ICE Finding Support

Add Speculative Calls Now!

By Bryan Bottarelli
Thursday, April 05, 2007 10:09 AM EDT
Thu, 5 Apr 2007 14:09:00 GMT

Dear Bottarelli Research Member,

You probably know that I’m very bullish on all of the publicly-traded exchange stocks. That’s why I’m holding longer-dated calls on NASDAQ Stock Market (NDAQ – NASDAQ) — a stock that I feel is the most undervalued company within this group. But today, another opportunity came up in the form of InterContinental Exchange (ICE — NYSE).

ICE

ICE is an Internet-based global electronic marketplace for trading futures and over-the-counter commodities. This includes contracts on crude and refined oil products, natural gas and power, sugar, cotton, coffee, cocoa, and orange juice (to name a few). Chart-wise, the stock is exhibiting signs of support at the $120 level — which could point to another upside run just on the horizon. As you can see from the chart above, ICE has the ability to make some rather large jumps, so this is a more speculative trade — but the rewards could be rather powerful. With the markets closed tomorrow for Good Friday, this would be a trade that looks to get kick-started next week. But I’d like to use the muted volatility levels today to enter a new ICE call position. Here’s the trade:

PLAY: Buy the ICE May 135 Calls (ICE EW) at or under $6.00, good for the day. Current bid/ask is $5.30 to $5.60. Place a protective stop loss at $2.50.

Also moving up nicely today is Valero Energy (VLO – NYSE).

VLO

The VLO May 65 Calls (VLO EM) that we entered on April 2nd for $2.95 have traded as high as $3.60 today, and with VLO on the verge of breaking a new 52-week high I’d like to let this position run. Maintain these calls for more gains.

Lock and load!

Sincerely,

Bryan Bottarelli
Editor, Bottarelli Research
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