Play DRYS Calls

Maintain CLF and PTEN

By Bryan Bottarelli
Friday, May 23, 2008 10:32 AM EDT
Fri, 23 May 2008 14:32:00 GMT

PLAY: Buy the DRYS June 95 Calls (DQR FS) at or under $5.00, good for the day. Place a protective stop limit at $2.00 but to not place a sniper sell. I’ll manage this play within our daily alerts.

Dear Bottarelli Research Member,

It’s been a rough week for the major market averages. In less than five trading days, the Dow went from being on the verge of a 200-day moving average breakout to clinging onto support at its 50-day moving average. How quickly things change.

INDU

Faced with this situation, combined with a long 3-day weekend, I think the best tactical move is to maintain our current ledger and play a market bounce leading into next week. Although our PTEN June 35 Calls (NZQ FG) and our CLF June 100 Calls (CGJ FT) are both trading below our original entry prices, I continue to feel that each position will hand us a gain prior to June expiration. CLF in particular has held up rather strong, and therefore I still think shares pop rather quickly. And PTEN’s 52-week high, combined with the cheap cost of the options going into June, make them a position I wish to maintain as well.

CLF

But for all you speculators out there, I also think we have an “oversold” opportunity in shares of Dryships (DRYS – NASDAQ).Just one day after highlighting the strength of the Baltic Dry Index, the entire sector has taken it on the chin — as profit-takers have locked in their short-term gains and sold out in advance of the long holiday weekend. As you can see below, DRYS has gone from $115.00 down to $88.00 in one short week. In my view, this selling pressure is overdone — and opens up the opportunity for a quick upside play going into June. Now remember, DRYS is a stock that moves fast, so his one’s for speculators only. Having said that, here’s the play:

DRYS

PLAY: Buy the DRYS June 95 Calls (DQR FS) at or under $5.00, good for the day. Place a protective stop limit at $2.00 but to not place a sniper sell. I’ll manage this play within our daily alerts.

That’ll most likely be the last play for today, so unless we speak again, enjoy you long weekend. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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