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Call Updates

Carbo Ceramics - CRR - close: 48.00 change: -0.81 stop: 46.90 *new*

After a tough week it's not looking good for the bulls. CRR has produced a failed rally pattern with the intraday spike above $50.00 on Wednesday. Now we're seeing multiple bearish divergences in the technical indicators. CRR's bullish trend is in short-term jeopardy. We're not suggesting new positions at this time. Instead we're raising our stop loss to $46.90. More conservative traders may want to just exit early. Our target has been the $52.00-52.50 zone.

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

Picked on May 11 at $ 47.45
Change since picked: + 0.55
Earnings Date 04/24/08 (confirmed)
Average Daily Volume = 303 thousand

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Harsco - HSC - close: 61.09 change: -1.27 stop: 59.95 *new*

Danger! HSC's 2% decline isn't so alarming. We were expecting another dip on Friday. Our concern is the breakdown under one of HSC's trendlines of support. There is still a decent chance that HSC will rebound from here but given the tone of the market we would hesitate to open new bullish positions. We're inching up our stop loss to $59.95. Our target is the $64.50-65.00 range but more aggressive traders may want to aim higher.

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

Picked on May 01 at $ 60.38
Change since picked: + 0.71
Earnings Date 04/22/08 (confirmed)
Average Daily Volume = 613 thousand

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IHOP Corp. - IHP - close: 47.71 change: +0.52 stop: 49.49

On Thursday we gave IHP an ultimatum. Either bounce from technical support at the 100-dma or we're dropping it as a potential bullish candidate. Well, the stock delivered a bounce on Friday but that doesn't mean buy calls yet. What we really want to see is a breakout over resistance near $53 and its 200-dma. Our suggested entry point to buy calls is at $53.75. Friday's bounce means we're willing to be patient for another day or two as we wait and see if there is any follow through on the rebound. If triggered at 53.75 our target is the $59.50-60.00 zone. The P&F chart is bullish with a $68 target. Note: More aggressive traders might want to consider buying this bounce with a very tight stop under Thursday's low as an alternative strategy. Our concern is the overall market tone and overhead resistance. FYI: The most recent data listed short interest at more than 26% of the very small 14.8 million-share float. That's about two weeks worth of short interest so if IHP breaks out it could see a huge squeeze. Note: we have to label this a more aggressive play because the option spreads are so wide.

Suggested Options:
If IHP hits our trigger to buy calls (53.75) then we would use the June or July calls.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/27/08 (unconfirmed)
Average Daily Volume = 326 thousand

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iShares Russ.2000 - IWM - cls: 72.21 chg: -0.96 stop: 71.45

The bulls might be in trouble here. The small cap Russell 2000 index has produced a failed rally under 750 and its 200-dma. Momentum indicators are waning. On the other hand the RUT and the IWM have spent a week consolidating lower but have not yet broken their bullish trend of higher lows. We are very cautiously bullish here. A bounce on Monday might be used as a new bullish entry point but honestly you may want to exit early at $74.50 and just scalp a couple of points. If the IWM does bounce we will seriously consider exiting in the $74.50-75.00 zone instead of waiting for a rally higher. Currently our target is the $77.50-80.00 range. The P&F chart is bullish with an $87 target.

Suggested Options:
We are not suggesting new positions at this time but nimble traders might be able to grab a couple of points on a bounce from here.

Picked on April 28 at $ 72.55 *triggered
Change since picked: - 0.34
Earnings Date 00/00/00
Average Daily Volume = 84.6 million

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Priceline.com - PCLN - close: 131.65 chg: +1.26 stop: 126.99

As expected shares of PCLN bounced on Friday but not enough to hit our trigger to buy calls. More aggressive traders might want to consider jumping in early right here. We do not see any changes from our Thursday night play description so we're reposting it here:

"PCLN exploded to new highs a couple of weeks ago on its earnings news. Now the stock has pulled back to fill the gap. Traders are buying PCLN near its trendline of higher lows (see chart). The stock can be very volatile so we consider this an aggressive, higher-risk play, but the bounce looks like a potential entry point. Just to be sure we want to see more follow through so we're suggesting a trigger to buy calls at $132.75. If triggered our target is the $139.50-140.00 zone. FYI: We do want to point out that the consolidation over the past two weeks has turned the P&F chart bearish."

Suggested Options:
Remember, this is an aggressive play. PCLN can be a volatile stock. Our suggested entry point to buy calls is at $132.75.

BUY CALL JUN 130 PUZ-FW open interest= 911 current ask $7.00
BUY CALL JUN 135 PNE-FG open interest= 947 current ask $4.80
BUY CALL JUN 140 PNE-FH open interest=1860 current ask $3.00

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 05/08/08 (confirmed)
Average Daily Volume = 1.5 million

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Molson-Coors Brewing - TAP - cls: 58.32 chg: +0.27 stop: 55.49

Shares of rival BUD soared 7.6% on Friday following news that it might be a takeover target by InBev. This strength bled over into shares of TAP and TAP hit our suggested trigger to buy calls at $58.51. Now that the play is open our target is the $64.00-65.00 range. Failure to hold most of its gains on Friday is somewhat concerning so readers may want to wait for TAP to trade over $58.50 again before initiating new positions. FYI: The P&F chart is bullish with a $69 target.

