Add APA Calls

A New Oil/Gas Play

By Bryan Bottarelli
Tuesday, March 11, 2008 2:16 PM EDT
Tue, 11 Mar 2008 18:16:00 GMT

PLAY: Buy the APA April 120 Calls (APA DU) at or under $5.40, good for the day.

Dear Bottarelli Research Member,

We’ve spent most of the day watching the market action, and after four and a half hours, the major market averages are still sitting right at the levels where they opened the day. I would have to call this a good sign for the bulls, since they’ve been able to successfully maintain these levels throughout the trading day. The bearish side of the argument says that the gains have been unable to extend further than the opening-session pop, so the jury is still out.

Looking at our current positions, I remain comfortable holding our LM April 60 Puts (LM PZ) and our JASO April 15 Calls (QJP DC). Each position has come within $0.20 of our original entry price, so I’m sure we’ll be able to lock in profits on both positions in the following days. But while we maintain these two positions, I’d also like to take a new position in shares of Apache (APA – NYSE).

APA

As you can see from the chart below, the crude oil and natural gas firm has been remarkably strong in the midst of the recent market weakness. In fact, rising oil and gas prices continue to paint a bullish picture for APA, so let’s establish a new April call position to ride the shares to a new 52-week high above the $120 level. Here’s the play:

PLAY: Buy the APA April 120 Calls (APA DU) at or under $5.40, good for the day. Place a sniper sell at $7.50 and a protective stop limit at $2.40.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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