Add X Calls

Quick Turnaround Play

By Bryan Bottarelli
Tuesday, July 01, 2008 11:02 AM EDT
Tue, 1 Jul 2008 15:02:00 GMT

PLAY: Buy the US Steel July 180 Calls (BXW GP) at or under $6.60, good for the day. Place a protective stop limit at $3.20 and a sniper-sell at $9.00.

Dear Bottarelli Research Member,

As I write, the major market averages are attempting to recover all of their morning losses. But in the midst of this recover, we’re seeing continuous selling pressure in some of the strongest sector plays — notably coal, steel, and agriculture. Over the course of the 2008 trading year, one of the very best tactical plays has been to “buy the dips” within these powerful companies — and today we have one such opportunity in shares of U.S. Steel (X – NYSE).

X

As you can see by the X chart, shares are down over $10.00 today and are right now touching the 50-day moving average. This has been a very strong level of support dating back to early March, and I feel it’ll continue to act as a solid support point going forward. Therefore, I’d like to carefully use today’s dip to add July calls — anticipating a bounce-back in the days leading up to the 4th of July holiday. Here’s the play:

PLAY: Buy the US Steel July 180 Calls (BXW GP) at or under $6.60, good for the day. Place a protective stop limit at $3.20 and a sniper-sell at $9.00.

Also, be sure to maintain your BTU August 90 Calls (BTU HR) and your ACH August 30 Calls (ACH HF). I purposely chose August expiration on each position to allow ourselves time to witness the upside move that I expect, so continue holding both plays. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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