Suggested Options:
We are suggesting the June or July 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 JUN 60.00 TAP-FL open interest=1612 current ask $1.15

BUY CALL JUL 60.00 TAP-GL open interest= 460 current ask $2.00
BUY CALL JUL 65.00 TAP-GM open interest= 332 current ask $0.55

Picked on May 23 at $ 58.51 *triggered
Change since picked: - 0.19
Earnings Date 08/07/08 (unconfirmed)
Average Daily Volume = 1.1 million
 

Put Updates

Apollo Group - APOL - close: 43.43 chg: -0.56 stop: 48.01 *new*

APOL lost another 1.2% on Friday. Shares look poised to continue lower but nothing goes down in a straight line for very long. Readers need to be expecting a bounce eventually. We're adjusting our stop loss to $48.01. More conservative traders may want to use a tighter stop or consider taking some profits off the table now. We're not suggesting new positions at this time. Our target is the $40.50-40.00 zone.

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

Picked on May 18 at $ 46.71
Change since picked: - 3.28
Earnings Date 06/26/08 (unconfirmed)
Average Daily Volume = 5.4 million

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3M Co. - MMM - close: 75.81 chg: -0.83 stop: 77.01

MMM continues to inch toward support in the $75.50-75.00 zone. We do not see any changes from our Thursday night play description so we're reposting it here:

"MMM has been consolidating sideways for four months. The stock's bullish breakout from its bearish channel back in March never saw any follow through. Now shares of MMM are nearing support around $75.00. A breakdown can be used as a new entry point to buy puts. Our suggested trigger to buy puts is at $74.95. If triggered our first target is the $70.25-70.00 zone. Our secondary target is the $66.00-65.00 range. The P&F chart is bearish with a $69 target."

Suggested Options:
We are suggesting the June or July puts. Our suggested entry point to open positions is at $74.95.

BUY PUT JUN 75.00 MMM-RO open interest=4400 current ask $1.30
BUY PUT JUN 70.00 MMM-RN open interest=1143 current ask $0.30

BUY PUT JUL 75.00 MMM-SO open interest=5179 current ask $2.15
BUY PUT JUL 70.00 MMM-SN open interest=3928 current ask $0.75

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 4.0 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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Amgen Inc. - AMGN - close: 42.38 chg: -0.39 stop: n/a

We do not see any changes from our Thursday night play description on this AMGN strangle. The stock continues to trade sideways providing an opportunity for us to open positions. A breakout one way or the other is imminent. The question is whether or not AMGN is going to move before, during or after the upcoming ASCO conference, which lasts from May 30th through June 3rd. We are suggesting entry points in the $42.00-43.00 zone. We have suggested a July strangle and a slightly more aggressive June strangle. The options in the July strangle are the July $45 calls (AMQ-GI) and the July $40 puts (AMQ-SH). Our estimated cost for the July strangle was $1.65. We want to sell if either option hits $3.50. The options in the June strangle are the June $45.00 calls (AMQ-FI) and the June $40.00 puts (AMQ-RH). Our estimated cost on the June strangle was $0.56. We want to sell if either option hits $1.10 or more. June options expire in four weeks.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. This is a neutral strategy. We don't care what direction the stock goes as long as it moves enough to push one side of the trade into a profitable position. Traders will want to try and balance the amount of their investment on both side of the trade to keep it neutral.

Picked on May 22 at $ 42.77
Change since picked: - 0.39
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 6.7 million

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McDonald's - MCD - close: 57.73 chg: -0.80 stop: n/a

Five cents! The June $57.50 put almost hit our target at $1.65. All we needed was another five cents. MCD declined again on Friday losing 1.3%. The stock is down several days in a row. While the new trend is bearish we should expect an oversold bounce. . We are not suggesting new strangle plays at this time. The options we suggested were the June $62.50 calls (MCD-FZ) and the June $57.50 puts (MCD-RY). Our estimated cost was $1.10. We want to sell if either option hits $1.65 or higher. More aggressive traders may want to raise their target. Keep in mind that June options expire in four weeks and will see their premium erode more quickly.

Suggested Options:
We are not suggesting new strangles in MCD at this time.

Picked on May 18 at $ 60.53
Change since picked: - 2.80
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 7.5 million
 

Dropped Calls

Fortune Brands - FO - close: 69.02 change: -1.38 stop: 69.45

The retail index's attempt at a bounce on Thursday failed when the sector sank to new relative lows on Friday. Shares of FO suffered a 1.9% decline on Friday and broke down under short-term support and its 50-dma. The stock hit our stop loss at $69.45 and its MACD on the daily chart has rolled over into a new sell signal. Our play is closed and I suspect that FO is headed for the $67.50 or $65.00 levels soon.

Picked on May 07 at $ 70.05 *triggered
Change since picked: - 1.03
Earnings Date 04/24/08 (confirmed)
Average Daily Volume = 971 thousand

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Lufkin Industries - LUFK - cls: 77.07 chg: -3.80 stop: 77.85

Crude oil and natural gas continued higher on Friday and yet the energy sector stocks were unable to avoid the market sell-off. Shares of LUFK were hit harder than most for no particular reason. It seems that as the market's correction ran headlong into the weekend that traders decided lock in gains and LUFK, trading near its highs, was a big target. The stock hit our stop loss at $77.85 closing the play. The breakdown under $78.00, which should have been new support, is a big negative for LUFK.

Picked on May 18 at $ 80.59 /stopped 77.85
Change since picked: - 3.52
Earnings Date 07/17/08 (unconfirmed)
Average Daily Volume = 209 thousand

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Reliance Steel - RS - close: 66.30 chg: -0.67 stop: 59.99

We are giving up on RS at least temporarily. Traders bought the dip near $65.00 again on Friday. The trend is still bullish but we're not going to wait for a dip into our suggested entry range of $64.75-64.00. Instead we're going to go for a more aggressive, buy the dip play in another steel stock MTL. See details on MTL in the new play section. We will keep RS on our watch list for another entry point. This play has been dropped unopened.

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 851 thousand
 

Dropped Puts

None
 

Dropped Strangles

None
 

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