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The current format of the Play Updates has changed. Only the pertinent data that has changed from the prior week will be shown in an effort to concentrate more on new commentary on new plays rather than restating existing positions. Each play has a link back to either its last full commentary or its initial description.

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ECA - $48.29 -0.65 - Encana ** Stopped $47.50 **

Natural gas fell to $7.27 at the open on Tuesday and that knocked Encana down to our stop at $47.50. We exited for a breakeven. With gas prices expected to fall over the next couple of months I am not complaining.

To see the initial commentary on this position click here

Earnings: Feb-15th, 84 cents vs $1.46 on lower gas prices.

Current recommendation: Buy at $44

Breakdown target: $45 hit Jan-3rd

Position: 2009 $50 LEAP Call ZBM-AJ @ $6.60, exit $6.80 for BE

Insurance put: None

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THE $34.15 +1.20 - TODCO ** New Stop $30.00 **

Todco must have heard I was thinking about dropping it. We saw a nice rebound from support at $32.50. It looks like all the bad news is priced in so I am sticking with it through earnings next week.

To see the initial commentary on this position click here

Earnings schedule: March 1st

Current recommendation: Hold

Breakdown target $39 hit 12/7/06

Position: 2009 $45 LEAP ZYU-AI @ $8.40

Insurance Put: None

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CHK $30.47 +0.79 - Chesapeake Energy ** Stop loss $28.50 **

CHK spiked over resistance at $30 on Friday after posting earnings of 90 cents that beat the street estimates of 76 cents substantially. They saw a production increase of 235 mcf per day over Q4-2005 and saw net reserves climb +19% to 8.956 TCF. They made $27 million for the quarter and $308 million for the year from their hedging program. Not bad when you consider gas prices were cut in half for the year. They increased working rigs to 132 from 73 in 2005.

I was going to sell a covered call here but there is no premium to sell. With ECA at $30.47 the $32.50 April call is only 45 cents, 15 cents for March. Puts are correspondingly cheap but we have strong support only a buck lower. No reason to risk additional funds to hedge this play. No change in play.

To see the initial commentary on this position click here

Earnings: Feb-23rd, 90 cents vs est 76 cents.

Current recommendation: Hold

Position: 2009 $35 LEAP VEC-AG @ $5.30

Insurance put: none

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FXI $105.40 -1.50 - FTSE/Xinhua China 25 Index Fund

The China ETF took a beating on Friday with a -2.60 loss to erase the early week gains. The China markets are closed for the Lunar New Year and will reopen on Monday. The dip came from funds reallocating into other countries not up so strongly for the last year.

The iShares FTSE/Xinhua China 25 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/Xinhua China 25 Index.

Component list

This iShare focuses on the largest companies in China (58% of it positions) and Hong Kong (42%). These are the most liquid companies in these markets. With Asia growing by leaps and bounds the FXI generated a +40% return in 2005 without using options. We hope to do better using LEAPs.

Current recommendation: Buy under $105

Breakout target: $94.50 hit 11/22/06 on gap open to $95.80

Position: 2009 $100 LEAP Call VHF-AT @ $13.50

No insurance

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MRO $92.59 +1.56 - Marathon Oil

Nice move higher by Marathon to current resistance at $93. They are riding the refiner wave this week. No news and no change in play.

To see the initial commentary on this position click here

Earnings: Feb-1st 3.06 vs 3.43 (Q4/05) $1.08 billion profit

Current recommendation: Buy at $85

Position 2009 $100 LEAP Call VXM-AT @ $12.60

Insurance put: 2/18/07
Position: March $85 PUT MRO-OQ @ 65 cents. Stop $85

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HES - $55.58 +1.31 - Hess Corporation
(Formerly (AHC))

No news but Hess finally broke out over resistance at $55 to hit a new 7-month high. No change in play.

