Add AKS Calls

Playing Steel’s Mojo

By Bryan Bottarelli
Wednesday, July 30, 2008 2:49 PM EDT
Wed, 30 Jul 2008 18:49:00 GMT

PLAY: Buy the AKS August 60 Calls (AKS HL) at or under $3.00, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $4.00.

Dear Bottarelli Research Member,

We’ve had a really nice trading day today, locking in well-timed profits of 35.71%, 29.03%, and 33.33% on SDS August 65 Calls (SDS HM), ACI August 55 Calls (ACI HK), and UNP August 80 calls (UNP HP).

After making these three trades, our current ledger is biased 3 to 1 to the downside, with puts on WHR, BEN, and LAMR combined with only one call on GENZ. In an effort to balance out this bias, I’d like to play the major upside momentum (or “mojo” as the kids call it) in the steel sector by adding August calls on AK Steel Holding (AKS – NYSE).

AKS

Over the last two days, we’ve seen blockbuster earnings from steel heavyweights like United States Steel (X – NYSE) and Arcelor Mittal (MT – NYSE), and you better believe this strength will trickle down to a company like AKS. While I’m slightly concerned with the recent gap, I feel that the momentum will over-ride the threat of filling the gap here in the near term. Plus, with a company like X salivating at the thought of acquiring AKS, that could be another upside trigger that works in our favor. Therefore, as one final trade of the day, let’s get positioned in AKS calls now.

PLAY: Buy the AKS August 60 Calls (AKS HL) at or under $3.00, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $4.00.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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