Three New Plays

DUG, APA, and GENZ

By Bryan Bottarelli
Tuesday, July 08, 2008 9:55 AM EDT
Tue, 8 Jul 2008 13:55:00 GMT

PLAY #1: Buy the DUG July 30 Calls (DZG GD) at or under $2.10, good for the day.

PLAY #2: Buy the GENZ August 75 Calls (GAA HO) at or under $3.10, good for the day.

PLAY #3: Buy the APA July 120 Puts (APA SU) at or under $3.00, good for the day.

Dear Bottarelli Research Member,

After recovering from my 24-hour stomach bug, it’s time to lock back into the markets. And as we open today’s trading, I’m seeing two major themes come into focus:

The first theme is the oil & energy sell-off, which is something I forecasted last week when we began playing calls on the UltraShort Oil & Gas ProShares (DUG – AMEX).

The second is the idea that biotech stocks are quietly emerging as the one and only “safe haven” in this current bear market environment (pharmaceuticals used to be the safe-haven investment in bear market conditions, but now the torch has been passed to the biotech sector).

Based on these two themes, I’d like to initiate three new trades this morning. The first trade is more upside call options on DUG. The second is a downside put play on oil & energy company Apache (APA – NYSE), which has just broken underneath its 50-day moving average. And the third is an August upside call play on Genzyme (GENZ – NASDAQ). All three positions attempt to position us in the best possible way to attack the current market conditions — so let’s enter these three trades now!

PLAY #1: Buy the DUG July 30 Calls (DZG GD) at or under $2.10, good for the day. Place a protective stop limit at $0.90 and a sniper sell at $2.55.

DUG

PLAY #2: Buy the GENZ August 75 Calls (GAA HO) at or under $3.10, good for the day. Place a protective stop limit at $1.90 and a sniper sell at $3.90.

GENZ

PLAY #3: Buy the APA July 120 Puts (APA SU) at or under $3.00, good for the day. Place a protective stop limit at $1.60 and a sniper sell at $3.70.

APA

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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