Option Investor
New Plays

Crude firms but the damage is not over.

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New Energy Plays

DXO - Double Long Oil ETN

The Crude Oil Double Long ETNs offer investors two times leveraged exposure to the monthly performance of the DB optimum yield crude oil index plus the monthly TBill Index return.

Basically, when oil was $147 this ETN (Exchange Traded Note) was $29.65. Today it is $2. If oil returns to the $150 range over the next couple years this ETN will return to $30 for a 1500% return. It does not expire, can be used in IRAs and has no margin requirement like crude futures.

Several readers have emailed asking about it and I almost added it last weekend as a play except I was concerned crude prices would continue lower. We saw the ETN hit $1.76 on Friday before rebounding to close at $2.01.

I am going to recommend buying it here at $2.00 and averaging down at 25-cent increments. (1.75, 1.50, etc.) I can't conceive of it going lower but honestly I would be thrilled to buy it cheaper than $1.50. That just increases the gain on the rebound.

ETN Info:

Deutsche Bank ETN Fact Sheet

Deutsche Bank Pricing Description

Buy the ETN now at $2.00. Average down at $1.75 and $1.50 if we are lucky enough to see it that low.

Chart of DXO
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New Non-Energy Plays

None - Added 10 stocks to the watch list

New Watch List Plays Triggered

WYN - Wyndham Worldwide

WYN declined to hit our $6 target on 12/24.

WYN appears to be bucking the trend with a nice rebound off the November lows. They recently said demand for rooms was strong despite the economic mess. They are cutting jobs and upgrading their advertising. They are discounting rooms to introduce people the Wyndham properties. It appears to be working.

Company Info:

Wyndham Worldwide Corporation (Wyndham Worldwide), is a hospitality company. The Company offers individual consumers and business-to-business customers a suite of hospitality products and services across various accommodation alternatives and price ranges through its portfolio of brands. With more than 20 brands, which include Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, TripRewards, RCI, The Registry Collection, Endless Vacation Rentals, Landal GreenParks, English Country Cottages, Novasol, Wyndham Vacation Resorts and WorldMark by Wyndham. Wyndham Worldwide operates primarily in the lodging, vacation exchange and rentals, and vacation ownership segments of the hospitality industry. In July 2008, the Company completed the acquisition of U.S. Franchise Systems, Inc. and its Microtel Inns & Suites and Hawthorn Suites hotel brands from a subsidiary of Global Hyatt Corporation.

Breakdown trigger: $6, 12/24

Position: Stock in WYN @ $6.00


Position: May $7.50 Call WYN-EU @ $1.05 (no leaps)

Chart of WYN
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XLE $45.16 - S&P Energy SPDR

The XLE declined to hit our entry target at $44 on 12/22. Stop is $39.

Company Info:

The S&P Energy sector SPDR represents about 13% of the S&P-500. Energy companies in this Index primarily develop and produce crude oil and natural gas, and provide drilling and other energy-related services. Leaders in the group include ExxonMobil Corp., Chevron Corp, and ConocoPhillips.

Breakdown trigger: $44, 12/22

Position: 2010 $50 LEAP Call WHA-AX @ $7.05

Chat of XLE
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