GME Looking to Move

Plus, MRO Follow Up

By Bryan Bottarelli
Tuesday, May 15, 2007 10:57 AM EDT
Tue, 15 May 2007 14:57:00 GMT

Dear Bottarelli Research Member,

Let’s continue to add upside call exposure in a market that refuses to go down. Today I’ve isolated a strong company with a great chart and under-priced calls — and that company is GameStop (GME – NYSE).

GME

I’m not going to lie to you: Video games are not my thing. But that doesn’t mean I can’t recognize — and profit off — a sector that’s experiencing tremendous growth. You see, GameStop operates 4,778 video game retail stores that sell everything from new and used video game hardware and software, memory cards, and other PC add-ons. With quarterly revenue growth (year over year) of 38.20%, you can see the company has serious momentum on their side — which valued them to #16 on Barron’s Top 500 Companies in America roster. With an earnings announcement schedules for May 23rd, we could see buying interest leading up to this release, so I’d like to add GME calls to profit off forthcoming upside exposure. Here’s the play:

PLAY: Buy the GME June 35 Calls (GME FG) at or under $1.30, good for the day. Current bid/ask spread is $1.05 to $1.20. Place a protective stop limit at $0.50.

Also blasting higher is Marathon Oil (MRO – NYSE).I understand that your MRO June 110 Calls (MRO FB) traded a little lower shortly after this morning’s alert was issued, but remember that these orders are set “good for the day.” As a result, if you maintain your sell orders, you’ll usually get filled sometime during the trading day.

MRO

This is exactly what happened in this case — as MRO shot up to a new 52-week high at $111.50 and your calls are trading well over $4.00. In case you missed it this morning, here are your MRO instructions once again:

PLAY: Sell your MRO June 110 Calls (MRO FB) at or above $4.10, good for the day.

Looking at some other positions, it’s been an up-and-down holding period for Monsanto (MON – NYSE). The MON June 60 Puts (MON RL) that we entered on May 8th for $2.45 have traded as high as $3.10, today’s unsubstantiated upside tick has pushed them down to our $1.40 stop. Prices have since ticked back up on the puts, so feel free to maintain the position. I’ll continue to follow it for you, but for the purposes of our track record, this position is now closed.

MON

Let’s also keep an eye on First Solar (FSLR – NASDAQ). As you know, this is a very volatile stock which makes large intra-day movements. The company IPO’d on November 16th 2006 and has sine gained 239%, but now the solar-module provider is unlocking some 20 million shares which could dilute the prices and push the stock lower. This could set the table for an attractive entry price, especially if FSLR finds support at 50-day moving average, so keep a close eye on this one.

FSLR

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Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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