Add OIH Puts

Playing an Oil Sell-Off

By Bryan Bottarelli
Wednesday, July 16, 2008 11:42 AM EDT
Wed, 16 Jul 2008 15:42:00 GMT

PLAY: Buy the OIH August 180 Puts (OIH TP) at or under $4.00, good for the day. Place a protective stop limit at $3.10 and a pre-determined sniper sell at $5.00.

Dear Bottarelli Research Member,

Looking at today’s trading action, the patterns are quite clear. Financials and housing stocks are rallying while oil and energy stocks are selling off.

That’s not a type-o. This pattern is the exact opposite of what we’ve seen lately, and this oil and energy price “un-winding” could present us with an interesting quick-trade opportunity on the Oil Services HOLDRs (OIH – AMEX).

OIH

Now don’t get me wrong. I love most of the companies that make up the OIH. But we have a situation right now where oil prices are falling — and this is applying pressure to the entire high-flying oil/energy sector. From a chart perspective, it appears like OIH’s recent failure at the 50-day moving average signals a test of the 200-day moving average — which points to continued downside. Therefore, let’s play this move using OIH August puts now!

PLAY: Buy the OIH August 180 Puts (OIH TP) at or under $4.00, good for the day. Place a protective stop limit at $3.10 and a pre-determined sniper sell at $5.00.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From July 2008