New Energy Plays
DIG - Proshares Ultra Oil & Gas ETF
The signs are growing that the energy sector may be ready to rebound from its oversold condition. OPEC is making noises about another production cut in December and the IEA is going to release their long awaited World Outlook 2008 on Nov 15th.
Unfortunately with the 200% Ultra ETFs the price you pay for double the performance is a wide bid/ask spread. In the case of DIG it is over $1 in most cases. Contrast that with the potential for a 20-point run and I believe it is worth it. If you can do a limit order and split the spread I have been successful with that in the past. Just don't let the price run away from you while you are trying to save a few pennies.
I chose a distant strike because of the high premiums closer to the money. With the $50 strike our risk is less in terms of premium at risk and that allows a wider stop.
Ultra Oil & Gas ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Dow Jones U.S. Oil & Gas Index.
Buy March $50 Call DPB-CX currently $5.00
Chart of DIG
New Non-Energy Plays
STLD - Steel Dynamics
STLD is a major scrap recycler and therefore has little risk associated with mining and a low cost per ton of raw material. STLD appears to have bottomed back in mid October and is about ready to breakout over resistance at $12. Earnings are still up +61% over the last year so business is good and the economic decline is making scrap even cheaper.
Steel Dynamics, Inc. is a steel producer. The Company, with its acquisition of OmniSource Corporation (OmniSource), is a scrap processor in the United States. During the year ended December 31, 2007, its consolidated shipments, excluding shipments between its operating divisions, totaled 6.2 million tons, which includes steel making, fabrication and scrap processing. On July 2, 2007, Steel Dynamics, Inc. purchased The Techs Holdings Inc. (The Techs), which is a flat-rolled steel galvanizing company that consists of three non-union galvanizing facilities: GalvTech, MetalTech and NexTech. On October 26, 2007, the Company completed its acquisition of OmniSource, a scrap recycling company. On June 10, 2008, Steel Dynamics, Inc. completed the previously announced transaction, wherein its wholly owned subsidiary OmniSource Corporation, through a wholly owned subsidiary, Carolina Investment Company, LLC, acquired the remaining stock of Recycle South, LLC.
BUY 2010 $15 LEAP Call WAF-AC currently $3.40
Chart of STLD
New Watch List Plays Triggered
GS - Goldman Sachs *** Stopped ***