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Call Updates

Apple Inc. - AAPL - cls: 172.69 chg: -5.33 stop: 164.75

Friday's market sell-off pulled AAPL down to support near $170 before traders bought the dip. Our suggested entry point to buy calls in AAPL was the $171.00-168.00 range. This looks like a good spot heading into MacWorld next week. If you did not jump in on Friday it's probably not too late to buy calls here. I heard on Friday that AAPL's average gain from the MacWorld exposure was 8%. That would put AAPL near $186. I'm not really expecting a big move until Tuesday, which is when the MacWorld Expo begins and Steve Job speaks. Our first target is the $179.50-180.00 zone. Our second target is $188.00-190.00.

Suggested Options:
If you wanted to jump into AAPL here we would suggest the February calls. January strikes expire next week.

Picked on January 11 at $171.00 *triggered
Change since picked: + 1.69
Earnings Date 01/22/08 (confirmed)
Average Daily Volume = 38 million

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BP Prudhoe - BPT - cls: 83.12 chg: -1.55 stop: 77.90

BPT posted an impressive week in spite of the market turmoil. Having a double-digit dividend yield can do that for you when investors are searching anywhere for a safe haven. I recently received an email from a reader asking if we would still be bullish on BPT post-dividend on a dip to $80.00 (which could happen on Monday). Yes, we are sticking with our suggested strategy. The market environment is bearish and investors will still be looking for a place to park their money. Technically broken resistance at $80.00, which was significant, should now be support. We are suggesting a trigger to buy calls in the $80.50-79.00 range. If triggered our target is the $89.00-90.00 zone.

Suggested Options:
We are suggesting the March calls. Our suggested trigger is $80.50. These should be cheaper on a dip to $80.

BUY CALL MAR 75.00 BPT-CO open interest=261 current ask $9.00
BUY CALL MAR 80.00 BPT-CP open interest=485 current ask $4.10
BUY CALL MAR 85.00 BPT-CQ open interest=277 current ask $1.90

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/08 (unconfirmed)
Average Daily Volume = 84 thousand

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Blackstone - BX - close: 20.06 chg: +0.22 stop: 17.24

BX is a new call play from our Thursday night newsletter. Shares gapped open higher on Friday at $20.22 and hit $21.31 before pulling back. The breakout over $20.00 is bullish but we would not be surprised to see a dip back toward $19.50-19.00. We are reposting our comments from Thursday:

This play is for the adventuresome crowd. BX hit new all-time lows Wednesday near $17.25. Yet Thursday's sharp rebound, thanks to a stock buy back announcement, has produced a three-candlestick bullish reversal pattern. BX is currently facing resistance near $20 and its 10-dma (and its late November lows). The rebound could fail right here. We are suggesting calls right now but this is a higher-risk play and you may want to wait. You don't have to buy calls immediately. You could wait for a breakout over the 10-dma near $20.60. Or you could wait for a dip back toward Thursday's intraday support near $19.00. Our target is the $24.00-25.00 range. We do not want to hold over the February earnings report.

Suggested Options:
If we can hold up to February expiration we'll have five weeks for this play to work. If BX reports earnings before expiration then we'll exit earlier. We're rolling the dice on this one so we're going for out-of-the money options. If you are willing to risk holding over the earnings report we would buy the March $22.50.

BUY CALL FEB 22.50 BX-BE open interest=865 current ask $0.70

Picked on January 10 at $19.84
Change since picked: + 0.22
Earnings Date 02/11/08 (unconfirmed)
Average Daily Volume: 2.7 million

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Covance - CVD - cls: 95.92 change: +1.13 stop: 86.99

I'm still kicking myself for not listing a breakout over $90.00 as an official entry point. At this point CVD has gotten away from us. Broken resistance near $90 should be new support so we're suggesting readers wait for the dip. Unfortunately, it looks like CVD will hit our target near $100 before we even get the chance. I would not chase it at current levels. The stock looks short-term overbought and due for a correction. Our suggested entry point is the $90.50-90.00 zone. Our first conservative target is $94.50-95.00. Our second, more aggressive target is the $99.00-100.00 range. FYI: We are unfortunately, running low on time. We don't want to hold over earnings.

