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Call Updates

SPDR Gold Shares - GLD - cls: 91.69 chg: +0.36 stop: 89.95

Traders bought the dip in gold and the GLD at $90.53 on Friday. The $90.00 level is round-number psychological support, which happens to be underpinned by technical support at its 50-dma and 100-dma. GLD is arguably short-term oversold with the sharp midweek sell-off. There appears to be potential resistance near $94.00 but we're aiming for a bounce back to $94.90. More aggressive traders may want to aim higher. FYI: There was a huge surge in open interest for the August $95 calls. There is also really big open interest in the August $97 calls.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 90.00 GLD-HL open interest=1790 current ask $3.30
BUY CALL AUG 93.00 GLD-HO open interest=1664 current ask $1.75
BUY CALL AUG 95.00 GLD-HQ open interest=10525 current ask $1.10

Picked on July 24 at $ 91.33
Change since picked: + 0.36
Earnings Date 00/00/00
Average Daily Volume = 12 million

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Intl. Bus. Mach. - IBM - cls: 128.53 chg: -1.47 stop: 124.95

IBM gave into some profit taking as investors headed into the weekend. Overall the stock has done a good job maintaining its gains from the past couple of weeks. A dip back to the 10-dma near $127.40 or a dip back toward more solid support near $125 and its 50-dma would not be out of the question. If we do see a dip wait for signs of a bounce before jumping in. Or readers can wait for a new rally over $130.25 again to initiate call positions. We have two targets. Our first target is $134.75. Our second target is $139.00. We are now suggesting the August or September calls.

Suggested Options:
August options will probably work fine but they expire in three weeks. We would prefer to use September calls at this time. Wait for an entry point.

Picked on July 23 at $130.25 *triggered
Change since picked: - 1.72
Earnings Date 07/17/08 (confirmed)
Average Daily Volume = 7.7 million

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United States Oil - USO - cls: 99.27 chg: -2.19 stop: 97.45 *new*

Our original play description called for traders to buy a dip to the 100-dma on the USO. We got impatient and suggested readers buy the bounce on Thursday. On Friday the USO delivered that dip to the rising 100-dma and what should be technical support. Thus we're looking at a new and more attractive entry point to buy calls. However, our stop loss is a little tight. We're going to widen our stop loss to $97.45. If you do not want to widen your stop, then consider jumping back in on a bounce over $100.50 if you do get stopped out at $98.45. The six-month bullish trend in oil has been broken but we're expecting an oversold bounce. Our target is the $106.75 mark. The 50-dma near $108 looks like overhead resistance. More aggressive traders may want to aim higher. Ultimately our ultra-long term bias for oil is much, much higher but that doesn't mean the commodity won't see corrections, seasonal swings, and some sector rotation.

Suggested Options:
We are suggesting the August and September calls. Remember, that the August options expire in three weeks.

It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY CALL AUG 100.00 IYS-HV open interest=6758 current ask $4.20
BUY CALL AUG 102.00 IYS-HX open interest=3810 current ask $3.40
BUY CALL AUG 105.00 IYS-HA open interest=2205 current ask $2.35

BUY CALL SEP 100.00 IYS-IV open interest=1577 current ask $7.10
BUY CALL SEP 103.00 IYS-IY open interest= 119 current ask $5.90
BUY CALL SEP 105.00 IYS-IA open interest=1255 current ask $5.20

Picked on July 24 at $101.46
Change since picked: - 2.19
Earnings Date 00/00/00
Average Daily Volume = 14.6 million
 

