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Call Updates

CBOE Volatility Index - VIX - close: 23.06 chg: -0.97 stop: n/a

The VIX spiked to 24.71 intraday but the fear index reversed as stocks bounced midday on Friday. A dip back toward the 22.00 region might be an alternative entry point to buy calls on the VIX. Or readers could just wait and watch for the market bounce to stall and roll over and use that as a new entry point to buy calls. Our target is the 29.75 mark but readers might want to consider scaling out of positions in the 28-29 region.

Suggested Options:
We have been suggesting the October calls.

Picked on August 03 at $ 22.57
Change since picked: + 0.49
Earnings Date 00/00/00
Average Daily Volume = x million
 

Put Updates

Air Products - APD - cls: 87.21 change: +0.49 stop: 90.55 *new*

Traders need to make a decision on APD. Do you exit now or endure what appears to be the coming bounce? The stock slipped to $84.87 on Friday morning but the bounce back has produced a "hammer" style candlestick, which can be interpreted as a bullish reversal pattern. More conservative traders are going to want to exit right now. I would expect APD to rally back to the $90.00 level, which should be overhead resistance. We'll try and reduce our risk with a stop loss at $90.55. We would only consider new bearish positions on a clear failed rally under $90. APD has already exceeded our $87.00 target. Our secondary target is $84.00. The Point & Figure chart is bearish with a $73 target.

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

Picked on August 31 at $ 91.85 *target hit 87.00 on 09/04/08
Change since picked: - 5.15
Earnings Date 10/22/08 (unconfirmed)
Average Daily Volume = 1.8 million

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Deutsche Bank - DB - close: 82.71 change: +0.74 stop: 86.05

Shares of German bank, DB, dipped to $80.34 and bounced. Yet the bounce was weak compared to the rebound in U.S. banks. It is certainly possible that European markets could rally Monday morning in response to the sharp bounce on Friday and the FRE/FNM news over the weekend. If European stocks do rebound that could lead DB to gap open when the U.S. markets open. More conservative traders will want to consider an early exit if you did jump in on Friday. A failed rally under $85.00 could be used as another entry point for bearish positions. Of course our previous suggestion to wait for a breakdown under $80.00 still works. We would expect a bounce near the July 2008 lows in the $78.00-78.50 zone. However, we expect DB to hit new lows. We are setting two targets. Our first target is $76.00. Our second target is $71.50. The Point & Figure chart looks very bearish with a $66.00 target.

Suggested Options:
If DB provides another entry point we would use the October puts. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY PUT OCT 85.00 DB-VQ open interest=3155 current ask $5.70
BUY PUT OCT 80.00 DB-VP open interest= 138 current ask $3.70
BUY PUT OCT 75.00 DB-VO open interest=6092 current ask $2.05

Picked on September 04 at $ 81.97
Change since picked: + 0.74
Earnings Date 10/30/08 (unconfirmed)
Average Daily Volume = 995 thousand

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Jacobs Engineering - JEC - cls: 64.57 chg: -0.13 stop: 70.51

JEC dipped to another new 52-week low on Friday. Shares hit $61.73 at its worst levels but then rallied back to almost unchanged on the day. We would expect some follow through on this bounce. If you don't want to endure the rebound then consider an early exit right now. You could always jump in again on a failed rally under $70. Broken support near $67.00 should be the first line of defense for the bears. We would not suggest new bearish positions until JEC's rebound begins to fade. Our target is $60.50. FYI: The Point & Figure chart is bearish with a $47 target.

Suggested Options:
We are not suggesting new positions at this time. If JEC provides another entry point use the October puts.

Picked on September 04 at $ 66.90 *triggered
Change since picked: - 2.28
Earnings Date 11/05/08 (unconfirmed)
Average Daily Volume = 1.6 million

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L-3 Comm. - LLL - close: 102.64 chg: +2.66 stop: 105.05

Uh-oh! LLL delivered a pretty big bounce on Friday following Thursday's bearish breakdown. We had been waiting for a break under support with a trigger at $102 to buy puts and that occurred on Thursday. LLL rallied hard on Friday with a bounce near its rising 40-dma and its 38.2% Fib retracement level. You could easily argue this is a bullish reversal and that Thursday was just a bear trap. More conservative traders will want to consider an early exit to limit your losses. What makes this even more scary for the bears is the strong volume behind Friday's gain. It looked like the rally was starting to stall on Friday afternoon when the rest of the market was bouncing. We're going to stick with our play as it is with a stop loss at $105.05. We're not suggesting new bearish positions at this time. Our target is $97.50 or the 50-dma (currently 97.37). Broken support near $102.50-103.00 should now be new resistance.

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

Picked on September 04 at $102.00 *triggered
Change since picked: + 0.64
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 million

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Millicom Intl. - MICC - cls: 75.86 chg: +1.49 stop: 80.51*new*

MICC dipped to $72.75 before bouncing back into the green on Friday. Our secondary target is $72.50! The bounce may not be over yet. Friday's session produced a bullish engulfing candlestick pattern. Readers can watch for another failed rally under $80.00 as a new entry point for bearish plays. We are adjusting our stop loss to $80.51. The MACD on the daily chart is very close to a new sell signal. The P&F chart is bearish with a $63 target.

Suggested Options:
If MICC provides a new entry point we would use the October puts.

Picked on August 28 at $ 78.58 *1st target hit 09/03/08
Change since picked: - 4.21
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.0 million

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Roper Industries - ROP - cls: 56.22 chg: -0.04 stop: 60.05*new*

More conservative traders should consider an early exit in ROP right here. The stock dipped to $54.80 and bounced back sharply. The move has produced a "hammer" style candlestick, which can be interpreted as a bullish one-day reversal pattern. Our target was $54.25. We are expecting a bounce from here. Shares could easily rally back to what should be resistance in the $58.50 region. We're adjusting our stop loss to $60.05. A failed rally under $60 can be used as a new entry point for puts. FYI: The Point & Figure chart is bearish with a $45 target but the P&F chart also shows some support near $53.00.

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

Picked on September 03 at $ 58.19
Change since picked: - 1.97
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 664 thousand

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Unibanco - UBB - close: 108.66 chg: -0.16 stop: 115.05

Banking stocks from around the world rallied sharply from their lows on Friday afternoon. UBB slipped to $103.53 before bouncing. It would not surprise us to see UBB challenge previous support as resistance in the $112-113 zone. If you do not want to endure the bounce back toward $112 then consider an early exit right here to cut your losses. You can always jump back in around $112-111 after the bounce begins to fade. We have two targets. Our first target is $100.50. Our second target is $92.50. The Point & Figure chart has produced a brand new triple-bottom breakdown sell signal with a $92.00 target - a target that will probably move lower. The stock can be volatile so readers should consider this a higher-risk play.

Suggested Options:
Wait for the failed rally before considering new positions. We are suggesting the October puts.

Picked on September 04 at $108.82
Change since picked: - 0.16
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: 16.20 chg: +1.03 stop: n/a

Rumors and speculation continue to fly about just who might be in talks with LEH to buy all or a part of their company. LEH is desperate to raise capital as they try to de-leverage their balance sheet. On Friday there was talk that Blackrock, KKR and Japan's Nomura Holdings were all considering some sort of action with LEH. LEH rallied from its lows near $14.60 and closed up 6.7%. We are quickly running out of time. We only have two weeks left before September options expire. LEH needs to do something quick. 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 strangles in LEH at this time.

Picked on July 27 at $ 17.05
Change since picked: - 0.85
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million
 

Dropped Calls

None
 

Dropped Puts

None
 

Dropped Strangles

None
 

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