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

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/23/08 (unconfirmed)
Average Daily Volume = 395 thousand

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Foster Wheeler - FWLT - cls: 141.58 chg: -5.98 stop: 137.85

If you are a day trader you have to love these big intraday swings. If you're not they probably give you heartburn. Honestly, FWLT is displaying a lot of mixed signals. You could argue a bullish or bearish case here. The stock did bounce as expected and hit our early target at $149.50-150.00 on Thursday. The sharp pull back on Friday is either another entry point for calls or a warning that FWLT is headed for its 200-dma closer to $120. I would be cautious about opening new plays now following Friday's market weakness. Friday is an "inside" day suggesting indecision. If FWLT bounces from $140 then great, we can buy calls again. How do you know it's "bouncing"? Try waiting for a rise past $145. Our second target is the $158.00-160.00 range. FYI: FWLT is due to split 2-for-1 on January 22nd.

Suggested Options:
If FWLT bounces consider buying the February calls.

Picked on January 09 at $142.90
Change since picked: - 1.32
Earnings Date 02/27/08 (unconfirmed)
Average Daily Volume = 1.7 million

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Hess Corp. - HES - cls: 91.74 chg: -0.94 stop: 89.90

Lack of follow through on HES' bounce from $90.00 is a warning signal for the bulls. On the positive side both oil stocks and crude oil have been trending lower but HES has managed to hold support. We remain bullish with HES above $90 but at this point you may want to wait for a rally over $94.00 before jumping into new positions. A rise over $94 should break the two-week trendline of lower highs. Our target is the $99.00-100.00 range. We do not want to hold over the late January earnings report.

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

Picked on January 07 at $ 92.00 *triggered
Change since picked: - 0.26
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 4.5 million

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Hologic - HOLX - close: 70.36 chg: +0.62 stop: 66.75 *new*

HOLX showed some relative strength on Friday with a gain. The stock got a boost after receiving some bullish analyst comments and a raised price target to $81. However, before you get too excited we're concerned with the trading pattern over the last few days. It almost looks like HOLX is painting a bearish head-and-shoulders pattern over the last four weeks and it's currently on the right shoulder. We're not suggesting new positions at this time. 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. We are inching up our stop loss to $66.75. FYI: The P&F chart is bullish and points to an $87 target.

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

Picked on December 18 at $ 66.22
Change since picked: + 4.14
Earnings Date 01/30/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Inverness Medical - IMA - cls: 60.02 chg: -2.33 stop: 55.99

After a five-day winning streak shares of IMA hit some profit taking Friday. The pull back to $60.00 looks likes a new bullish entry point. However, if you're patient the stock might see a dip to its 50-dma near $58.50. More conservative traders may want to consider a stop closer to $58. Our target is the $64.00-65.00 range.

Suggested Options:
We would suggest the February calls.

Picked on January 08 at $ 58.50 *triggered/gap open entry
Change since picked: + 1.52
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 857 thousand

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Jacobs Engineering - JEC - cls: 88.71 chg: -1.82 stop: 81.65

The trading in JEC actually looks similar to FWLT. The chart is just a little easier to read. One could argue both a bullish and a bearish case for JEC. However, the bullish trend is still the dominant pattern here. Investors bought the dip at JEC's rising 100-dma near the bottom of its channel. Friday's pull back after a $10 bounce is normal. We would still consider buying calls here or on a dip/bounce near $85.00. Our target is the $94.00-95.00 range. More aggressive traders may want to aim for $100. This is going to be a short-term play since we plan to exit ahead of the late January earnings report.

Suggested Options:
We are suggesting the February calls.

