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Call Updates

Arch Coal - ACI - close: 55.61 chg: -0.98 stop: 49.95 *new*

After Thursday's big pop higher in ACI it was only natural to see some profit taking on Friday. Shares held up relatively well and were bouncing higher again heading into the close. The stock is up sharply for the week and could see more profit taking if the major indices struggle. We are not suggesting new bullish positions at this time. We're upping our stop loss to $49.95 and more conservative traders may want to inch their stop even higher. Our target is the $58.00-60.00 zone. The P&F chart is bullish with a $68 target.

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

Picked on August 20 at $ 52.37
Change since picked: + 3.24
Earnings Date 10/20/08 (unconfirmed)
Average Daily Volume = 6.4 million

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Adobe Systems - ADBE - close: 44.91 chg: +0.40 stop: 43.34

Shares of ADBE managed to sneak above its recent trading range but the bulls struggled to get the stock above round-number resistance at $45.00 and technical resistance at its 10-dma. The stock acts like it wants to go higher but the indicators are mixed and you could make a case for a deeper correction in ADBE. We are not suggesting new bullish positions in this stock. Our target is the $47.50-50.00 zone. The Point & Figure chart is bullish with a $71 target.

Suggested Options:
We are not suggesting new positions in ADBE.

Picked on August 05 at $ 43.34
Change since picked: + 1.57
Earnings Date 09/16/08 (unconfirmed)
Average Daily Volume = 6.5 million

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Chesapeake Energy - CHK - cls: 47.65 chg: -1.74 stop: 46.45*new*

Ouch! After a strong Tuesday-Thursday rally in natural gas stocks the group was hammered lower on Friday. CHK gave up 3.5% and the three-day candlestick pattern looks bearish. We are raising our stop loss to $46.45, which is just below the rising 10-dma. A bounce from here could be used as a new entry point but traders need to be defensive and maybe cut back on their position size. We have two targets. Our first target is $52.00. Our second target is $54.85. FYI: As expected CHK produced a brand new P&F chart buy signal that now points to a $62 target.

Suggested Options:
If you are considering bullish positions on CHK we would use the September or October calls. September options expire in four weeks.

Picked on August 20 at $ 48.05 *triggered
Change since picked: - 0.40
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 20.2 million

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Illumina - ILMN - cls: 91.33 chg: -0.67 stop: 89.45 *new*

It might be time to start looking for the exits in ILMN. The stock displayed relative weakness on Friday and the afternoon bounce was already rolling over ahead of the closing bell. More aggressive traders may want to keep their stop loss under the 50-dma around $88.00. We are raising our stop loss to $89.45. Shares still have short-term support near $90.00 and stronger support with its rising trendline of higher lows (see chart). More conservative traders could place theirs closer to $90.00. Wait for a new rally over $92.00 or $92.50 before considering bullish positions. The long-term trend for ILMN is still very bullish but that doesn't mean the stock won't see short-term volatility. We have two targets. Our first target is $95.25. Our second target is $99.50. FYI: ILMN has a 2-for-1 stock split scheduled for September 23rd. Traders might also want to note that ILMN's short interest is about 19% of the 50 million-share float. That's high enough to spark some short squeezes.

Suggested Options:
If ILMN provides another bullish entry point we would use the September or October calls. September options expire in four weeks.

Picked on August 14 at $ 91.55
Change since picked: - 0.22
Earnings Date 07/27/08 (unconfirmed)
Average Daily Volume = 1.2 million

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Itron Inc. - ITRI - close: 104.79 change: +1.36 stop: 99.90*new*

ITRI turned in another decent week after testing support near $100 again. Even though technical indicators look positive this is probably not the place to open new positions. The rally on Friday seemed to run out of steam as ITRI near its mid August highs. There is resistance near $105.00 More conservative traders may want to scalp some profits right here! If the stock does see a dip look for a bounce in the $101.50-102.00 zone. We are raising our stop loss to $99.90. We've set two targets. Our first target is $105.75. Our second target is $109.90.

Suggested Options:
If you are tempted to buy calls on a dip in ITRI we would use the September or October strikes.

Picked on August 14 at $ 101.50
Change since picked: + 3.29
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 616 thousand

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Research In Motion - RIMM - cls: 131.45 chg: -0.85 stop: 124.65

RIMM remains a leader in the tech sector but shares under performed on Friday following a nice two-day bounce. We are bullish on RIMM but some of the short-term technical oscillators are suggesting that the stock may be headed for another dip. Therefore we would wait for a dip into the $130-127.50 zone before considering new bullish positions. The $125 level remains support so we're going to keep our stop loss where it is. We have two targets. Our first target is $143.50. Our second target is the $155.00-160.00 zone. However, readers should expect RIMM to encounter some resistance in the $145-150 area.

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

Picked on August 21 at $132.30
Change since picked: - 0.85
Earnings Date 09/25/08 (unconfirmed)
Average Daily Volume = 19.1 million

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CBOE Volatility Index - VIX - close: 18.81 chg: -1.01 stop: n/a

It is not looking good for our speculative bet on the VIX. The volatility index closed at its lowest levels in several weeks. The current trend is lower but that could change pretty quickly. At this point we would consider new bullish positions on a dip in the 17.00-16.00 zone or a new rise above 22.50. If you haven't been following this play we're betting that the market will see another sharp sell-off and investor fear will rise enough to push the VIX toward 30.00 and all before the October option expiration. Our target is 29.75 but readers might want to consider scaling out of positions in the 28-29 region.

