Position Update

CTRP, TIE, STP, AAPL, and OIH

By Bryan Bottarelli
Monday, January 08, 2007 3:26 PM EST
Mon, 8 Jan 2007 20:26:00 GMT

Dear Bottarelli Research Member,

Like a hamster on a wheel, the first four trading days of the year have put forth a great deal of effort making numerous intra-day moves — but resulting in little significant action.

Aside from oil and commodities — which have gotten severe haircuts in 2007 — the broader markets have engaged in a “feel out” trading mentality to kick off the calendar year. In other words, neither the bulls nor the bears have laid their cards on the table, and as such, we’ve engaged in the choppy trading action we’ve experienced now for the 4th consecutive day of the year.

As you know, choppy action like this isn’t necessarily a friend to option traders like us, as lots of movement with little action gives way to price softening and time decay — which can be seen in the current positions we have open. Case in point, CTRP, TIE, STP, AAPL, and the OIH have all made slight up and down moves today — pushing premiums lower across the board.

OIH

Now I’m not going to lie, this is slightly concerning. But what we have going for us is the fact that we’re holding February positions in each and every one of our open plays. This additional month of expiration gives names like OIH, AAPL, TIE, and CTRP time to find near-term support and re-establish their up-trends.

STP

On the same hand, it also could allow STP to make another down-move, which would be all we need to exit our STP February 35 Puts (STP NG) for gains.If the stock fails to break through its past high as $35, then we’ll see a down-move back around the mid-$31 level.

To be honest, our current ledger looks nicely balanced. We’re playing calls in the oil sector, and all it’ll take is a cold snap or bottom-feeding to push prices higher. We’re also playing calls on Apple, one of the best technology names out there, a week prior to their January 15th earnings announcement. They’ll also the beneficiary of two major technology conferences going on right now — where Apple gives the world a look at their exciting technology pipeline. Like the OIH, all it’ll take is one day of upside to take a nice AAPL gainer here as well.

AAPL

Sticking with the contrarian theme, TIE is a pure play on the metals sector sell-off we’ve seen in 2007. But unlike gold or copper, where there are many publicly-traded names to choose from, publicly-traded titanium stocks are few and far between. In fact, aside from Allegheny Technologies (ATI – NYSE) and RTI International Metals (RTI – NYSE), there’s not much to choose from — making the titanium sector a very short list of investing candidates.

TIE

So, if TIE can get some sustainable momentum, it’s off to the races. Chart-wise, the stock should soon be popping above both the 50-day and 200-day moving averages, as is has done the last two times it dipped to these levels.

We have a similar situation in CTRP. Despite choppy trading, the stock registered a new 52-week high late last week, further supporting our upside thesis and pointing to more upside to come. When this stock moves up, it moves up hard. You better believe that I want to be positioned to profit off the next big jump.

CTRP

So all told, let’s maintain all of our current positions — looking for the establishment of each stock’s prevailing trend to win out and carry us into profitability.

Of course, I’ll be out with any necessary updates or sell targets. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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