Play EOG Calls

An Aggressive Play

By Bryan Bottarelli
Friday, June 06, 2008 10:55 AM EDT
Fri, 6 Jun 2008 14:55:00 GMT

PLAY: Buy the EOG June 140 Calls (EOG FU) at or under $2.20, good for the day.

Dear Bottarelli Research Member,

I’d like to take advantage of today’s +230 point sell-off my making an aggressive play on EOG Resources (EOG – NYSE). Right off the bat this morning, we witnessed a big jump in oil and energy stocks, as the downside tailwinds caused by the jobs number, combined with a big pop in oil prices, attracted investors back into the oil/energy sector as a “safe haven” play. But as you can see below, this upside move in EOG has since fallen back down, resulting in a candlestick formation that resembles an upside down “T”. In my recent experience, whenever you see a formation like this (notably ones which carry a very long vertical line), you typically see these stocks move back up to recover the gains that were previously given up on an intra day basis. Combine this observation with the fact that today’s move pushed EOG over its 50-day moving average, and I think it’s worth a short to play EOG upside calls now. Therefore, let’s make an aggressive play on the cheap June 140 Calls (EOG FU) and play a quick recovery move.

EOG

PLAY: Buy the EOG June 140 Calls (EOG FU) at or under $2.20, good for the day. Place a protective stop limit at $0.85 and a pre-determined sniper sell at $3.20 (which coincides with the high of the day on these calls).

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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