Three New Plays

Buy RIG & ABX Calls, COF Puts

By Bryan Bottarelli
Wednesday, March 26, 2008 11:25 AM EDT
Wed, 26 Mar 2008 15:25:00 GMT

PLAY: Buy the ABX April 45 Calls (ABX DI) at or under $2.05, good for the day.

PLAY: Buy the RIG April 140 Calls (RIG DH) at or under $3.80, good for the day.

PLAY: Buy the COF April 50 Puts (COF PJ) at or under $3.10, good for the day.

Dear Bottarelli Research Member,

We’re seeing some rather interesting chart formations today, and I’d like to take full advantage of the most promising situations. Let’s start with gold, copper, silver, and zinc producer Barrick Gold (ABX – NYSE). As you can see below, the recent commodities sell-off absolutely clobbered shares of ABX, and the aftermath is leaving us with a fantastic opportunity to scoop up some calls on the cheap. Even if the major market averages remain weak, we could see money flowing back into gold (as a safe haven), and this could ignite a quick snap-back in ABX shares. Therefore, let’s establish a new April call position now!

ABX

PLAY: Buy the ABX April 45 Calls (ABX DI) at or under $2.05, good for the day. Place a sniper sell at $2.50 and a protective stop limit at $1.20.

Also looking strong is oil driller Transocean, (RIG – NYSE). As you can see, the stock is bouncing very strongly off its 50-day moving average, and this points to extended upside momentum in the coming days. Considering today’s upside move on RIG in the midst of a bearish market, this position should also pay off regardless of market direction. Therefore, let’s also establish an April call position in RIG as well.

RIG

PLAY: Buy the RIG April 140 Calls (RIG DH) at or under $3.80, good for the day. Place a sniper sell at $4.70 and a protective stop limit at $2.40.

In terms of a downside put, we’re seeing a classic double-top failure in shares of Capital One Financial (COF – NYSE).The consumer credit and debit market certainly is not “in favor” right now, and any forthcoming market weakness could really put a dent into COF shares. Therefore, let’s establish a new April put position now!

COF

PLAY: Buy the COF April 50 Puts (COF PJ) at or under $3.10, good for the day. Place a sniper sell order at $3.70 and a protective stop limit at $2.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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