Playing TIE Up

Add TIE December Calls

By Bryan Bottarelli
Tuesday, October 24, 2006 12:56 PM EST
Tue, 24 Oct 2006 17:56:00 GMT

Dear Bottarelli Research Member,

As you continue to work you sell order for the FLML December 20 Calls (FLU LD), an interesting development is happening in the steel sector that I should draw to your attention.

Without question, steel stocks are continuing their torrid upside run. Last week, Nucor (NUE – NYSE) reported a 77% jump in earnings despite a period of “unprecedented volatility,” as Q3 earnings climbed to $1.68 a share versus $0.93 cents a share one year ago. A week later, the after-effects of this announcement are still being felt across the sector, as NUE is up 7.66% today and US Steel (X — NYSE) is up 5.09% today. Just look at these charts!

NUE

X

While I think playing calls on X or NUE could be risky at theses levels, I do think it’s time to get positioned in one of my longtime favorites Titanium Metals (TIE – NYSE).

TIE

Titanium Metals produces titanium melted and mill products, which include ingot, electrodes, slab, billets, plates, sheets, strips, and pipes. As you can see by the chart, TIE just experienced a strong breakout at the crossing of the 50-day and 200-day moving averages, which means an upside move purely on momentum could take shares up to the recent high just under $36.00. Lets’ play this move using December calls.

PLAY: Buy the TIE December 30 Calls (TIE LF) at or under $3.40, good for the day. Current bid/ask spread is $3.20 to $3.30. Place a protective stop loss at $2.20.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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