LEAP Trader Update - Tuesday Afternoon 9/12/06
The unthinkable happened with Mcdermott plunging from $50 to $42 in three days. This has been the most stable performer for weeks but once the sector saw oil headed for $65 it was a rout for any winning oil position.
Fortunately we have a September $45 PUT MDR-UI which was worthless as insurance just a week ago. Today MDR hit $42 and our previous profit stop on this put. I am recommending we close this put at the current $2.85 bid. This covers our cost of $1.40 and lowers our cost in the LEAP.
We were also triggered on new entries on Suncor (SU), Schlumberger (SLB) and CNOOC (CEO). With oil closing at $63.76 at 2:30 today we could have some more entries before the day is out. We needed this washout to clear the decks and a break by crude under $64 is a perfect window of opportunity.
I will update the outlook and entries again this evening.