Play PCU & WFT Calls

Plus: Maintain JOYG

By Bryan Bottarelli
Thursday, May 15, 2008 11:17 AM EDT
Thu, 15 May 2008 15:17:00 GMT

PLAY: Buy the PCU June 115 Calls (PCU FC) at or under $5.90, good for the day.

PLAY: Buy the WFT June 90 Calls (WFT FR) at or under $3.00, good for the day.

Dear Bottarelli Research Member,

Southern Peru Copper (PCU – NYSE) looks like its’ ready to break out to the upside. As you can see from the chart, the stock has recently traded in a narrow range between its 50-day and its 200-day moving averages. This “coiled spring” effect has kept the shares confined between $105 and $110 since the beginning of May, but to my eye, the 200-day moving average serves as a strong support point. Therefore, any forthcoming bounce could be rather aggressive — possibly taking the shares above the $125.00 high set in mid-April. Based on this forecast, let’s add PCU calls to our ledger now!

PCU

PLAY: Buy the PCU June 115 Calls (PCU FC) at or under $5.90, good for the day. Place a protective stop limit at $3.10 and a sniper sell at $7.50.

At the same time, continue holding your JOYG June 80 Calls (JQY FP), as these calls are on the verge of breaking into profitability. And also, based on today’s great upside move on RIG, I continue to like the idea of owning upside exposure to the oil drillers. Therefore, I’d like to once again jump into an upside play on Weatherford International (WFT – NYSE).

WFT

As you can see, the stock is sitting on the verge of a new 52-week high, and entering calls right now offers us a nice way to buy into yesterday’s end-of-day dip. If the oil drillers remain strong (and I think they will) then we’ll see a nice upside pop in WFT leading into June. Let’s play this move now!

PLAY: Buy the WFT June 90 Calls (WFT FR) at or under $3.00, good for the day. Place a protective stop limit at $1.70 and a sniper sell at $4.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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