Add BG and FCX Calls

Plus: CSIQ, MOS, SHLD, and ACI

By Bryan Bottarelli
Wednesday, August 27, 2008 10:13 AM EDT
Wed, 27 Aug 2008 14:13:00 GMT

PLAY: Buy the BG September 90 Calls (BG IR) at or under $5.10, good for the day. Place a protective stop limit at $3.10 and a pre-determined sniper sell at $7.50.

PLAY: Buy the FCX September 90 Calls (FCX IR) at or under $5.60, good for the day. Place a protective stop limit at $2.90 and a pre-determined sniper sell at $7.20.

Dear Bottarelli Research Member,

Good morning. Before today’s bell, shares of Chinese solar cell maker Solarfun Power Holdings (SOLF – NASDAQ) reported that their Q2 profits nearly tripled — which beat the analyst expectation. They also raised their guidance into 2009, which is everything that Wall Street typically embraces on an earnings announcement.

But unfortunately, the stock is selling off today, and this has caused downside volatility within the entire solar sector. As a result, we’ve seen early weakness in shares of Canadian Solar (CSIQ – NASDAQ) which has triggered a stop on our CSIQ September 35 Calls (GQA IG). Despite the fact that I still believe CSIQ will break above its 50-day moving average, this position is now closed.

CSIQ

In terms of our SHLD September 85 Puts (KTQ UQ), WB September 15 Puts (WB UC), and our MOS September 110 Calls (MOS IY), continue to maintain all three positions. They’re all on the verge of breaking into profitability, so hold for more upside. Looking specifically at MOS, a move above the 50-day moving average could send our calls aggressively higher, so maintain positioned to capitalize on this move.

MOS

Also maintain your ACI September 55 Puts (ACI UK), as the tremendous volatility in the oil sector seems to push this position up and down in large price moves on an hourly basis. We’ll stand ready to lock in profits on the next down-leg.

In terms of new plays, I’ve isolated two candidates: Bunge (BG – NYSE) and Freeport-McMoRan Copper & Gold (FCX – NYSE). Starting with the BG chart below, I think a solid floor has been set at $90.00, and this sets the stage for a powerful upside move back to the $105.00 level. Let’s play this move using September calls. Here’s the play:

BG

PLAY: Buy the BG September 90 Calls (BG IR) at or under $5.10, good for the day. Place a protective stop limit at $3.10 and a pre-determined sniper sell at $7.50.

At the same time, we could also be looking for an upside move in metals major FCX. As you can see, the stock has been steadily advancing in the month of August, and I’d like to use the recent price dip to add upside exposure. I’m targeting a move up to $100.00, so let’s ride this move using September calls as well.

FCX

PLAY: Buy the FCX September 90 Calls (FCX IR) at or under $5.60, good for the day. Place a protective stop limit at $2.90 and a pre-determined sniper sell at $7.20.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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