Option Investor
Play Updates

A Quiet Wednesday

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CALL Play Updates

Apple Inc - AAPL - close: 100.06 change: +0.34 stop: 88.99

AAPL spent the day trading sideways and appeared to ignore news that one analyst firm had sliced their price target to $95. Thus far AAPL has been able to hold above its 50-dma and use it as technical support. I don't see any changes from our previous comments. More aggressive traders may want to buy calls on AAPL in the $96-95 zone. I am suggesting readers buy calls in the $94.00-92.00 zone. We'll use a stop loss at $88.99, just under Friday's low.

If triggered at $94.00 we have two targets. Our first target is $99.85. Our second target is $107.50.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =      52.8 million  


Amazon.com - AMZN - close: 49.70 change: -1.55 stop: 43.25

AMZN endured some profit taking on Wednesday but the 3% decline was not enough. We are suggesting readers buy calls on a dip into the $46.00-45.00 zone. Although we're thinking about adjusting that entry point a little higher to maybe $46.50, maybe the $47.00 mark. At the moment we'll stick to $46.00. Our first (short-term) target is $49.95. Our secondary target is the $54.00 mark. The P&F chart is bullish with a $74 target.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           01/28/09 (unconfirmed)
Average Daily Volume =      12.9 million  


China Mobile Ltd. - CHL - close: 51.92 change: +1.07 stop: 47.75

It was an interesting day for Chinese stocks. News that China's exports fell in November, the first contraction in seven years, failed to halt the rally in Chinese equities. CHL rallied 2.1% and bounced back above its 100-dma. We're not suggesting new positions at this time. CHL hit our first target at $51.75 yesterday. We still have a secondary, more-aggressive target at $57.00.

Note: I was unable to find an earnings date for CHL, which does raise our risk since we prefer to avoid holding over an earnings report.

Picked on December 03 at $ 47.11 /gap down entry
Change since picked:      + 4.81 /originally listed at $47.85
Earnings Date           00/00/08 (unconfirmed)
Average Daily Volume =       3.9 million  


Chipotle Mexican Grill - CMG - close: 58.91 chg: +5.51 stop: 48.45

I could not find any news to account for the sudden rise in shares of CMG today. Let me say that another way. I know why the stock rose. It looks like a short squeeze and CMG has a very high amount of short interest. Yet I can't find what sparked the short squeeze. On a bullish note CMG managed to breakout over its 100-dma. We do not want to chase this stock. The $60.00 mark should be resistance. The stock is up dramatically in the last three weeks from its lows near $37.00. A 38.2% retracement is going to bring it back down toward the $51-50 zone. We're still waiting for a dip toward support. Our suggested entry point is to buy calls on a pull back into the $51.00-49.00 zone. Our stop loss is at $48.45. If triggered at $51.00 we have two targets. Our first target is $54.85. Our secondary target is $59.00.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           02/12/09 (unconfirmed)
Average Daily Volume =       475 thousand 


Express Scripts - ESRX - close: 59.08 change: +1.07 stop: 55.95

We don't see any changes from our previous comments. ESRX bounced from the $57.70 zone and put in a barely discernable higher low. The bounce could be used as a new entry point but more conservative traders may want to wait for another rise over $60.00. Or readers may want to consider a higher stop loss closer to $57.00. Our target is $64.00.

Picked on December 06 at $ 59.36 /gap higher entry 
Change since picked:      - 0.28 /originally listed at $58.58
Earnings Date           02/19/09 (unconfirmed)
Average Daily Volume =       3.1 million  


FTSE/Xinhau China Index - FXI - close: 31.24 chg: +2.16 stop: 27.45*new*

Bad news about falling exports out of China failed to stem the buying interest in Chinese stocks. The FXI Chinese ETF soared 7.4% and closed at new multi-week highs. If you have not taken any profits yet I would do so now. We are raising our stop loss to $27.45. Our secondary target is $34.00.

