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SNP - $76.00 - Sinopec

The implosion in China knocked $10 off the price of Sinopec and unfortunately triggered our breakdown entry on Tuesday at a price well above Friday's close. It is a cheap option and the China problem will not continue indefinitely.

Sinopec just signed a deal with Syntroleum for a joint effort in construction of a 17,000 bpd gas-to-liquids plant in China. They also signed a deal with Exxon and Saudi Aramco to triple the capacity of a refinery in the Fujian province to 240,000 bpd by 2009. The deal includes two 800,000 ton per year crackers to produce other petroleum products including polyethylene.

Company info:

China Petroleum & Chemical Corporation (Sinopec Corp.) is an integrated energy and chemical company with upstream, midstream and downstream operations. The Company and its subsidiaries operate mainly in the People's Republic of China. The principal operations of Sinopec Corp. and its subsidiaries include exploring for and developing, producing and trading crude oil and natural gas; processing crude oil into refined oil products, producing refined oil products and trading, transporting, distributing and marketing refined oil products, and producing, distributing and trading petrochemical products. Sinopec Corp. has five operating segments: exploration and production, refining, marketing and distribution, chemicals, and corporate and others. On June 21, 2005, Sinopec Corp. entered into an agreement with Beijing Yanhua Hitech Co., Ltd., pursuant to which Sinopec Corp. acquired 95% equity of Beijing Yanhua Hi-tech Catalyst Co., Ltd., held by Yanhua Hi-tech Corp.

Breakdown target $82.50 hit on 2/27

Position: OCT $85 Call SNP-JQ @ $7.00

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