Add AKS Calls, Part II

Takeover Rumors Heat Up

By Bryan Bottarelli
Thursday, July 31, 2008 1:05 PM EDT
Thu, 31 Jul 2008 17:05:00 GMT

PLAY: Buy the AKS August 70 Calls (AKS HN) at or under $1.85, good for the day. Place a protective stop limit at $0.60, but do not place a pre-determined sniper sell at this time. Any confirmed takeover news could blast the shares aggressively higher.

Dear Bottarelli Research Member,

As I reported yesterday, AK Steel (AKS – NYSE) has been entertaining sale talks with multiple parties, and now the rumors are being confirmed as fact in today’s Financial Times. According to sources, AKS is said to be interested in an all-cash transaction, and the company is not responding to any phone calls. This could mean that a deal is certainly in the works. The message boards are indicating that a $95.00 per share premium could be possible, and this could certainly blast shares higher. Therefore, as a pure momentum play, let’s add another round of AKS calls to our ledger now!

AKS

PLAY: Buy the AKS August 70 Calls (AKS HN) at or under $1.85, good for the day. Place a protective stop limit at $0.60, but do not place a pre-determined sniper sell at this time. Any confirmed takeover news could blast the shares aggressively higher.

*NOTE: Due to the nature of this play, this one involved a little more speculation. Therefore, if you’re more risk-averse, you may consider trading this one a little lighter than normal.

At the same time, we’ve certainly gotten today’s market direction right (which is long biotech and short everything else). But thus far, our positions have yet to make any significant moves, aside from right at the open. As a result, we were not able to sell our WHR puts, so maintain your $2.60 sell orders throughout the session. And also continue to hold your BEN August 100 Puts (BEN TT) and LAMR August 35 Puts (LJQ TG) for further downside. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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