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Updates On Latest Picks

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Call Updates

Arch Coal - ACI - close: 54.24 chg: -1.16 stop: 52.37

Strength in the U.S. dollar weighed on commodity stocks. The coal sector inched lower. Shares of ACI gave up 2%. Short-term technicals indictors for ACI are suggesting a deeper pull back. We are not suggesting new bullish positions at this time. Last week's low bounced from the exponential 200-dma near $52.81. If you wanted to tighten your stop that's where I would put it (52.80ish). Our target is the $58.00-60.00 zone but readers may want to exit at the 50-dma if it falls under $58.00. The P&F chart is bullish with a $68 target.

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

Picked on August 20 at $ 52.37
Change since picked: + 1.87
Earnings Date 10/20/08 (unconfirmed)
Average Daily Volume = 6.4 million

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Chesapeake Energy - CHK - cls: 48.40 chg: -0.84 stop: 46.90

Natural gas stocks continued to retreat following Thursday's reversal. Shares of CHK have pulled back to short-term support near $48 and its 10-dma and 200-dma. We have been suggesting that more conservative traders might want to raise their stops toward the $48.00 level. Overall the rally in CHK may be in trouble. Its upward movement stopped dead at the 40-dma and its 38.2% Fib retracement of its mid-July to August sell-off. A bounce from here might be a new bullish entry point but we're not very enthusiastic about putting new capital at work here. We have two targets. Our first target is $52.00. Our second target is $54.85.

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

Picked on August 20 at $ 48.05 *triggered
Change since picked: + 0.35
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 20.2 million

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Itron Inc. - ITRI - close: 103.58 change: -1.95 stop: 101.25*new*

Last week delivered a decent gain for ITRI. The stock hit our first target at $105.75. Unfortunately, Friday's widespread market sell-off took a chunk out of ITRI's gains. The MACD on the daily chart looks vulnerable and is nearing a new sell signal. Additional short-term technicals also look worrisome. More conservative traders will want to strongly consider an early exit right here if you have not already done so. We are upping our stop loss to $101.25. We're not suggesting new positions. ITRI may struggle to get past resistance near $106. Our second target is $109.90. FYI: The Point & Figure chart is bullish with a $122 target.

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

Picked on August 14 at $ 101.50 /1st target hit 105.75 (08/28)
Change since picked: + 2.08
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 616 thousand

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United States Oil - USO - cls: 92.87 chg: -0.52 stop: 89.79

The last four days in a row has seen oil (or at least the USO) gap higher at the open and then trade lower. This is not a bullish development. If oil cannot rally with hurricanes barreling toward the Gulf of Mexico then odds of a bounce are pretty low. At this time I would suggest more conservative traders exit early or raise their stop loss toward the $92.00 region. Of course by Tuesday's open it could be a different story since hurricane Gustav is supposed to hit our shores by Monday. The impact or the miss by Gustav could send oil sharply higher or lower. Another factor to watch is the escalating conflict with Russia. If something happens over the three-day weekend it could also send oil higher. The USO has support at $90.00 so we're going to keep our stop loss at $89.79 for now. Aggressive traders still looking for a bullish entry point could buy a bounce from $92.00 or a bounce (or dip) near $90.00. If you missed it our entry point for this play was one hour after the August 27th oil inventory report was announced. Our target is $99.50.

Suggested Options:
We are not suggesting new positions at this time. Should the USO provide another entry point we'd use the September calls since this should be a short-term play. September options expire in three weeks.

