Add PBR Calls

Plus: OIH & PCU Commentary

By Bryan Bottarelli
Thursday, July 17, 2008 10:05 AM EDT
Thu, 17 Jul 2008 14:05:00 GMT

PLAY: Buy the PBR August 60 Calls (PMJ HL) at or under $3.40, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.00

Dear Bottarelli Research Member,

As you can see below, the Dow is following up yesterday’s 276-point rally with another 100-point advance in today’s early trading. In many respects, I’m tempted to short this upside using SDS calls, but since the S&P 500 is heavily-weighted with financial stocks, strength in Wells Fargo (from yesterday) and JP Morgan (from today) makes a strong case for playing a different ultra-short position. If the opportunity arises to enter into a new short play, you’ll be the first to know.

INDU

In the meantime, our stop loss has been triggered on our OIH August 180 Puts (OIH TP). We entered these puts yesterday for $3.59 and placed a super-tight stop loss of $3.10, which was triggered this morning. This was a quick attempt at further oil price declines, but it appears like traders are buying oil in the major price dips we’ve seen in recent days. Therefore, this position is now closed.

OIH

On the flipside, our PCU August 30 Calls (PCU HF) have traded as high as $3.00 today, good for a 15% gain from yesterday’s $2.60 entry price. I continue to feel like PCU is due for a large pop, so maintain these calls for more upside.

PCU

And lastly, I think we have a wonderful call-buying opportunity in my #1 favorite oil play, Brazil’s Petrobras (PBR – NYSE). As you can see from the chart below, the stock has been slowly drifting lower in recent trading, and I feel that buying anywhere between the $55.00 and $60.00 level represents a fantastic entry price. Therefore, let’s add August calls now while they’re nice and cheap!

PBR

PLAY: Buy the PBR August 60 Calls (PMJ HL) at or under $3.40, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.00.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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