NEW DIRECTIONAL CALL PLAYS
Valmont Industries Inc. - VMI - cls: 73.88 chg: +2.06 stop: 69.94
Why We Like It:
The stock market is extremely overbought and way overdue for a pull back but that doesn't mean it can't get even more overbought. Money managers are chasing performance and with a new month they have more money they need to allocate. I suggest traders wait for a market correction to open new bullish positions but for those aggressive investors we're going to try and scalp a few points. I suspect this will be a very short-term three, maybe four-day trade. If stocks continue with their current trend the question will be "do we hold over the Friday morning jobs report or exit in front of it?"
The plan is to buy short-term calls on VMI with a stop loss under the recent low near $70.00. I consider this an aggressive trade and suggest readers only use small position sizes at least half or less than your normal trade size. Our target is $78.50.
FYI: I also considered Seacor Holdings (CKH) for a similar trade but the option spreads were pretty wide making it even higher risk.
This is a short-term trade so use August calls.
BUY CALL AUG 70.00 VMI-HN open interest= 328 current ask $5.10
BUY CALL AUG 75.00 VMI-HO open interest= 358 current ask $2.10
BUY CALL AUG 80.00 VMI-HP open interest= 128 current ask .65
Picked on August 03 at $ 73.88
Change since picked: + 0.00
Earnings Date 07/21/09 (confirmed)
Average Daily Volume = 414 thousand
Listed on August 03, 2009