We need to make some changes to our LEAPStrader portfolio concerning BJS and DXO. I've provided details below.
Closed Play Detail
BJS $16.45 +0.39 -- BJ Services Company
On Monday morning Baker Hughes Inc. (BHI) announced it had made a deal to buy BJ Services (BJS) for a cash and stock deal worth $5.5 billion. Shares of BJS gapped open higher on Monday morning at $16.83, traded to $17.00 and then collapsed as the market sold off.
We added BJS to our watch list this past weekend with a breakout trigger to buy LEAPS at $17.10. The play has not yet been opened. Now that BJS is in the process of being acquired by BHI it will not be trading on its own but in conjunction with BHI's stock. I'm removing it from the play list as a LEAPS candidate.
Breakout trigger: $17.10 (NEVER HIT)
Chart of BJS:
DXO $4.38 -0.10 -- Deutsche Bank Double-long Oil ETN
This past weekend we put a stop loss on the DXO at $4.25. We added the stop loss because commodity ETFs (and ETNs) were coming under fire as the CFTC looked into position limits. The concern was that the CFTC might decide to force position limits on the ETFs smaller than their current holdings and there might be a sell-off as the securities adjust.
It would seem that Deutsche Bank has decided to avoid that possibility altogether. There has been no formal or public announcement by the CFTC yet but DB just announced today that it is closing or redeeming all the DXO notes by September 9th, 2009. You can read the press release
here. or at this URL:
FYI: The CFTC's news page (There is no note on the DXO):
I am suggesting investors immediately exit any bullish DXO positions. We may not even get the chance. The press release came out after the closing bell and the DXO was trading lower around $4.15 on the news. Our stop is at $4.25 so if the DXO gaps open lower we're going to see the position closed anyway.
Deutsche Bank ETN Fact Sheet
Deutsche Bank Pricing Description
Our plan called for buying this ETN instead of the options.
Current position in the DXO = $2.15 entry (NEW STOP @ 4.25)
Exit at $4.38 (actually Opening price on September 2nd, 2009)
If we're stopped out at $4.25 it would be a +97% rise in price from our entry point.
Chart of DXO