A Split Decision

Next Up: Addressing SLB and PCU

By Bryan Bottarelli
Tuesday, May 02, 2006 10:47 AM EST
Tue, 2 May 2006 15:47:00 GMT

Dear Bottarelli Research Member,

Its’ been a busy morning, but the trading doesn’t stop here! Now that you’ve closed out your ADM position for gains, let’s address the next two upside plays in the ledger: Schlumberger (SLB – NYSE) and Southern Copper (PCU – NYSE).

As I write, SLB has once again rallied to a new 52-week high at $72.15, a move that has pushed your SLB May 70 Calls (SLB EN) up to $3.70. That’s a nice 37% gain from your entry price. Let’s take profits on that one as well!

PLAY: SELL SLB MAY 70 CALLS (SLB EN) AT OR ABOVE $3.60, GOOD FOR THE DAY.

On the flipside, your PCU May 100 Calls (PCU ET) hit our stop at $2.80. This one has been extremely volatile, as these calls have traded as high as $3.70 and as low as $2.55 just in the first hour of today’s trading! In terms of this loss, I’m confident that we’ll be playing PCU again soon, so we can easily make up for this trade moving forward. PCU is one of the best-positioned companies on Wall Street when it comes to the metals — which show no signs of slowing down. But for now, the safe play is to exit.

PLAY: PCU MAY 100 CALLS (PCU ET) STOPPED AT $2.80

Maintain your two downside put positions in BDK and PFCB.

Lock and load,

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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