Play Apple Calls

ADM & FRE Update: Plus PBR & WYNN

By Bryan Bottarelli
Tuesday, January 29, 2008 10:19 AM EST
Tue, 29 Jan 2008 15:19:00 GMT

PLAY: Buy the AAPL February 135 Calls (APV BG) at or under $4.80, good for the day. Place a protective stop limit at $2.10.

Dear Bottarelli Research Member,

The ADM March 45 Calls (ADM CI) that we entered yesterday for $2.05 have traded as high as $2.40 this morning, good for a 17% overnight gain. For some of you, this has triggered an immediate “sniper sell” to lock in your gains. And for others, you’re probably still holding ADM for any further up-ticks. After being up $0.95 in pre-market trading, the stock has dipped back down in today’s action. But I still like the way the ADM chart looks, so if you’re still holding the March calls, maintain the position and be sure to lock in any sniper gains on any forthcoming upside.

ADM

Let’s also take a moment to review the current stock chart of Apple (AAPL — NASDAQ). As you know, AAPL has gotten clobbered lately — taking shares well below its 50-day and its 200-day moving averages. This looks particularly low to me, especially when faced with a Fed rate-cut tomorrow that could potentially spark a flurry of trading activity. After such a violent sell-off, Apple’s February options contracts now look reasonably priced, so it makes sense for us to take a shot at playing a February call for quick gains. If you’d like to jump on board with this quick sniper trade, then here’s the play:

AAPL

PLAY: Buy the AAPL February 135 Calls (APV BG) at or under $4.80, good for the day. Place a protective stop limit at $2.10.

Also, I still receive a number of questions about Petroleo Brasileiro (PBR – NYSE), so I’d like to take a moment to comment on (what I feel) continues to be the most under-reported story across the globe. You see, a huge natural gas field has been discovered in the Atlantic Ocean off the coast of Rio de Janeiro, Brazil. The find is almost 17,000 feet below the ocean surface and may rival in size to the Tupi oil field (which is a 5 billion to 8 billion deposit). And as you know, Petrobras is regarded as a world leader in deep water drilling technology, and as Brazil’s state oil company, they could use this discovery to become a dominant energy supplier on a global scale. Therefore, I remain very bullish on PBR.

PBR

Here’s another interesting tidbit for you to consider. During the recession of 2000 — 20002, the S&P 500 fell 47%. But the S&P Casinos and Gaming index gained 115%, and this could make a strong case for getting into a call position in Wynn Resorts (WYNN – NASDAQ).I’ll watch the stock for any strong entry-price triggers.

WYNN

And finally, continue to hold your FRE February 35 Calls (FRE BG) leading into tomorrow’s Fed announcement. The stock continues to trade all over the map, but the position could get a much-needed shot in the arm come tomorrow. Therefore, be sure to lock in your gains the moment this position trades 15% to 20% above your entry price.

I’m also watching the major oil refiners, as names like Hess Corporation (HES – NYSE), Marathon Oil (MRO – NYSE), Valero Energy (VLO – NYSE), and Tesoro Corporation (TSO – NYSE) all look strong. If it comes time to enter a call position on any of these names, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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