Add OIH Calls

Lower Your Cost Basis Now

By Bryan Bottarelli
Monday, August 17, 2009 12:05 PM EDT
Mon, 17 Aug 2009 16:05:00 GMT

Dear Bottarelli Research Member,

In previous weeks, I’ve noted that the U.S. markets are now mirroring the movements of the Shanghai. It used to be that all of the international indices took their cue from the U.S. markets. Now, it’s the other way around, and this pattern can clearly be seen today.

The Shanghai, for example, dropped 5.8% in overnight trading, which was the largest single day drop of the year. This sparked a global sell-off in virtually every asset class, with a heightened emphasis on commodities and oil.

OIH

Crude prices fell 4.3% on Friday, followed by today’s 2.6% dip. But with news of hurricane Bill gaining momentum, this could offer us a nice place to add to our OIH September 105 Calls (OIH IA). If you’re still holding these calls, then today’s dip represents a great opportunity to add to our position – especially since we have an extended September expiration date.

I closely monitor the OIH, and it always tends to reverse its direction by mid-afternoon. If this reversal comes in strong, you’ll often times see the OIH completely recover the morning’s gains/losses by the close of trading. Since today’s downside move was fueled entirely by China, we could see the OIH snap back. Therefore, I’d like to use this opportunity to add to our September calls now.

PLAY: Buy more OIH September 105 Calls (OIH IA) at market good for the day.

NOTE: If you sold this position last week, then consider this a great chance to re-enter the position at today’s levels.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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