like many of the REIT stocks, turned lower on Friday. The stock hit a new 21-month low and did so on big volume. Shares look poised to drop toward the $80 region. Our initial target is the $80.50-80.00 range. We are considering a second, more aggressive target near $75. Currently the P&F chart is bearish with a $73 target. We would not want to hold over the late February earnings report. More conservative traders may want to tighten their stops but remember VNO can be a volatile stock.

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

Picked on December 30 at $ 86.30
Change since picked: - 3.51
Earnings Date 02/27/08 (unconfirmed)
Average Daily Volume = 1.3 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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Encana - ECA - close: 69.60 chg: -1.63 stop: n/a

We have two weeks left before January options expire. That's not much time. ECA needs to see a significant move if we're going to be successful here. Odds are not in our favor. If given the chance readers will want to consider exiting early to salvage any capital. This was a high-risk speculative play but that doesn't mean we have to wait for the options to expire worthless. We're not suggesting new strangle positions at this time. The options we listed for the strangle were the January $75 calls (ECA-AO) and the January $60 puts (ECA-ML). Our estimated cost is $0.65. We want to sell if either option hits $1.25 or higher. FYI: The P&F chart is bullish with a $92 target.

Suggested Options:
We are not suggesting new strangle positions in ECA.

Picked on December 20 at $ 67.52
Change since picked: + 2.08
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million
 

Dropped Calls

None
 

Dropped Puts

Ralph Lauren Polo - RL - cls: 56.59 change: -3.59 stop: 65.05

Target exceeded! The bulls finally caved in on RL and the stock crashed through support at the $60.00 level. Volume was very big on the 5.9% sell-off. Our target was the $58.00-57.00 range. Broken support near $60 should now be overhead resistance.

Picked on December 19 at $ 63.11
Change since picked: - 6.52
Earnings Date 02/07/08 (unconfirmed)
Average Daily Volume = 1.5 million
 

Dropped Strangles

None
 

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