Friday Status Check

Longer-Dated Plays Showing Strength

Dear Bottarelli Research Member,

As you know, some of our trades move faster than others. And as such, it’s my job to tell you the very best entry and exit positions throughout each and every the trading day. Sometimes, due to circumstances beyond your control, a fast-moving trade is executed that you miss out on. If that happens sometimes, don’t worry about it. There will be many, many other trades.

But nevertheless, in an effort to maintain a high degree of winning trades that are not so time sensitive, I’ve started making longer-dated recommendations here in 2007. This way, you have the ability to participate in our longer-term trades at the same time as participating in our short-term trades – equating to more trading opportunities, and of course more winners for you.

As I write, we own three of these longer-dated positions – and I like what I’m seeing in each and every one of them. Here’s a quick run-down:

Longer-Dated Position #1: BBI January 2008 10 Calls (YCQ AB)

This could be one of our best plays of the year, as we’re positioned to ride a Blockbuster turnaround all the way into January of 2008. With the introduction of their competitive new business strategy, I feel BBI will be a “steady eddy” that inches its way up to the $10 level over the next few months. The calls that we entered for $0.40 have already traded as high as $0.75 today, so the position is paying immediate dividends. Hold.

Longer-Dated Position #2: CHINA January 2008 7.5 Calls (WRW AU)

Despite today’s weakness, CHINA is in prime position to leverage the rapidly growing consumer market in China. If fact, they’ve quickly become the leader in online and mobile games – a truly exploding market segment in China. According to U.S. research firm IDC, online subscription game revenues are expected to increase from $673 million at the end of 2006 to $2.1 billion at the end of 2010, a compounded annual growth rate of 36%. That’s remarkable, especially when you’re talking about a stock under $10 a share. Hold.

Longer-Dated Position #3: ISIS January 2008 10 Calls (LFE AB)

Over the last few days, ISIS has displayed very strong upward tendencies. If you recall, ISIS was my “predatory” play that was initiated after Pfizer’s (PFE – NYSE) cholesterol treatment torcetrapib was yanked after an unexpected number of deaths and complications – opening the door for ISIS to capture this vacated market segment. Not only that, but ISIS could be considered a natural takeover target for PFE since their cholesterol-lowering agent works differently than Lipitor. With a robust $13 billion in available cash, an ISIS/PHE synergy is certainly not out of the question. Hold.

In terms of our shorter-term positions, both SNDK April 47.5 calls (SWF DW) and TIE February 30 Calls (TIE BF) continue to claw their way back. Despite the counter-move yesterday in SNDK, I still think we’re getting into the stock close to its near-term bottom. And of course, we’re simply waiting on TIE to get the upside momentum that could take the shares $2-$3 higher in a moment’s notice. As is stands today, maintain each position.

When I look at future play candidates, two names keep appearing on my intra-day watch list. The first one is Focus Media Holding (FMCN – NASDAQ).

As we just learned with our successful trade on Lamar (LAMR – NASDAQ), the big-name advertising stocks are getting a high degree of investor interest as of late, and Focus Media is one of the top advertising network plays in China.

Whether it is commercial, outdoor LED, mobile handset, or flat-panel television displays placed in high-traffic areas, FMCN currently carries the intra-day momentum that could push the stock well into the mid-$80’s in a short period of time. Let’s target this as a possible quick-hit winner for next week.

Sticking with the same theme, China Life Insurance (LFC – NYSE) just exhibited two bullish characteristics that I love to look for: New 52-week high combined with a stock split. As you can see, LFC just had a great run-up — but then fell back down as the company split 2 for 1. This is pushing prices back down to more reasonable levels — giving investors that all-important second-opportunity to enter the stock. If the $45 level holds, look to enter LFC calls targeting another upside run at $55. Both of these new trading possibilities on FMCN and LFC could be issued next week, so stay tuned.

As a quick administrative note, the markets will be closed Monday for Martin Luther King Day, and I will be out of the office traveling on Tuesday. That means your next alert bulletin will come on Wednesday. So until then, have a good weekend — and as always…

Lock and load!

Sincerely,