Your First Play of 2008

Add OII Calls, Add to BG Calls

By Bryan Bottarelli
Wednesday, January 02, 2008 10:49 AM EST
Wed, 2 Jan 2008 15:49:00 GMT

PLAY: Buy the OII January 70 Call (OII AN) at or under $2.65, good for the day. Current bid/ask spread is $2.35 to $2.45. Place a protective stop limit at $1.20.

PLAY: Buy more BG January 120 Calls (BG AD) at or under $3.30, good for the day. Current bid/ask spread is $2.75 to $2.90. Lower your protective stop limit to $1.90.

Dear Bottarelli Research Member,

Happy New Year! As you can see from the Dow chart below, the markets are welcoming in the 2008 campaign on a weak note. The Blue Chips have just dropped over 100 points thanks to a factory-sector reading that was a lot weaker than expected.

INDU

At the same time, crude oil has once again popped over the $98 level and gold is rallying towards $850. I think these two themes ($100 oil and $850 gold) will be staple news items in the early parts of 2008, so I’d like to take on positions that profit off these themes. For example, the moment I get an indication that Freeport-McMoRan Copper & Gold (FCX – NYSE) has stabilized at the 50-day moving average, I’d like to add a new call position. But since there is a chance that FCX could dip underneath this level (like it did on two prior occasions before bouncing back), I’d like to hold off on a new call position at this time.

FCX

But while we wait, we do have a new play opportunity in shares of Oceaneering International (OII – NYSE). OII provides engineering products and services to offshore oil, gas, and aerospace industries, and a quick look at the chart shows that the stock could be on the verge of breaking above its 50-day moving average. If this breakout occurs, the stock could be on the move towards $80.00, so let’s get positioned to profit off any forthcoming breakouts now!

OII

PLAY: Buy the OII January 70 Call (OII AN) at or under $2.65, good for the day. Current bid/ask spread is $2.35 to $2.45. Place a protective stop limit at $1.20.

At the same time, let’s add to our position in Bunge (BG – NYSE). As you know, the stock has been slowly moving down since we entered our January 120 Calls (BG AD), but the stock is now getting awfully close to its 50-day moving average, and this should re-ignite the upside trend that’s been in place for the last five months. I certainly want to profit off any forthcoming upside moves, so let’s go ahead and add to our position now!

BG

PLAY: Buy more BG January 120 Calls (BG AD) at or under $3.30, good for the day. Current bid/ask spread is $2.75 to $2.90. Lower your protective stop limit to $1.90.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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