Put Updates

Freddie Mac - FRE - close: 8.27 change: -0.54 stop: n/a

Friday closed the books on a volatile week for FRE. This weekend will have historical consequences for the GSE as the Senate will vote to approve the housing bill, which includes bail-out plans for FNM and FRE should they need it. Part of that plan involves the U.S. government buying stock if needed, which would seriously dilute current shareholders. Or the government could buy preferred stock, which would further push common shareholders further down the ladder. Many on Wall Street expect FRE's stock to eventually hit zero. We might see an emotional bump higher on Monday after the bill is signed by the President but we would not expect the bounce to last. We would still consider new positions here or wait for another bounce to roll over. This could take several weeks to play out so you'll want to consider the September or October puts. We consider this a lottery-ticket style of play. Our put is our ticket. If we win, we should win big. If we lose, we lose it all. Thus we're not playing with a stop loss. More conservative traders may want to play with a stop anyway. Our short-term target would be a move back to $5.00. More aggressive traders may want to aim lower. FYI: FRE will be presenting at a conference on July 28th.

Suggested Options:
We are suggesting the September or October puts.

BUY PUT SEP 5.00 FRE-UA open interest=1014 current ask $0.85
BUY PUT SEP 4.00 FRE-UN open interest= 112 current ask $0.60

BUY PUT OCT 5.00 FRE-VA open interest=11128 current ask $1.15
BUY PUT OCT 4.00 FRE-VN open interest= 2743 current ask $0.80

Picked on July 20 at $ 9.18
Change since picked: - 0.91
Earnings Date 08/06/08 (confirmed)
Average Daily Volume = 45.5 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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Apple Inc. - AAPL - close: 162.12 chg: +3.09 stop: n/a

AAPL managed a bounce from its 200-ema on Friday but the general trend is still down. Investors are still worried about Steve Jobs' health. More conservative traders need to consider cutting their losses here. There was no follow through on the post-earnings gap down and August options expire in three weeks and we still need a big move in AAPL to become profitable. We are no longer suggesting new strangle positions. The options we suggested were the August $180 calls (APV-HP) and the August $150 puts (APV-TJ). Our estimated cost is $8.90. We want to sell if either option hits $14.50 or more.

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

Picked on July 20 at $165.15
Change since picked: - 3.03
Earnings Date 07/21/08 (confirmed)
Average Daily Volume = 31.7 million

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Popular Inc. - BPOP - close: 6.67 change: -0.23 stop: n/a

The rebound in the financials is losing steam. This week should be interesting for BPOP. Will it bounce from its 10-dma, which has been resistance for weeks? Or will it continue lower again? August options expire in three weeks. More conservative traders need to consider an early exit here to cut their losses since we didn't see a big enough post-earnings move to make the play profitable. We are not suggesting new strangle plays on BPOP. The options we listed were the August $7.50 calls (BQW-HU) and the August $5.00 puts (BQW-TA). Our estimated cost was $0.65. We want to sell if either option hits $1.45 or more.

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

Picked on July 16 at $ 5.82
Change since picked: + 0.85
Earnings Date 07/18/08 (confirmed)
Average Daily Volume = 3.4 million

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DIAMONDS - DIA - close: 113.17 chg: -0.43 stop: n/a

We only have three weeks left before August options expire. Unfortunately, the DIA has traded on either side of our strangle but has reversed directions both times. We still need to see some big moves before the play is profitable. More conservative traders may want to exit early now. We are not suggesting new strangles on the DIA. The options we suggested were the August $115 calls (DIA-HK) and the August $109 puts (DIA-TE). Our estimated cost is $4.35. We want to sell if either option hits $6.90 or more.

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

Picked on July 07 at $112.21
Change since picked: + 0.96
Earnings Date 00/00/00
Average Daily Volume = 15.5 million

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iShares Brazil - EWZ - cls: 77.40 chg: -0.10 stop: n/a

The EWZ has naturally been following the Brazilian Bovespa index lower. However, the EWZ broke down through short-term support in the $79-80 zone last week. The Bovespa broke down through much more significant support and could easily drag the EWZ into another leg lower. August options expire in three weeks and while it looks like the EWZ will be under the $75 level by expiration more conservative traders will still want to evaluate an early exit to cut their losses. We're not suggesting new positions at this time. The options we suggested back in early July were the August $90 calls (EWZ-HR) and the August $75 puts (EWQ-TO). Our estimated cost is $3.95. We want to sell if either option hits $5.90.

