Snipe ICE Profits

Tough Call, But ICE Gains Prevail

By Bryan Bottarelli
Thursday, February 07, 2008 12:45 PM EST
Thu, 7 Feb 2008 17:45:00 GMT

PLAY: Sniper Sell your ICE March 140 Calls (ICE CX), good for the day.

Dear Bottarelli Research Member,

I’m doing some deep contemplation about our ICE March 140 Calls (ICE CX).As you know, we entered these calls this morning for $6.70 on the notion that ICE shares were dramatically over-sold based on yesterday’s Justice Department news. And today, ICE shares have aggressively snapped back, as we expected, pushing your calls all the way up to $8.00. That’s good for a 19% gain before lunchtime!

ICE

To my eye, shares of ICE could continue their strong upside move over the next 2-3 weeks. So the greedy part of me wants to continue holding these March contracts. But on the flipside of the coin, the pragmatist in me is telling me that we’ve successfully navigated this choppy market by taking quick “sniper” profits off the table — and that’s exactly what we should do here as well. Faced with this decision, the practical side wins out. We have gains in hand, so the smart and safe play is the lock them in now. We can always re-enter this ICE play in the coming days, but for now, let’s take our money and run!

PLAY: Sniper Sell your ICE March 140 Calls (ICE CX), good for the day.

In the meantime, if the markets turn higher, let’s be prepared to make possible upside call trades on Hess Corporation (HES – NYSE) and Arch Coal (ACI – NYSE). Starting with Hess, the oil refiner was remarkably strong towards the end of 2007, but shares have now dipped back below its 50-day moving average here in 2008. As you can see from the chart, the latest dip here in February is being met today with a very strong upside candlestick formation, and this leads me to believe that any market strength could easily push HES shares well above its 50-day MA. Therefore, if the timing is right, be prepared to play March calls on HES.

HES

In the same spirit, we could also have an upside move in shares of ACI. Blizzards in China, power outages in South Africa, and floods in Queensland have cut into global coal output — but demand for coal continues to blast higher. Citigroup expects coal to double this year, even thought coal futures on the New York Mercantile Exchange have already gained 42%. If prices keep moving higher, ACI should easily extend upon its recent upside move.

ACI

As you can see, ACI shares have blasted higher — but have now fallen back over the last three trading sessions. This could give us an opportunity to enter March calls and play another run at the $50.00 level, so keep this trading set-up on our radar as well.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From February 2008