Another Quick Breakout Play

Add DO Calls

By Bryan Bottarelli
Tuesday, February 26, 2008 1:00 PM EST
Tue, 26 Feb 2008 18:00:00 GMT

PLAY: Buy the DO March 130 Calls (DO CF) at or under $2.40, good for the day.

Dear Bottarelli Research Member,

Yesterday, we played calls on Transocean (RIG – NYSE) and locked in a really quick return. Today, I’m seeing an even more powerful upside breakout formation in RIG’s top-line competitor Diamond Offshore Drilling (DO – NYSE), so I’d like to establish a new upside call play on DO immediately.

DO

As you can see from the chart, DO is currently breaking through its 50-day moving average – and this major upside momentum signals to me that the shares could continue moving higher at a strong pace. Therefore, let’s go ahead and add the DO March 130 calls to our ledger to profit off any extended upside move. Here’s the play:

PLAY: Buy the DO March 130 Calls (DO CF) at or under $2.40, good for the day. Place a sniper sell at $3.00 and a protective stop limit at $1.20.

Also, I still feel like this market could drop very quickly, so I want to do our best to maintain some level of downside protection. Therefore, continue holding your PTR March 140 Puts (PTR OH) and your NILE March 40 Puts (JWU OH).

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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