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

Picked on July 03 at $ 83.06
Change since picked: - 5.66
Earnings Date 00/00/00
Average Daily Volume = 13.6 million

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FosterWheeler - FWLT - close: 55.72 chg: +2.20 stop: n/a

Friday produced an oversold bounce in FWLT and the stock was indeed very oversold. The stock looks like it could encounter overhead resistance near $57.50 and again near $60.00. With three weeks left before August options expire more conservative traders need to consider an early exit to cut their losses. Earnings for FWLT are due out on August 6th and the announcement could produce some volatility and depending on where the stock is at and the direction of the post-earnings move it could empower or kill this strangle play. We are not suggesting new strangle positions in FWLT at this time. The options we suggested were the August $70 calls (UFB-HN) and the August $50 puts (UFB-TJ). Our estimated cost was $2.60. We want to sell if either option hits $4.00.

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

Picked on July 15 at $ 61.24
Change since picked: - 5.52
Earnings Date 08/06/08 (confirmed)
Average Daily Volume = 2.5 million

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Corning Inc. - GLW - close: 20.50 chg: +0.62 stop: n/a

In spite of the volatility shares of GLW have gone sideways for three weeks. This lack of direction has been a killer for our strangle play. Odds are good that GLW will continue to trade sideways until its July 30th earnings report. GLW reports on Wednesday morning so we should see some movement on Wednesday. If GLW does not see a big post-earnings move we'll need to consider an early exit to cut our losses and try and salvage any capital. August options expire in three weeks. If you wanted to gamble on the post-earnings move then make sure you open positions before Tuesday's closing bell. The options we suggested were the August $22.50 calls (GLW-HX) and the August $17.50 puts (GLW-TW). Our estimated cost is $0.75. We want to sell if either option hits $1.50. Try and keep your investment balanced on both sides of the trade.

Suggested Options:
We have not been suggesting new positions recently but if GLW is trading near $20 on Tuesday then readers may want to consider new positions again.

Picked on July 10 at $ 20.16
Change since picked: + 0.34
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 15.9 million

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Google Inc. - GOOG - close: 491.98 chg: +16.36 stop: n/a

Before the opening bell on Friday GOOG was upgraded to a "buy" with a $580 price target. This fueled a rally in shares of GOOG but it ran out of steam before 11:00 a.m. The stock has short-term overhead, psychological resistance at the $500.00 level so further gains could be challenging. We're going to repeat our previous comments about the lack of follow through on the post-earnings sell-off. More conservative traders may want to consider an early exit now to salvage capital since August options expire in three weeks. We're not suggesting new strangle positions in GOOG at this time. The options we listed were the August $590 calls (GOO-HR) and the August $480 puts (GOP-TI). Our estimated cost was $19.10. We want to sell if either option hits $30.00 or more.

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

Picked on July 16 at $535.60
Change since picked: -43.62
Earnings Date 07/17/08 (confirmed)
Average Daily Volume = 4.5 million

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Internet Holders - HHH - cls: 50.22 change: +0.71 stop: n/a

The HHH looks like it's trying very hard to breakout from its bearish channel. Many of the short-term technicals have turned positive. Yet this Internet ETF hasn't broken its pattern of lower highs yet. Volume on Friday was incredibly low. The lack of movement in this ETF over the last three weeks has been terrible. More conservative traders may want to consider an early exit now even though we'd only be able to recoup about $0.30 of our capital. We're going to stick with the play for now. The next three weeks could see some fireworks! Since the HHH is back to the $50 level again aggressive traders looking for a position may want to consider new strangles. A strangle at the same strikes would only cost about $0.65. I want to repeat that only aggressive traders should consider it. The HHH has not been performing for us. The options we suggested were the August $55 calls (HHH-HK) and the August $45 puts (HHH-TI). Our estimated cost is $1.65. We want to sell if either option hits $2.45.