Suggested Options:
If the VIX provides another entry point we have been suggesting the October calls.

Picked on August 03 at $ 22.57
Change since picked: - 3.76
Earnings Date 00/00/00
Average Daily Volume = x million
 

Put Updates

Bank of Amer. - BAC - cls: 30.21 change: +1.17 stop: 31.55

News that LEH is a buyout target and could be in serious negotiations with potential acquirers sparked a short covering rally that was focused on financials. BAC bounced more than 4% higher and actually managed to close over the $30.00 mark. The short-term technical oscillators have turned bullish. We would wait for a very clear failed rally near $31.00 or wait for a new decline under $29.00 before considering new bearish positions on BAC. We have two targets. Our first target was $28.00, which has already been achieved. Our second target is $25.50.

Suggested Options:
If BAC provides a new entry point we would consider the September or October puts. Don't forget that Septembers expire in four weeks.

Picked on August 07 at $ 31.52 /1st target exceeded
Change since picked: - 1.31
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume = 90.4 million

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Chipotle Mex.Grill - CMG - cls: 72.00 chg: +1.47 stop: 73.65

The short covering panic on Friday morning sent CMG to an intraday high of $72.86. If we happen to get stopped out at $73.65 we'll be watching for another bearish entry point until CMG can clear resistance near $78.00. At this point we would consider new put positions under $71.00 or under $69.00, whichever best suits your risk tolerance. We have two targets. Our first target is $65.50. Our second target is $61.00.

Suggested Options:
If CMG provides a new entry point we are suggesting the September or October puts.

Picked on August 20 at $ 69.90 *triggered
Change since picked: + 2.10
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 888 thousand

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Millicom Intl. - MICC - cls: 80.07 chg: -0.63 stop: 80.75

The market bounce on Friday also led MICC higher. The stock added 2.2% but failed to breakout past its August highs. If MICC can clear the $84.00 level we may want to switch to bullish strategies. Right now we've been waiting for a new relative low and our suggested entry point to buy puts is $78.49. A failed rally in the $83.00-83.50 zone might be an alternative entry point for puts but we'd use a stop loss at $84.05. If triggered at $78.49 we're listing two targets. Target number one is $75.05. Target number two is $72.50.

Suggested Options:
We are suggesting the September $80 or $75 puts.

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 million

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Regional Bank HOLDRs - RKH - cls: 101.04 chg: +3.04 stop: 103.05

Financial stocks popped higher on the LEH news Friday morning. The RKH gapped open at $100.22 and bounced once it filled the gap. The bounce is bad news for the bears. The overall trend is still bearish but short-term RKH could rally to its 100-dma around $107.80. More conservative traders may want to tighten their stops toward the $102 region. We would wait for a new decline under $99.00 before considering new bearish positions. We have two targets. Our first target is $91.00. Plan to exit all or most of your position there. We'll set an aggressive, secondary target at $86.00. FYI: The top three holdings in the RKH are JPM (19%), WFC (13.6%) and WB (10%).

Suggested Options:
We would suggest the October or September puts if the RKH provides a new entry point.

Picked on August 18 at $ 99.80
Change since picked: + 1.24
Earnings Date 00/00/00
Average Daily Volume = 3.1 million

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Uniao de Bancos Brasil - UBB - cls: 118.34 chg: -0.85 stop: 117.75

I listened to one analyst offer a very positive review of Brazil on Friday and he mentioned UBB as one of his best picks for that country. While long-term that may be a good bet short-term the bounce in UBB is struggling. We are still waiting for a breakdown under support and we're not ready to give up just yet. Our suggested entry point to buy puts is at $112.50. If triggered our target is the $102.50-100.00 zone. FYI: More nimble traders may want to switch to bullish strategies if UBB can bounce above the $123.00 mark.

Suggested Options:
If UBB hits our trigger at $112.50 we would buy the September or October puts.

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 1.5 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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Lehman Brothers - LEH - close: 14.41 chg: +0.69 stop: n/a

LEH was all over the news on Friday when word got out they were talking to a Korean bank about a major stake in the troubled broker. The stock soared Friday morning as investors placed bets that someone might just buy all of LEH. Shares hit $15.93 intraday and eventually settled with 5% gain. The stock was plunging into the closing bell as enthusiasm waned. At least one analyst expressed their opinion that LEH may follow Bear Stearns and go under completely. A different analyst reiterated his opinion that LEH would be rescued and put a $20 price target on the stock. We don't see any changes from our previous comments and we're not suggesting new strangle positions. We have four weeks left before September options expire and need to see LEH significantly above $24.00 or under $10.00. The options we suggested were the September $24.00 calls (LYH-IR) and the September $10.00 puts (LYH-UB). Our estimated cost is $2.15. We want to sell if either option hits $3.50 or higher.

Suggested Options:
We are not suggesting new strangles in LEH.

Picked on July 27 at $ 17.05
Change since picked: - 2.64
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million
 

Dropped Calls

None
 

Dropped Puts

NYSE Euronext - NYX - close: 41.14 change: +2.37 stop: 41.05

Strength in the financials on Friday ignited some heavy short covering in NYX and the stock rallied more than 6%. Shares cleared round-number resistance at $40.00 and hit our stop loss at $41.05. The overall trend remains bearish so we are watching the trendline of lower highs as a potential reversal point.

Picked on August 21 at $ 38.77 /stopped 41.05
Change since picked: + 2.37
Earnings Date 11/03/08 (unconfirmed)
Average Daily Volume = 4.8 million
 

Dropped Strangles

None
 

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