Full Position Update

Plus, the Run-Down on GOOG

Dear Bottarelli Research Member,

We’re seeing a strong advance in oil prices today, as crude oil is currently up $1.91 thanks to the National Weather Service forecasting below-average temperatures throughout most parts of the United States.

This up-move is giving a nice lift to Hess Corporation (HES – NYSE), which has pushed our HES March 55 Calls (IGG CK) into profitability. Continue to hold for more gains.

As the same time, I’m getting signals that another high-flying stock could have established a near-term bottom. Specifically, I’m talking about one of the major Chinese petroleum and natural gas companies called PetroChina ((PTR – NYSE).

As you can see, PTR has tested the $120 level on two recent occasions — and bounced each time. This tells me that PTR could soon jump back above its 50-day moving average and trade in the mid $130 level here in the near term. Let’s keep a close eye on PTR for a possible upside play, as it has the ability to run up very quickly.

And speaking of quick run-ups, we’re seeing a nice jump today on China Life Insurance (LFC – NYSE). I’m hoping that LFC has established support at its 50-day moving average, which would indicate a new run to the mid-$50 level. Today’s pop is pushing our LFC February 50 calls (LFC BJ) back to parity, so any further upside and we could be in the profit zone. Maintain the position.

Also establishing a new high today is our longer-dated play on CDC Corp. (CHINA – NASDAQ).The new 52-week high at $10.63 points to continued upside, which is why we’re holding the CHINA January 2008 7.5 Calls (WRW AU). With an entry price at $3.83 and a high today of $4.20, this position continues to gradually creep higher. Maintain your calls for more upside.

Liberty Media Capital (LCAPA – NASDAQ) opened the day $1.00 lower, but has since recovered some of the losses to only show a $0.50 decline. Despite the down-move, your LCAPA March 105 Calls (NLD CA) are trading for exactly break-even, so maintain the position for more upside.

TXU Corp. (TXU – NYSE) is trading $0.65 higher, which has pushed your TXU February 55 Puts (TXF NK) below our entry price. But remember, a bearish chart formation in the Dow Utilities combined with two earnings announcements tomorrow from Dominion Resources (D – NYSE) and Public Service Enterprise Group (PEG – NYSE) could provide the downside catalyst that pushes the entire sector lower. Maintain your puts.

And finally, we have Titanium Metals (TIE – NYSE). Like a balloon with a slow leak, your TIE February 30 Calls (TIE BF) have been slowly shrinking in value — as TIE just has not been able to muster up the ability to rally for two consecutive days.

As a result, we’re left with the frustrating stock chart that you see here — one that’s mired in tight trading ranges and inconsequential moves for all of 2007. As I’ve said before, TIE has exhibited the ability to really make strong upside moves in 2006 — which I thought would’ve pushed the stock convincingly through the $30 level here in 2007. But as it stands, TIE is drifting lower — so maintain your TIE February 30 Calls (TIE BF) with your $0.70 stop. If TIE can put together one strong upside day, I may use said upside to cut our losses the best I can.

And finally, I can’t sign off before commenting on Google (GOOG – NASDAQ). As you may or may not know, GOOG reports earnings tomorrow after the close of trading, and the numbers are once again expected to be blockbuster. The expectation is that GOOG’s earnings will increase some 88% as Internet ad sales continue to roar ahead at a record pace. In fact, Yahoo.com (YHOO – NASDAQ), which is the distant #2 search engine on the Internet, just posted a 13% increase in sales (which beat expectations) so you can only imagine what GOOG reports tomorrow evening.

Now, I’ve received some questions about how to make an intelligent speculation and play GOOG’s earnings, and my response comes in the form of the GOOG March 570 Calls (GOP CQ). Currently trading between $3.10 and $3.40, these calls offer a relatively cheap way to play a big upside push should GOOG blast higher.

At the same time, it would also make sense to own GOOG March 390 Puts (GOP OR). Currently trading between $1.55 and $1.65, these puts will act as downside protection should GOOG shares plummet on a poor earnings report. So all told, you’re paying out a total of $4.90 to own the GOOG March 570 Calls (GOP CQ) and the GOOG March 390 Puts (GOP OR).

So here’s the breakdown. Let’s say GOOG either moves UP $30 or DOWN $30 based on tomorrow’s earnings report. If GOOG goes up$30.00, your GOOG March 570 Calls (GOP CQ) would more than double and your GOOG March 390 Puts (GOP OR) would be worthless, handing you a net gain of around 40%. If GOOG goes down $30, your GOOG March 570 Calls (GOP CQ) would probably drop to $1.15 and your GOOG March 390 Puts (GOP OR) would probably be around$3.80, thus breaking you even on the entire position.

Of course, a play like this works only if GOOG makes a big-time move — either up or down (preferably up). But given GOOG’s recent earnings history, that will most likely be the case. So if you’re the type of trader who thrives off big speculation and big reward, then that’s how I’d play the upcoming GOOG announcement. Of course, you can always decide to be a true cowboy and play just one side (the calls or the puts), but owning both calls and puts offers you a buffer should the move go against you.

Lock and load!

Sincerely,