Picked on December 03 at $ 26.27 /gap down entry point
Change since picked:      + 4.97 /originally listed at $27.25
Earnings Date           00/00/00
Average Daily Volume =      51.2 million  


Goldman Sachs - GS - close: 71.53 change: -1.24 stop: 67.49 *new*

GS continued to dip and fell to an intraday low of $69.35. Our suggested entry point to buy calls was a pull back into the $71.00-68.00 zone. The play is now open. If you did not buy the dip then consider waiting for a bounce. We have two targets. Our first target is $79.85. Our second target is $89.00 or the 50-dma, whichever one GS hits first. We do not want to hold over the December earnings report. Thus we only have a few trading days to enter and exit this play. Please note that we are upping the stop loss to $67.49.

Chart:
GS

Picked on December 10 at $ 71.00 *triggered
Change since picked:      + 0.53
Earnings Date           12/16/08 (confirmed)
Average Daily Volume =        29 million  


Jacobs Engineering - JEC - close: 53.18 change: +2.13 stop: 42.45

JEC continues to surge on the Obama-infrastructure expectations. The stock rallied 4% but failed to breakout past its 100-dma. We don't want to chase it so we're waiting for an entry point. Please note that we're adjusting our suggested entry point from $44.00 to the $46.00-45.00 zone. We'll use a stop loss at $42.45. Our first target will be $51.00. Our second target will be $54.90.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           01/21/09 (unconfirmed)
Average Daily Volume =       3.0 million  


Priceline.com - PCLN - close: 62.08 change: +0.48 stop: 58.49

PCLN's dip near $60.00 looked like another entry point. You may want to consider new positions on a rally from here. Our second target is $69.90. FYI: The Point & Figure chart is bullish with a $102 target.

Picked on December 06 at $ 61.60 /gap open higher
Change since picked:      + 0.48 /originally listed at $60.46
Earnings Date           02/12/09 (unconfirmed)
Average Daily Volume =       1.8 million  


Wynn Resorts - WYNN - close: 44.30 change: +2.60 stop: 38.45

The bounce in WYNN today looked pretty bullish. Shares have been building on a trend of higher lows. We're not going to chase it but we will adjust our entry point. Instead of buying calls at $40.25 we'll use a trigger at $40.75. We'll up the stop loss to $38.45. If triggered we have two targets. Our first target is $44.75. Our second target is $49.00. I would expect some resistance at the 50-dma but the P&F chart has turned bullish with a $62 target.

Picked on December xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           02/12/09 (unconfirmed)
Average Daily Volume =       3.2 million  


PUT Play Updates

*Currently we do not have any put play updates*


Strangle & Spread Play Updates

SPDR GOLD Trust - GLD - close: 79.75 change: +3.42 stop: n/a

Commodities were strong today thanks to another decline in the U.S. dollar. Gold prices surged and the GLD added more than 4.4%. The gold ETF rallied toward resistance at $80.00 and its 100-dma. A continued rally from here would be pretty bullish.

We're quickly running out of time as December options expire in less than two weeks. I am reiterating previous suggestions that more conservative traders cut their losses and exit early. FYI: The December $75 call grew to over $5.00 today.

We are not suggesting new strangle positions in the GLD.

What is a strangle?
A strangle involves buying both an out-of-the-money call and an out-of-the-money put. We don't care what direction the stock goes as long as it moves one direction. If the stock moves far enough one side of our trade will rise in value and pay for the entire trade and make a profit.

-December Strangle-

Summary:
We suggested readers buy the December $75 call (GVD-LW) and the December $70 puts (GVD-XR). Our estimated cost was $6.30. We want to sell if either option hits $12.00.

Picked on November 09 at $ 72.50
Change since picked:      + 7.25
Earnings Date           00/00/00
Average Daily Volume =      19.3 million  


Ultra S&P500 ProShares - SSO - close: 26.36 change: +0.49 stop: n/a

A minor rally in the S&P 500 left the SSO to close with a 1.9% gain. Overall it was a relatively quiet day. We don't see any changes from our previous comments on the SSO strangle. We have less than two weeks left before December options expire.

We're not suggesting new strangles at this time.

Note: The SSO is an ultra-long ETF that typically moves twice the daily performance of the S&P 500 index.

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.

-December Strangle Details-
We suggested readers buy the December $30.00 call (SOJ-LD) and the December $20.00 put (SOJ-XT). Our estimated cost is $3.75. We want to sell if either option hits $6.00.

Picked on November 12 at $ 24.84
Change since picked:      + 1.52
Earnings Date           00/00/00
Average Daily Volume =       126 million  


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