NEW DIRECTIONAL CALL PLAYS
Donaldson Company - DCI - close: 64.67 change: +0.31
Stop Loss: 63.25
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Company
Description
Why We Like It:
It looks like the correction in DCI might be over. Yet the bounce back has stalled near resistance at $65.00 and its 20-dma. I am suggesting a trigger to open small bullish positions at $65.55. If triggered we'll aim for $69.50, just under the recent highs. More aggressive traders may want to aim higher.
FYI: The Point & Figure chart for DCI is bullish with a $95 target.
Trigger @ 65.55 (small positions)
- Suggested Positions -
buy the JAN $65 call (DCI1221A65) current ask $3.30
Annotated Chart:
Entry on November xx at $ xx.xx
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 306 thousand
Listed on November 29, 2011
NEW DIRECTIONAL PUT PLAYS
Green Mountain Coffee Roasters - GMCR - cls: 48.92 change: -2.07
Stop Loss: 52.15
Target(s): 41.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Company
Description
Why We Like It:
The bulls could argue that GMCR's sideways consolidation last week is positive since the rest of the market was declining. However, I would argue that last week was just a rest period before the next leg down. GMCR still has a short-term (and longer-term) trend of lower highs. I am suggesting we open bearish put positions at the open tomorrow.
Keep in mind that GMCR is a volatile stock and there is always the risk of another short squeeze. That's why we want to keep our position size small to limit our risk. FYI: The most recent data listed short interest at 23% of the 121.7 million-share float. That does raise the risk of a short squeeze.
(Small Positions)
- Suggested Positions -
buy the DEC $45 PUT (GMCR1117X45) current ask $1.94
- or -
buy the JAN2012 $45 PUT (GMCR1221M45) current ask $4.20
Annotated Chart:
Entry on November xx at $ xx.xx
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 11.7 million
Listed on November 29, 2011