Picked on January 09 at $ 86.31
Change since picked: + 2.40
Earnings Date 01/22/08 (unconfirmed)
Average Daily Volume = 1.4 million

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Joy Global - JOYG - cls: 60.01 chg: -1.89 stop: 57.49

JOYG gave back all of Thursday's gains during Friday's market sell-off. Overall the pattern is still bullish and we would still consider buying calls right here. More conservative traders will want to see signs of a bounce first. We're keeping our stop loss under the 50-dma for now. We have two targets. Our first target is $67.00. Our second target is $71.50. We do not want to hold over the late February earnings report.

Suggested Options:
We are suggesting the February or April 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 FEB 55.00 JQY-BK open interest= 38 current ask $7.50
BUY CALL FEB 60.00 JQY-BL open interest=453 current ask $4.40
BUY CALL FEB 65.00 JQY-BM open interest=459 current ask $2.30

BUY CALL APR 60.00 JQY-DL open interest=2068 current ask $7.00
BUY CALL APR 65.00 JQY-DM open interest=11722 current ask $4.80

Picked on January 09 at $ 60.19
Change since picked: - 0.18
Earnings Date 02/28/08 (unconfirmed)
Average Daily Volume = 1.7 million
 

Put Updates

Shire Plc - SHPGY - close: 68.87 change: -0.27 stop: 70.05

We don't have anything new to report on for SHPGY. We remain very defensive here given the stock's rally back toward resistance. If the market sees any sort of significant rally then we would expect to be stopped out at $70.05. A new decline through short-term support near $68.00 could be used as a new entry point for puts. The stock has already hit our first target near $65. Our second target is the $62.00-60.00 zone.

Suggested Options:
If SHPGY provided us a new entry point we would suggest the February or April puts.

Picked on December 13 at $ 68.07 *triggered/gap down entry
Change since picked: + 0.80
Earnings Date 02/21/08 (unconfirmed)
Average Daily Volume = 956 thousand
 

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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Biogen Idec - BIIB - cls: 59.02 chg: -0.16 stop: n/a

BIIB provided a good day for us. Shares traded sideways between $59 and $60 most of the session. That was an opportunity to open strangle positions. Now we wait. We are expecting Monday, January 14th to bring news. BIIB and its partner ELN are expecting an FDA approval to widen the acceptable uses for their Tysabri drug. We only have five days left before January options expire. All the action should happen Monday or Tuesday depending on when the announcement hits. The options we suggested for our strangle were the January $65 call (IHD-AM) and the January $55 put (IDK-MK). Our estimated cost here is $1.05. We want to sell if either hits $2.50. More aggressive traders may want to aim higher.

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

Picked on January 10 at $ 59.18
Change since picked: - 0.16
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 4.4 million

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Encana - ECA - close: 67.20 chg: -0.73 stop: n/a

There is no change from our previous comments. At this point our speculative, high-risk strangle on ECA is dead in the water. The stock will need to see a really big move in a short time frame to give us any sort of decent exit. 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 positions at this time.

Picked on December 20 at $ 67.52
Change since picked: - 0.32
Earnings Date 02/14/08 (unconfirmed)
Average Daily Volume = 2.7 million
 

Dropped Calls

Humana Inc. - HUM - cls: 84.28 chg: -0.79 stop: 78.95

The pattern in HUM continues to look bullish but we've missed the entry point. Shares never pulled back to hit our suggested trigger. We would continue to watch HUM for a pull back near $81.00-80.00, which should be support.

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/04/08 (unconfirmed)
Average Daily Volume = 1.3 million

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PetroChina - PTR - cls: 181.65 chg: -0.47 stop: 174.49

The Hang Seng index was down sharply on Friday while the Shanghai composite managed to rebound from its intraday lows. Combined with a pull back in oil prices, shares of PTR hit more profit taking. The stock hit our stop loss at $174.49. The recent highs near $182-183 now look like a bull trap.

Picked on January 09 at $182.12
Change since picked: - 0.47
Earnings Date 03/10/08 (unconfirmed)
Average Daily Volume = 1.0 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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