Suggested Options:
*See play details.

Picked on July 03 at $ 50.50
Change since picked: - 0.28
Earnings Date 00/00/00
Average Daily Volume = 132 thousand

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Legg Mason - LM - close: 39.51 chg: +1.30 stop: n/a

LM reported earnings on Friday morning and missed estimates by 35 cents. The stock dipped to $36.80 on the news and quickly recovered. Obviously this reaction is a positive for shareholders. The lack of a big post-earnings move is negative for our strangle play. More conservative traders may want to consider an early exit right here to cut your losses. If you were able to exit right now the options would be worth about $1.65. I expect the financials will see some volatility in the next couple of weeks so we're going to keep the play open. We're not suggesting new strangle positions at this time. The options we listed were the August $45 calls (LM-HW) and the August $35 puts (LM-TG). Our estimated cost was $3.15. We want to sell if either option hits $4.85 or more.

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

Picked on July 23 at $ 40.20
Change since picked: - 0.69
Earnings Date 07/25/08 (confirmed)
Average Daily Volume = 3.1 million

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MarketVectors Agribusiness- MOO - close: 55.26 chg: +1.44 stop: n/a

The MOO spent more than three weeks consolidating sideways. Last Thursday it looked like the Agribusiness ETF had finally picked a direction with the breakdown to new lows. That move reversed on Friday thanks to a rebound in many of the potash and fertilizer stocks. However, we wouldn't be suggesting calls just yet. The bounce failed to close over resistance near $55.00 and its 200-dma plus volume was pretty low. We only have three weeks left before August options expire and we still need to see a significant move in the MOO. More conservative traders will want to consider an early exit. We're not suggesting new positions at this time. The options we suggested were the August $62 calls (MYV-HJ) and the August $50 puts (MOO-TX). Our estimated cost is $2.10. We want to sell if either option hits $3.15.

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

Picked on July 03 at $ 57.25
Change since picked: - 1.99
Earnings Date 00/00/00
Average Daily Volume = 745 thousand

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Netflix - NFLX - close: 27.85 change: +1.12 stop: n/a

NFLX reported earnings on Friday morning and the results were better than expected. The company beat estimates by 2 cents and said that subscribers had jumped by 168,000 to 8.4 million customers. Management also announced a deal to partner with Microsoft and let Xbox 360 console owners download streaming video this fall. It is unclear at this time what the service would cost and whether or not consumers would need an Xbox Gold membership. NFLX managed a 4% gain on Friday but we were expecting a much bigger move. More conservative traders will want to consider cutting their losses right here and closing the play. There are only three weeks left for August options. We're going to stick with NFLX and see what happens. We're not suggesting new strangles at this time. The options we suggested were the August $32.50 calls (QNQ-HT) and the August $22.50 puts (QNQ-TX). Our estimated cost is $1.20. We want to sell if either option hits $2.20 or more.

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

Picked on July 23 at $ 27.98
Change since picked: - 0.13
Earnings Date 07/25/08 (confirmed)
Average Daily Volume = 1.3 million

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PowerShares QQQ - QQQQ - cls: 45.27 chg: +0.58 stop: n/a

The NDX is still going nowhere fast. If you look hard enough at the four-week consolidation pattern is appears to be an inverse head-and-shoulders (it's easier to see on a 30 minute or 60 minute chart), which would actually be bullish but only if the Qs can breakout over the $46.00 level. Even if the Qs did breakout over $46 it would encounter plenty of overhead technical resistance with a cloud of moving averages. We're definitely not suggesting new positions and traders will want to consider an early exit now to cut their losses. We only have three weeks left before August options expire. The options we suggested were the August $47 calls (QQQ-HU) and the August $43 puts (QQQ-TQ). Our estimated cost is $1.80. We want to sell if either option hits $2.75 or more.

