Two New Plays

Add ATI and LMT Calls

By Bryan Bottarelli
Monday, March 12, 2007 2:42 PM EDT
Mon, 12 Mar 2007 18:42:00 GMT

Dear Bottarelli Research Member,

Two of my favorite S&P 500 components are each triggering bullish reactions to their 50-day moving averages today — and I’d like to establish new longer-dated call positions in each one.

The first stock is Allegheny Technologies (ATI — NYSE). As I’ve mentioned many times before, ATI is the largest player in the booming titanium market — and the stock has used the recent market down-turn to establish strong support at its 50-day moving average. This could set up another run at a new 52-week high, and I’d like to be positioned to capitalize on this run over the next 2 months. We could be looking at a quick $5 to $10 up-move, so let’s get positioned now.

ATI

PLAY: Buy the ATI April 110 calls (ATI DX) at or under $3.50, good for the day. Current bid/ask spread is $3.20 to $3.50. Place a protective stop loss at $1.90.

The second stock is Lockheed Martin (LMT – NYSE). Similar to ATI, LMT has just traded lower alongside the rest of the markets — but has now bounced hard off the 50-day moving average. This bounce sets up another upside run that could easily break $102.50 in the coming days, and I’d like to be positioned to profit off this upside move.

LMT

PLAY: Buy the LMT June 100 Calls (LMT FT) at or under $4.10, good for the day. Current bid/ask spread is $3.80 to $4.00. Place a protective stop loss at $2.30.

In other positioning news, our NDAQ June 30 Calls (NDQ FF) are slightly lower — but I still consider them a strong hold at current levels. Our MRO April 95 Puts (MRO PS) are right at our entry-point as MRO is currently using oil’s $1.00 down-move to threaten a stronger break to the downside. And our ITMN April 20 Puts (IQY PD) are drifting lower due to the stock’s inability to move up or down in recent days — but I still feel that the stock should be nowhere close to $22 per share. Based on their pipeline, cash position, and clinical trial results, $10 a share is more appropriate.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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