Withstanding the Turbulence

Add WFT Calls

PLAY: Buy the WFT January 2009 50 Calls (ODS AJ) at market, good for the week. Place a protective stop limit at $1.80 and implement our scaled-selling technique to lock in portions of your profits as these calls achieve 50% returns (and greater).

Dear Bottarelli Research Member,

This past week of market turbulence was a perfect illustration of why adding our new Bottarelli Research LEAPS methodology to your investment arsenal makes so much sense.

For example, in an options alert issued on Wednesday, I noted that whenever the Volatility Index (VIX) makes a quick jump of 20% (or more), this serves as a clear indication that trading decisions are being dictated by emotions. And most notably, the emotion offear.

In times like this, where the emotion of fear dictates trading decisions, logical investing is thrown out the window. As a result, you typically see good stocks and bad stocks all experience severe valuation declines.

When it comes to fast-action intra-day trading, environments like this prove to be difficult. Luckily, environments like this never last too long.

But when you have the luxury of time on your side, any quick valuation declines in the top companies that I meticulously follow offers you an absolutely wonderful opportunity to add longer-term LEAPS contracts at fire-sale prices.

After all, with plenty of time on your side, these longer-term plays successfully allow you to withstand any intra-week volatility and emerge with strong profits in hand when the markets (and the strong companies you’ve been carefully accumulating) eventually recover. And this, my friends, is the tremendous benefit that’s now offered to you with Bottarelli Research LEAPS.

In fact, this benefit is actually communicated perfectly in the definition of LEAPS. According to investopedia.com, Long-Term Equity Anticipation Securities are defined as follows (with specific emphasis on the bolded section):

Publicly-traded options contracts with expiration dates that are longer than one year. Structurally, LEAPS are no different than short-term options, but the later expiration dates offer the opportunity for long-term investors to gain exposure to prolonged price changes without needing to use a combination of shorter-term option contracts. The increased expiration date gives the underlying asset more time to make a substantial move and for the investor to make a healthy profit. LEAPS are an excellent way for a longer-term trader to gain exposure to a prolonged trend in a given security without having to roll several short-term contracts together. The ability to buy a call/put option that expires one or two years in the future is very alluring because it gives the holder exposure to the long-term price movement without the need to invest the larger amount of capital that would be required to own the underlying asset outright.

In other words, LEAPS offer you the ability to place a small amount of capital in a highly-leveraged investment vehicle, and in the process, sidestep any periods of intense market volatility, and eventually come out with strong profits in hand. In times like this, adding LEAPS to our investing ledger makes tons of sense, and that’s why I’m thrilled that you’re part of our exciting new group.

So on that note, let’s get into this week’s new LEAPS pick…

Today’s play comes in the form of oil service company Weatherford International (WFT – NYSE).Founded in 1972 and based in Houston, Texas, Weatherford International is one of the world’s top “pick and shovel” plays in the oil patch sector.

With $6.1 billion in annual revenues and operations in over 100 countries, WFT provides the oil industry with a broad portfolio of services and products, including drilling, evaluation, completion, production, and intervention.

Not only do they provide equipment and services used in oil and natural gas wells worldwide, but they also offer infrastructure like submersible pumps, gas and hydraulic lifts, flow measurement and field optimization tools, drilling services, well testing, cementation tools, and solid tubular expandable technologies.

If that weren’t enough, Weatherford also designs and manufactures various drilling tools and provides evaluation services that measure the physical properties of underground formations.

In short, WFT is one of the premier oil service plays your investment dollars can buy — yet the majority of investors are still not aware of their incredible potential. In fact, 9 out of 10 investors will identify names like Schlumberger or Halliburton as the top oil service candidates. But I’m here to tell your WFT offers you the most bang for your buck.

For example, WFT’s quarterly revenue growth of 18.60% exceeds that of competitors like Baker Hughes’ (BHI – NYSE) 8.00% and Schlumberger’s (SLB – NYSE) 15.10%. But more importantly, WFT has increased 72.91% over the last 52-weeks compared to BHI’s 4.96% gain, SLB’s 29.97% gain, and the S&P 500’s -9.01% loss.

The WFT chart below says it all:

Looking specifically at the entire oil service group, I particularly like the investing thesis in the sector because these names enjoy the benefits of high oil prices without running the risk of profit loss if oil prices drop. Therefore, this is a powerful sector that I definitely want you to be exposed to here in Bottarelli Research LEAPS.

And since WFT offers the very best combination of explosive upside potential and safety, it makes sense to establish an upside call position going into January of 2009. As an added benefit, shares of WFT split 2 for 1 on May 27^th, which offers you the chance to add longer-dated calls for a very attractive entry price.

As I’ve said before, stock splits are 100% bullish, and WFT’s recent split combined with my viewpoint that they’re the top oil service play that your money can buy makes them a perfect candidate for this week’s newest LEAPS pick.

So on that note, here’s your newest LEAPS play…

PLAY: Buy the WFT January 2009 50 Calls (ODS AJ) at market, good for the week. Place a protective stop limit at $1.80 and implement our scaled-selling technique to lock in portions of your profits as these calls achieve 50% returns (and greater).

Sincerely,