EME (Long)...

Emcor is an engineering/construction firm providing services pertaining to electrical and mechanical systems. EME does not pay a dividend. EME is optionable, but the option chain is thin in terms of volume and open interest with wide strikes and bid/ask spreads. It's not an option buyer-friendly name, but it's ok for option sellers, so while spreads are not of interest to me, buy-writes are. EME is due to report earnings in late February or early March.

EME scores a 2/2 on the screens. It has 93% interest from the Peter Lynch screen, 90% from the Joel Greenblatt and Kenneth Fisher screens, 86% from the Benjamin Graham screen, and 75% from the James O'Shaughnessey screen.

Technically, I like what I see in EME. Here's a stock that has been basing since August and attempted three times to clear resistance at $26 before successfully doing so in December. It's also trading at 52-week highs. The breakout's volume wasn't as big as I would like to see, but the stock has consolidated above the breakout level for a couple weeks now. I expect $26 will now act as support because it's not only the old resistance level (broken resistance levels tend to become new support levels, and vice versa), but also because the 50-day EMA is creeping upward.

As I mentioned above, I like this stock for buy-writes instead of call spreads. It's not an options chain I want to be buying in and I'd rather be selling in it. Monday morning, I play to buy some shares of EME and quickly sell the January $27.50 calls against those shares. For every 100 shares I buy, I will sell one of those calls. Next week, once those calls have expired (hopefully worthless, but if not, that's ok), I'll sell some February calls against the stock in the same ratio.



Position: none

Disclaimer: This is not a recommendation and is presented for informational purposes only.