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New Energy Plays
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FTI $48.88 - FMC Technologies

I had a breakout trigger on FTI but after a $6 drop last week to strong support I am adding it as an active play at the current level.

Company Info:

FMC Technologies, Inc. (FMC Technologies) is a global provider of technology solutions for the energy industry and other industrial markets. The Company designs, manufactures and services systems and products, such as subsea production and processing systems, surface wellhead production systems, high-pressure fluid control equipment, measurement solutions, and marine loading systems for the oil and gas industry. During the year ended December 31, 2007, it operated in three business segments: Energy Systems (comprising Energy Production Systems and Energy Processing Systems); FoodTech, and Airport Systems. On July 31, 2008, FMC Technologies completed the spin-off of its FoodTech and Airport Systems businesses into John Bean Technologies Corporation.

Entry $48.88 9/07

BUY APR $55 Call FTI-DK currently $5.60


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New Watch List Plays Triggered
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HP $49.33 - Helmerich & Payne

When I put the $52 trigger on HP it was trading at $59. The severity of the drop was amazing. As you can see by the chart this should be decent support. Let's hope it holds.

Company Info:

Helmerich & Payne, Inc. is primarily engaged in contract drilling of oil and gas wells for others. The contract drilling business accounts for almost all of the Company's operating revenues. It is also engaged in the ownership, development and operation of commercial real estate. It is organized into two separate operating entities: contract drilling and real estate. The Company's contract drilling business consists of three business segments: U.S. land drilling, offshore platform drilling and international drilling. The Company's U.S. land drilling is conducted primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Alabama, Arkansas, New Mexico, and North Dakota, and offshore from platforms in the Gulf of Mexico, California, Trinidad and Equatorial Guinea. During the fiscal year ended September 30, 2007, the Company's international land segment operated in seven international locations: Venezuela, Ecuador, Colombia, Argentina, Bolivia, Tunisia and Chile.

Breakdown trigger: $52, hit 9/02

Position: 2010 $60 LEAP Call LQB-AL @ $9.10

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AAPL $160.18 - Apple Computer

This play is either going to succeed wildly or fail miserably next week. On Tuesday at 10:am Pacific time Apple is holding its "Let's Soft Rock" press conference and new product release. There are dozens of rumors of what they might announce and rumors of what they won't announce.

Reportedly channel checks have ruled out a new MacBook but there will be a new iPod. There may also be a new AppleTV with DVR and TV tuner capabilities and potentially an iPod/Mac hybrid with a large screen. Either way the Apple public will either reward the stock or crush it if the event fails to measure up.

Because Apple is so volatile the September puts are far too expensive for my tastes as insurance. This is a dice roll play after a $20 drop from the recent highs to our breakdown trigger at $160.

Company Info:

Apple Inc. designs, manufactures, and markets personal computers, portable digital music players, and mobile communication devices and sells a variety of related software, services, peripherals, and networking solutions. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. In addition, the Company sells a variety of third-party Macintosh (Mac), iPod and iPhone compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals through its online and retail stores. The Company sells to education, consumer, creative professional, business and government customers.

Breakdown trigger: $160, Hit 9/05

Position: Jan 2009 $190 Call APV-AR @ $7.80

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PCP $98.14 - Precision Cast Parts

That was really frustrating to see a $6 gap open on Tuesday trigger our breakout entry of $105. The gap was sold hard with the market and PCP returned to strong support at $97. PCP is not as volatile as Flowserve and the mid $90s have proven to be strong support. Hopefully the bear market will reverse soon and we will be rewarded.

Company Info:

Precision Castparts Corp. is a manufacturer of complex metal components and products, provides investment castings, forgings and fasteners/fastener systems for critical aerospace and industrial gas turbine (IGT) applications. The Company also provides investment castings and forgings for general industrial, automotive, armament, medical and other applications; nickel alloys and product forms, as well as cobalt alloys, for the aerospace, chemical processing, oil and gas, pollution control and other industries; fasteners for automotive and general industrial markets; specialty alloys, waxes and metal processing solutions for the investment casting industry; refiner plates, screen cylinders and other products for the pulp and paper industry; metal-injection-molded and ThixoFormed parts for automotive and other markets; low-pressure sewer systems; gas monitoring systems for the power generation industry, and metalworking tools for the fastener market and other applications.

Breakout trigger: $105, Hit 9/02

Position: Jan 2010 $120 LEAP Call YAM-AD @ $14.90

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MOS $94.52 - Mosaic

Mosaic was knocked for a $23 loss in three days and then rebounded +$6.74 on Friday. Potash (POT) and Terra (TNH) also rebounded strong. I hope it was not just short covering. Nothing has changed in the need for fertilizer and until the world population begins to shrink rather than expand I don't see a slowing of demand. This drop is market related not product related.

