Play SII Calls

Oil Servers Blasting Higher

By Bryan Bottarelli
Monday, June 04, 2007 12:11 PM EDT
Mon, 4 Jun 2007 16:11:00 GMT

Dear Bottarelli Research Member,

The major oil names are shooting to the upside – as demonstrated by new 52-week highs on both the Oil Services HOLDRs (OIH – AMEX) and the Energy Select Sector SPDR (XLE – AMEX).And with P/E ratios well under 10, oil service names like Transocean (RIG – NYSE) and Diamond Offshore Drilling (DO – NYSE) are in the process of getting re-rated on Wall Street. Oil service stocks in particular are quite strong – and I fully expect both RIG and DO to break $100 soon. But one relatively unknown name that’s also on the move is Smith International (SII – NYSE).

SII

As you can see by the chart, SII’s big up-tick today sets the table for further gains – and the greatest aspect of SII is that their SII July 60 Calls (SIK GL) are very cheap. Currently trading between $1.70 and $1.80 per contract, an extended upside move could easily hand us a double, so let’s play the momentum for all it’s worth.

PLAY: Buy the SII July 60 Calls (SIK GL) at or under $1.95, good for the day. Place a protective stop limit at $1.10.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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