Add PBR Calls

New Discovery In Play

By Bryan Bottarelli
Thursday, September 11, 2008 10:43 AM EDT
Thu, 11 Sep 2008 14:43:00 GMT

PLAY: Buy the PBR October 40 Calls (PMJ JH) at or under $3.20, good for the day. Place a protective stop limit at $1.90 and a pre-determined sniper sell at $4.30.

Dear Bottarelli Research Member,

Oil prices are now approaching $100.00 per barrel, and this sizeable pullback is pushing virtually every oil, energy, and commodity name lower across the board.

In the process, some of the very best oil companies are getting pushed to ridiculously-low levels — with absolutely no regard for future earnings potential. One such company is Petrobras (PBR – NYSE).In fact, major news out of PBR today is being widely ignored by the mainstream media, and this could set the table for a really strong trade opportunity.

You see,Petrobras (who operates offshore oil fields offshore in Brazil) said that one of their recent oil finds in the Santos Basin could contain up to 4 billion barrels of oil.This is PBR’s third find in the BM-S-11 concession, which is a discovery that could contain a total of 8 billion barrels of oil.

With numbers like this, we’re talking about an oil find that could make PBR one of the world’s top oil companies over the next three decades. After all, Deutsche Bank analysts have estimated that this recent discovery could be worth $13.5 billion to Petrobras alone. These are staggering numbers — which are mostly being ignored by Wall Street.

PBR

Had such an announcement come out 6 months ago, for example, PBR would be up over $10.00 in one day. But in our current market environment, PBR struggles to even trade in the green. This trading pattern will not last forever. But with PBR shares trading at such low levels, it makes sense for us to add October calls now. Here’s the play:

PLAY: Buy the PBR October 40 Calls (PMJ JH) at or under $3.20, good for the day. Place a protective stop limit at $1.90 and a pre-determined sniper sell at $4.30.

Following up on our WYNN September 80 Puts (UWY UP), our attempt to sell them this morning did not trigger our exit prices. And of course, playing off the strong market volatility, shares of WYNN reversed course and are now trading higher. Due to this intense price action, I’ll continue to follow the WYNN position. Maintain your $4.00 sell orders. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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