Play EOG Calls Now

Plus: Wait on JOYG and ZEUS

By Bryan Bottarelli
Thursday, May 08, 2008 1:52 PM EDT
Thu, 8 May 2008 17:52:00 GMT

Dear Bottarelli Research Member,

Over the course of the trading session, the major market averages have somewhate stabilized — and this offers us an opportunity to dip a toe in the water on a new upside call play. While spending the morning hours scanning for the best possible opportunities, I’ve decided to hold off on JOYG and ZEUS and play alongside a relatively safe crude oil and natural gas play, which comes in the form of EOG Resources (EOG – NYSE).

EOG

As you can see from the chart, EOG has on two occasions tested the $140.00 level, and now it’s getting set to break through this level and establish a new 52-week high. This possible upside breakout makes a strong case for playing the EOG May 140 Calls (EOG EU). They’re $2.00 out-of-the-money and currently trading between $2.35 and $2.50 per contract, which means that any forthcoming upside breakout could easily push them higher. Therefore, as a cheap (and relatively safe) way to get back into the markets, let’s add this position to our ledger now.

PLAY: Buy the EOG May 140 Calls (EOG EU) at or under $2.60, good for the day. Place a protective stop limit at $1.50 and a pre-determined sniper sell at $3.50.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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