Picked on August 27 at $ 95.12 *triggered 1 hour after report
Change since picked: - 2.25
Earnings Date 00/00/00
Average Daily Volume = 13.9 million

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CBOE Volatility Index - VIX - close: 20.65 chg: +1.22 stop: n/a

Hmm... the situation may be changing for the VIX. This was the first week in a while that the VIX did not see a new relative low. The market's weakness on Friday fueled a 6% gain in the VIX. Right now the volatility index still has a bearish pattern of lower highs but it wouldn't take much to break it. We've been suggesting that readers buy calls on a new move over 22.50. More aggressive traders might want to consider jumping in early over 21.50 instead. Don't forget that this is a very speculative play (as in no stop loss) as we bet on a strong enough market sell-off to send the VIX toward 30.00. In our favor is the time of year with September and the first several days of October historically the worst time of year for stocks. Plus, we have the ongoing credit crisis, financial sector woes, and escalating tensions with Russia (not to mention Iran), oh and let's throw in a couple of hurricanes. 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 a new entry point we have been suggesting the October calls.

Picked on August 03 at $ 22.57
Change since picked: - 1.92
Earnings Date 00/00/00
Average Daily Volume = x million

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Whiting Petrol. - WLL - cls: 96.24 chg: +1.67 stop: 91.95 *new*

A lot of the oil stocks have begun to roll over in the last couple of trading days. Not so for WLL. Thursday was rough but traders bought the dip on Friday near its 10-dma and 50-dma. This move actually looks like a new bullish entry point. However, considering the recent weakness in the oil sector, buying calls now makes this an aggressive play. We're going to try and reduce our risk with a stop loss at $91.95. More conservative traders could put their stop under Thursday's low of $92.70. We have two targets. Our first target is $103.50. Our second target is $107.00. The P&F chart is bullish with a $132 target. FYI: WLL is due to present at an investor/analyst conference on September 2nd.

Suggested Options:
We would suggest the September or October calls. Keep in mind that September options expire in three weeks.

Picked on August 26 at $ 95.80
Change since picked: + 0.44
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 1.1 million
 

Put Updates

Chipotle Mex.Grill - CMG - cls: 69.32 chg: -0.92 stop: 73.65

Investors have soured on CMG. The stock remains in a long-term bearish trend. This last week undermined investor confidence again when fellow food stock Darden Restaurants (DRI) issued an earnings warning. Traders are worried that CMG is facing a slowing consumer and rising ingredient costs. The short-term trend is also negative and CMG is poised to mover lower. The stock can be volatile so we're keeping a slightly wider stop loss but more conservative traders could probably get away with a top near $72.00 or 71.50. We are suggesting new put positions here. We have two targets. Our first target is $65.50. Our second target is $61.00.

Suggested Options:
We would use the September or October puts. Keep in mind that September options expire in three weeks.

Picked on August 20 at $ 69.90 *triggered
Change since picked: - 0.58
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 888 thousand

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Millicom Intl. - MICC - cls: 79.37 chg: -1.29 stop: 81.55*new*

We have been patiently waiting for MICC to breakdown and hit our entry point at $78.49. On Friday the stock spiked lower to $78.36 before bouncing back. The play is now open. It still looks like the path of least resistance is lower but Friday's afternoon bounce may not be over yet. We would watch for a failed rally under $81.00 or a new relative low (78.35) before initiating new positions. We're also adjusting our stop loss to $81.55 based on the bounce. We have two targets. Our first target is $75.05. Our second target is $72.50. FYI: A move under $78.00 will produce a brand new Point & Figure chart sell signal.

Suggested Options:
We are suggesting the October puts but September options would probably work, just remember that Septembers expire in three weeks.


Picked on August 28 at $ 78.49 *triggered
Change since picked: + 0.88
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 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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Lehman Brothers - LEH - close: 16.09 chg: +0.22 stop: n/a

Shares of LEH have rallied four days in a row as hope grows the company may find a solution or that someone might make a bid for them. It's worth noting that the overall trend is still very bearish and the rebound has failed to break resistance. Nor has there been any volume on the bounce. We're not suggesting new strangle positions in LEH at this time. We only have three weeks left and LEH still has to make some big moves. If you wanted to exit now you might be able to recover about 40-45 cents of our initial investment. Anything can happen in the next three weeks and odds that LEH just bounces around the $13-20 zone is growing, which would end with a complete loss for us. We 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 positions in LEH at this time.

Picked on July 27 at $ 17.05
Change since picked: - 0.96
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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