One Final Play

Add FLR Calls

By Bryan Bottarelli
Friday, October 12, 2007 11:48 AM EDT
Fri, 12 Oct 2007 15:48:00 GMT

Dear Bottarelli Research Member,

A potential subscriber just emailed me and asked to send him the list of trades we’ve closed in the month of October. As I compiled this list, I struck me: We’ve hit 11 straight winners in October! With such powerful tailwinds behind our recent trading, I’ll do everything in my power to keep this profit winning streak alive. But we must be cautions.

Yesterday’s late-session sell-off was a warning bell that the markets will not continue moving higher forever — and that’s why I’d like to maintain some downside exposure in the form of our BSC November 125 Puts (BSC WE). Chart-wise, the stock continues to look weak, so let’s maintain this put position into next week.

BSC

On the flipside, let’s close off another great week of trading by balancing out our ledger by adding one new call play on Fluor Corporation (FLR – NYSE). As you know, we’ve had great success playing engineering and construction firms like MDR, OII & FWLT, and today’s play on FLR continues to ride this bullish theme. Why is this sector so red hot? That’s simple: Oil.

You see, the surging price of oil has allowed Middle Easton nations to earn a record $650 billion in petroleum export revenues in 2006. That’s a 22% increase from 2005 and almost double the level of 2004. This year, the returns are on pace to shatter yet another record. With such a huge influx of money, a large majority of it is being allocated to invest in new refineries, new petrochemical plants, new hotels, new highways, and new water desalinization plants. All told, $1.7 trillion worth of new construction projects are going on in the Middle East, and this is an absolute windfall for engineering and contracting firms like Fluor.

FLR

In fact, substantial orders from the Middle East has allowed FLR to rank in the top 10 among international contractors — and this should fuel record earnings over the next 1-2 years. Based on this bullish catalyst, let’s go ahead and add FLR November calls now. Here’s the play:

PLAY: Buy the FLR November 160 Calls (FLR KL) at or under $8.50, good for the day. Current bid/ask spread is $8.10 to $8.30. Place a protective stop limit at $4.00.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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