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

Picked on July 07 at $ 44.90
Change since picked: + 0.37
Earnings Date 00/00/00
Average Daily Volume = 148 million

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Starbucks - SBUX - close: 14.42 change: -0.12 stop: n/a

SBUX continues to pull back after last week's failed rally at $16.00. The stock came to rest on its 10-dma by Friday's closing bell. This week should see more volatility as SBUX is due to report earnings on July 30th (Wednesday) after the closing bell. If the stock trades back into the $13.70-13.30 zone readers may want to consider opening new strangle positions ahead of the earnings report. Actually, since SBUX has so many options at $1.00 increments in the teens, readers could open new strangles at any time but we would wait until Wednesday, just before the earnings report, to do so. The options we suggested for the strangle were the August $14.00 calls (SQX-HK) and the August $13.00 puts (SQX-TJ). Our estimated cost was $1.38. We want to sell if either option hits $3.50 or more.

Suggested Options:
*See play details above.

Picked on July 15 at $ 13.58
Change since picked: + 0.84
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 14 million

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UBS Ag - UBS - close: 20.76 change: -0.24 stop: n/a

UBS pulled back sharply on Thursday during the profit taking in financial stocks. There was no real follow through on Friday and the stock held on to its 10-dma. It doesn't seem to be impacting the share price but New York Attorney General Andrew Cuomo has filed a lawsuit against UBS. Cuomo claims that UBS sold billions of dollars worth of auction-rate securities under the pretense that business was fine while at the same time a number of high-level bank executives were pulling their own personal investments out of the market (source: AP). We only have there weeks left before August options expire. After two weeks the stock has moved less than 10% from our initial entry point. More conservative traders are going to want to evaluate an early exit and cut their losses. I suspect the financials will still see some big moves over the next three weeks. We're not suggesting new positions at this time. We listed two different strangles.

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

UBS Strangle #1) This uses the August $22.50 calls (UBS-HX) and $17.50 puts (UBS-TW). Our estimated cost was $1.90. We want to sell if either option hits $3.00.

UBS Strangle #2) This uses the August $25.00 calls (UBS-HE) and $15.00 puts (UBS-TC). Our estimated cost was $0.90. We want to sell if either option hits $1.90.

Picked on July 13 at $19.49
Change since picked: + 1.27
Earnings Date 08/12/08 (unconfirmed)
Average Daily Volume: 7.3 million

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Washington Mutual - WM - close: 3.84 chg: -0.19 stop: n/a

It was a very rough week for WM. Last Monday shares hit $6.60 and Wednesday saw a spike to $6.39 but the stock was crushed under concerns about its mortgage defaults, exposure and liquidity. The company came out recently saying it had significantly raised liquidity but no one appeared to be buying. There are renewed concerns that WM will need to raise a lot of capital, which might require diluting shareholders. The lack of bounce following Thursday's huge-volume sell-off is pretty negative. The August $4.00 put traded over $1.00 on Friday. We are adjusting our exit target to $1.95 instead of $2.25 on the options. More aggressive traders may want to keep a higher exit target. We suspect that WM will find support again, at least temporarily near its $3.00 low. A lot of investors would be tempted to buy WM at $3.00 as a speculative "it can't get much worse" kind of trade. At $3.00 a lot of traders see this as a long-term call option that doesn't expire with unlimited upside. That doesn't mean that WM can't go to $2.00 or $1.00 but expect some sort of bounce at $3.00. We are not suggesting new positions at this time. The options we suggested were the August $8.00 calls (WM-HV) and the August $4.00 puts (WM-TH). Our estimated cost is $0.72. We want to sell if either option hits $1.95 or more.

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

Picked on July 20 at $ 5.92
Change since picked: - 2.08
Earnings Date 07/22/08 (confirmed)
Average Daily Volume = 57 million
 

Dropped Calls

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Dropped Puts

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Dropped Strangles

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