Play RIG Calls

Plus: Second Exit on TSO

By Bryan Bottarelli
Tuesday, May 13, 2008 11:39 AM EDT
Tue, 13 May 2008 15:39:00 GMT

PLAY: Buy the RIG June 150 Calls (RIG FJ) at or under $7.50, good for the day.

Dear Bottarelli Research Member,

If you were unable to sell your TSO June 20 Calls (TSO FD) this morning for $4.90, you’re now getting a second exit opportunity. Within the last few moments, these calls have triggered for $5.00, so be sure to lock in these profits.

TSO

At the same time, continue holding your JOYG June 80 Calls (JQY FP). The stock triggered a new 52-week high today and then moved lower. But looking forward, the upside trend remains in tact, so maintain these calls for more upside.

JOYG

On the other hand, our ABX June 42.5 Calls (ABX FV) have officially stopped out. For reasons unknown to me, shares of ABX simply cannot sustain any sort of upside momentum, and this morning’s downside move has unfortunately triggered our stop loss. Therefore, we must call this position closed.

ABX

In terms of new plays, I think we have a really nice timing entry on shares of Transocean (RIG – NYSE). As you can see from the chart, RIG has been moving lower over the last five trading sessions, and today’s move has brought shares all the way down to its support point at the 50-day moving average.

RIG

Ever since blasting aggressively above this level in mid-February, RIG has called this a strong level of support. Therefore, I’d like to use this as a catalyst to enter into June calls. If RIG does indeed bounce off this level, shares could break out past $160 and possibly establish a new high. Therefore, let’s play this move using June calls.

PLAY: Buy the RIG June 150 Calls (RIG FJ) at or under $7.50, good for the day. Place a protective stop limit at $4.10 and a pre-determined sniper sell at $9.20.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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