Leverage Alert: CG
LEVERAGE ALERT
TUESDAY, JANUARY 25, 2005
NEW RECOMMENDATION!
PLACE A DAY-LIMIT ORDER TO BUY (TO OPEN) THE CAROLINA GROUP MARCH 30.00
CALL (CGCF) AT A MAXIMUM ENTRY PRICE OF 2.40 OR LESS.
*** IF YOU ARE UNABLE TO ENTER THIS POSITION BEFORE THE CLOSE TODAY, WE
RECOMMEND THAT YOU REPEAT THIS PROCEDURE THROUGH THE NEXT TRADING DAY. DO
NOT ATTEMPT TO GET INTO THIS TRADE AFTER THE NEXT TRADING DAY’S CLOSE. ***
THIS OPTION IS CURRENTLY BID AT 2.10, OFFERED AT 2.30.
CG IS CURRENTLY TRADING AT 31.82.
DO NOT PLACE A GOOD-TIL-CANCELLED ORDER TO EXIT THE POSITION UNTIL WE
FOLLOW UP WITH FURTHER INSTRUCTIONS, AS WE MAY ALLOW PROFITS TO RUN IF OUR
INDICATORS SUGGEST THE POSITION HAS MORE PROFIT POTENTIAL.
NEVER PAY MORE THAN THE MAXIMUM ENTRY PRICE FOR THIS OR ANY OTHER
RECOMMENDATION. DO NOT INVEST MORE THAN 10%-20% OF YOUR AVAILABLE CASH
ALLOCATED TO THIS PROGRAM IN ANY ONE TRADE.
YOU WILL NOT RECEIVE FURTHER COMMUNICATION CONCERNING THIS TRADE, INCLUDING
CLOSEOUT INSTRUCTIONS, IF YOUR SUBSCRIPTION IS NOT ACTIVE AT THE TIME WE
ISSUE FOLLOW-UP INSTRUCTIONS.
LEVERAGE ALERT COMMENTARY
RECOMMENDED ON TUESDAY, JANUARY 25, 2005
CAROLINA GROUP (CG) TRADE DRIVERS:
* According to Hoover's, CG is a group company of Loews Corporation (LTR),
accounting for 21 percent of LTR's sales. CG was created in 2002 to track
stock for LTR in its tobacco holdings. CG's subsidiary, Lorillard, is the
fourth largest cigarette maker in the U.S., driven by menthol brand
Newport.
* Pessimism runs high on CG as, according to Zacks, six of the eight
analysts covering the stock have "hold" or "sell" ratings on it. Any
upgrades from this group could send the equity higher.
* Options players are also betting against the equity, as the stock's
Schaeffer's put call open interest ratio has jumped higher during the past
several sessions from its near-term low of 0.19 on January 18 to its
current perch at 0.22.
* Also on the options front, the stock has recently taken out potential
resistance at the 30 level, site of peak-front month call open interest.
With little in the way of call activity above this strike, CG should face
little options-related resistance.
* Technically speaking, CG is soaring higher today following a successful
retest of support at its 10-day moving average. The shares have risen
along the loose support of this short-term moving average since September.
Furthermore, the equity has taken out round-number resistance in the 30
area and continues to advance along its rising 10-week moving average.
* This combination of pessimistic sentiment and strong technical
performance has earned CG a Schaeffer's Equity Scorecard rating of 7.5 out
of 10.0. This elevated reading indicates that the security could have
additional upside as pessimistic sentiment unwinds.
REVIEW OF RECOMMENDATION: Buy the Carolina Group March 30 call (CGCF) at a
maximum entry price of 2.40. We will closely monitor this position and
contact you immediately with updated instructions should our expectations
change.
CURRENT OPEN POSITIONS: Apple Computer April 60 call (AAQDL); Genzyme
April 55 call (GZQDK); Wynn Resorts March 65 call (UWYCM); Amazon.com
February 45 put (ZQNNI).
You will not receive further communication concerning this trade, including
closeout instructions,
if your subscription is not active at the time we issue follow-up
instructions.
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