Company Info:

The Mosaic Company (Mosaic) is a producer of phosphate and potash crop nutrients for the agricultural industry. The Company operates its business through three business segments: phosphates, potash and offshore. The Phosphates segment produce phosphate fertilizer and feed phosphate which are used in crop nutrients and animal feed ingredients, respectively. The principal inputs used in crop nutrients production are phosphate rock, sulfur and ammonia. The Potash segment mines ad processes potash in Canada and the United States and sells potash in North America and internationally. The Offshore segment produces and markets fertilizer products and provides other ancillary services to wholesalers, cooperatives, independent retailers, and farmers in South America and the Asia-Pacific regions. As of May 31, 2008, Cargill, Incorporated owned approximately 64.4% of the Companys interest. As of May 31, 2008, the Company had a 50% interest in Saskferco Products Inc.

Breakdown trigger: $95, hit 9/04

Position: Jan 2009 $120 LEAP Call LXW-AD, $20.20

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HES $91.44 - Hess Corp

Hess withstood the last six weeks of declines and then collapsed under pressure from hedge fund selling. Being the strongest in its sector has its disadvantages when the momentum crowd exits. The $23 drop triggered our entry at $95 and just above strong support at $90.

Company Info:

Hess Corporation (Hess) is a global integrated energy company that operates in two segments: Exploration and Production (E&P) and Marketing and Refining (M&R). The E&P segment explores for, develops, produces, purchases, transports and sells crude oil and natural gas. These exploration and production activities take place principally in Algeria, Australia, Azerbaijan, Brazil, Denmark, Egypt, Equatorial Guinea, Gabon, Ghana, Indonesia, Libya, Malaysia, Norway, Russia, Thailand, the United Kingdom and the United States. The M&R segment manufactures, purchases, transports, trades and markets refined petroleum products, natural gas and electricity. As of December 31, 2007, the Company owned a 50% interest in a refinery joint venture in the United States Virgin Islands, and another refining facility, terminals and retail gasoline stations located on the East Coast of the United States.

Breakdown trigger: $95, hit 9/03, net debit $4.40

Long 2010 $100 LEAP Call WHS-AT @ $20.70
Short 2010 $90 LEAP Put WHS-MR @ $16.30


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New Non-Energy Plays
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XHB - S&P Homebuilder SPDR

The Fannie and Freddie takeover by the government suggests the housing sector could get a major boost over the coming months. Once the banking sector backs away from the financial cliff and mortgages become more available the housing sector should rally hard. Sentiment surveys show that interest in home buying is rising sharply but the availability of credit has been a hindrance. Also, the takeover should put a bottom in the sector and that is another reason people have not been buying because they did not want to own real estate if there was more pain to come. Everyone was waiting for a bottom and the takeover could produce that event.

Company info:

SPDR S&P Homebuilders ETF (the Fund) seeks to replicate as closely as possible, before expenses, the performance of the S&P Homebuilders Select Industry Index (the Index). To accomplish this, the Fund utilizes a passive or indexing approach and attempts to approximate the investment performance of its Index, by investing in a portfolio of stocks intended to replicate the Index. The S&P Homebuilders Select Industry Index seeks to provide a representation of the homebuilders sub-industry portion of the S&P Total Market Index. The S&P TMI tracks all the United States common stocks regularly traded on the NYSE, American Stock Exchange, NASDAQ National Market and NASDAQ Small Cap Exchanges. The Homebuilders Index is an equal weighted market cap index.

We will probably see a gap open on Monday so I picked a strike a little farther away than normal. Prices at the open are going to be inflated so I would be cautious on your entry.

Buy 2010 $25 LEAP Call KHG-AY currently $2.90

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GS - Goldman Sachs - Combination play

Goldman has suffered less from the financial crisis than any major investment bank. They are seen as the best in breed. If the financial system gridlock is released by the Fannie/Freddie takeover then Goldman has the most to gain by going back to business as usual.

I am suggesting a combination play where we buy a $200 2010 LEAP call and sell a 2010 $150 LEAP Put. The net debit will be about zero and the upside will be huge. This is a risky play only if the financial system implodes. Goldman has strong support at $160.

Company Info:

The Goldman Sachs Group, Inc. (Goldman Sachs) is a global investment banking, securities and investment management firm that provides a range of services worldwide to a client base that includes corporations, financial institutions, governments and high-net-worth individuals. Its activities are divided into three segments: Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. Investment Banking and Asset Management and Securities Services each represented 16% of net revenues during the fiscal year ended November 30, 2007 (fiscal 2007). Trading and Principal Investments represented 68% of net revenues in fiscal 2007. On December 11, 2007, Credit-Based Asset Servicing and Securitization LLC, a sub-prime mortgage investor, sold its Litton Loan Servicing business to Goldman Sachs. In June 2008, the Companys division, Goldman Sachs Urban Investment Group, and Cordova, Smart & Williams, LLC announced the acquisition of H2O Plus, LLC.

Prices will change at the open on Monday and should put the net debit closer to zero. The call will go up and the put will go down. Target an entry as close to even as possible.

Buy 2010 $200 LEAP Call WSD-AT currently $19.35
Sell 2010 $150 LEAP Put WSD-MG currently $23.70


 

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