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Call Updates

Peabody Energy - BTU - close: 75.95 change: -2.74 stop: 74.90

It was a mixed day for the coal stocks and some of them were hammered. BTU was one of the unlucky ones with a 3.4% loss. The stock did manage to bounce from the $75.00 level but it has broken one of its short-term trendlines of support. We are not suggesting new positions at this time even though BTU could see a short-term oversold bounce. More conservative traders will want to strongly consider an early exit since BTU showing so much weakness. BTU has exceeded our first target near $80 multiple times. Our second target is the $84.00-85.00 zone.

Picked on June 01 at $ 73.92 /1st target exceeded 79.75
Change since picked: + 2.03
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 5.8 million
 

Put Updates

Emerging Markets 50 ADR - ADRE - cls: 51.90 chg: +0.43 stop: 55.51

After four down days in a row ADRE finally bounced. Volume was below average, which is not very bullish. The short-term trend remains bearish but the oversold bounce may not be over yet. We're not suggesting new positions at this time. Our target is the $51.00-50.00 zone.

Picked on June 03 at $ 54.69
Change since picked: - 2.79
Earnings Date 00/00/00
Average Daily Volume = 448 thousand

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Caterpillar - CAT - close: 80.50 change: +1.57 stop: 83.05

CAT produced a couple of headlines today. First they announced a $1 billion expansion for its Illinois operations. Second, they announced a strategic alliance with rival Navistar to cooperate on truck engine development. Shares of CAT rallied to $81.79 before rolling over. This looks like a new entry point for put plays. More conservative traders may want to use a tighter stop loss. Our target is the $75.25 mark. The stock "should" see some technical support at its 200-dma near $75.00.

Picked on June 11 at $ 79.45 *triggered
Change since picked: + 1.05
Earnings Date 07/18/08 (unconfirmed)
Average Daily Volume = 6.2 million

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Deere & Co. - DE - close: 77.96 change: -1.04 stop: 82.55

A bounce for the broader market did not translate into strength for DE. The stock continued to sink and broke down from its trading range. Our suggested entry point to buy puts was at $78.49 so the play is now open. Our target is the $70.50 mark. If you missed today's entry we would still consider new positions now but if you have the patience consider waiting for a new failed rally near $80.00.

Picked on June 12 at $ 78.49 *triggered
Change since picked: - 0.53
Earnings Date 08/13/08 (unconfirmed)
Average Daily Volume = 5.4 million

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DaVita Inc. - DVA - close: 49.34 chg: -0.25 stop: 53.01

The overall condition in shares of DVA continues to look bearish but we are going to wait for a bounce to enter positions. Our suggested entry point to buy puts is the $51.00-52.00 zone. If triggered we have two targets. Our first target is 47.75-47.50. Our second target is the $45.15-45.00 zone. The P&F chart is bearish with a $45 target. FYI: Last month DVA announced a $250 million stock buy back program. At $50 a share that's about 5 million shares. DVA has about 104 million shares outstanding.

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 606 thousand

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Electronic Arts - ERTS - close: 45.99 chg: -0.08 stop: 49.05

ERTS dipped to $45.50, a new relative low, before bouncing. The trend is still bearish but we expect an oversold bounce at any time. Readers can watch for a failed rally near $48.00 as a new bearish entry point. We're adjusting the stop loss to $49.05. Our target is the February lows near $44.50-44.00.

Picked on June 06 at $ 47.75 *triggered
Change since picked: - 1.76
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 3.7 million

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3M Co. - MMM - close: 75.55 chg: +0.28 stop: 77.05 *new*

MMM continues to meander sideways. The last several weeks has seen the stock sort of stair-step down so we should see it step down soon. Nimble traders might want to consider buying puts near $76.50. We are going to try and reduce our risk by adjusting the stop loss to $77.05. We do want to point out that MMM appears to have produced a bullish wedge pattern over the last eight weeks. A breakout above its trendline of lower highs would be very bullish. We have two targets. Our first target is the $70.25-70.00 zone. Our secondary target is the $67.00-65.00 range. The P&F chart is bearish with a $69 target. FYI: If you are aiming for the $67 target then you might want to consider the October puts.

Picked on June 06 at $ 74.95 *triggered
Change since picked: + 0.60
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 4.0 million

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Monsanto - MON - close: 134.93 change: +1.53 stop: 140.55

Our speculative put play on MON is not off to a great start. The lack of follow through on yesterday's failed rally pattern is bullish or maybe a better term is "not bearish". The general trend hasn't changed and MON still has resistance overhead. Unfortunately, the action on the intraday chart suggests MON may want to challenge the $140 level again. Rival POT also looks like it's poised to move higher, which could have a positive affect on MON. I repeat that I'm longer-term bullish on MON and the group thanks to some very impressive fundamentals in the sector. Yet short-term the stock was saying "short me" yesterday. If we get the chance a failed rally in the $138-140 zone would be a new entry point for puts! Our target is the $126.50 mark. We do not want to hold over the June 25th earnings report.

FYI: The $125.00 level should be short-term support and we might use a bounce there as an entry point for new bullish positions.

Picked on June 11 at $133.40
Change since picked: + 1.53
Earnings Date 06/25/08 (confirmed)
Average Daily Volume = 6.5 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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Amgen Inc. - AMGN - close: 43.22 chg: +0.27 stop: n/a

Today's minor bounce in AMGN really doesn't help us. We have less than two weeks left for June strikes before they expire and the erosion is going to pick up speed. We are not suggesting new positions at this time. We have suggested a July strangle and a 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.

Picked on May 22 at $ 42.77
Change since picked: + 0.45
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 6.7 million

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McDonald's - MCD - close: 59.34 chg: +0.59 stop: n/a

It was a day of mixed signals in MCD. The stock rallied toward $60 only to roll over. Yet traders were buying the dip this afternoon. The MACD indicator on the daily chart is nearing a new buy signal. Overall the bullish breakout from Monday may have been a true direction change for MCD. We've got less than two weeks left before June options expire. We are not suggesting new positions. 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.

Picked on May 18 at $ 60.53
Change since picked: - 1.19
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 7.5 million

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Tyco Intl. - TYC - close: 43.31 change: +0.40 stop: n/a

We do not see any changes from our previous comments on TYC. We are not suggesting new strangle positions in TYC at this time. The options we suggested were the July $47.50 calls (TYC-GW) and the July $42.50 puts (TYC-SV). Our estimated cost was $1.30. We want to sell if either option hits $1.95 (50% gain).

Picked on June 03 at $ 44.89
Change since picked: - 1.59
Earnings Date 08/05/08 (unconfirmed)
Average Daily Volume = 2.9 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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