To see the initial commentary on this position click here

Earnings: Jan 31st, $1.13, vs $1.44 in Q4/05, 230% replacement

Current recommendation: Buy at $47

Position:
11/05/06 2009 $50 LEAP Call VHS-AJ @ $6.80
Cost adjustment put exit +1.60, cost = $8.40

Insurance Put: Triggered Jan-3rd @ $49
01/03/07 May $45 put HES-QI @ $2.60, exit 1/26 $1.00

Insurance Put: 2/16/07
BUY MAY $50 PUT IGG-QJ if HES trades at $52.75.

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BTU - $44.44 +3.41 - Peabody Energy

Outstanding sprint higher by BTU. The spike came on news from the government that coal production fell -3% for the week of Feb-17th as producers cut back on production to reduce inventories at power plants. An analyst at Raymond James said everything was in place for a nice turnaround in 2007 after coal supplies exceeded demand in 2006 for the first time in 4 years. No change in play.

To see the initial commentary on this position click here

Earnings: Jan-25th +42% including special items.

Current recommendation: Buy at $35

Position:
10/22/06 Jan-2009 $50 LEAP Call ZZT-AJ @ $8.70
02/05/07 March put stopped -$1.00, cost = $9.70

Insurance put: Triggered with drop through $39
01/03/07 March $35 Put BTU-OG at $1.15, stopped @ $42.50

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DVN - $66.16 -0.53 - Devon Energy

I came very close to dropping Devon this week after it failed to show any gains compared to the other stocks in the portfolio. Since we just bought a new insurance put last week I decided to wait a little longer. The March put gives us about two weeks of protection but without any gain next week Devon is gone.


To see the last full commentary on this position click here

Earnings: Feb-7th, $1.36 vs est of $1.36

Current recommendation: Buy at $60

LEAP Position:
10/03/06 Position: 2009 $70 LEAP Call VVH-AN @ $9.00
Cost update: 1/22 Put exit +0.20 = $9.20

Insurance put: 2/16/07
BUY MARCH $65 PUT DVN-PM currently $1.05. Stop $63.

Insurance put: Triggered 12/18 at $69
Position: Apr-2007 $60 Put DVN-PL @ $1.30, exit $1.10 1/22

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RIG - $78.75 +2.51 - Transocean Inc ** New Stop $74 **

RIG rebounded nearly +$4 from the Tuesday lows after the company said it settled a patent suit with Global Santa Fe. GSF will pay a fee for prior use of the RIG technology and a future percentage of revenues from GSF drill ships equipped with that dual activity drilling technology. Using the dual activity technology companies can drill two wells at once from the same ship and cut development time and costs.

Their rig report released Feb-2nd

To see the last full commentary on this position click here

Earnings: Feb-14th, $1.25 vs 46 cents in prior quarter.

Current recommendation: Buy at $74

LEAP Position:
10/03/06 Position: 2009 $80 LEAP Call VOI-AP @ $12.90
01/31/06 Cost update Put stopped -1.15 cost = 14.05

Insurance put: Triggered at $79 on Jan-3rd
1/3/07 Feb $75 PUT RIG-NO @ $2.55, stopped $77.50, $1.40

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TSO - $91.23 +5.45 - Tesoro Corporation ** Stop Loss $87.00 **

Tesoro rocketed higher once again on the various refiner problems pushing the price of gasoline higher. Eventually this balloon is going to bust so I raised the stop again. Analysts were still recommending it as late as Friday night saying the current price still represented a PE of less than 8.

To see the last full commentary on this position click here

Earnings: Jan-29th, $2.28 +129%

Current recommendation: Hold

LEAP Position:
10/04/06 Position: 2009 $70 LEAP Call ZGC-AN @ $7.70

Insurance put: None

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SLB $64.58 +1.25 Schlumberger

SLB recovered all the ground lost in the prior week and returned to press resistance at $66. No news and no change in play.

To see the last full commentary on this position click here

Earnings schedule: Jan 19th, +71% to $1.13 billion

Current recommendation: Buy at $60, stop at $55

LEAP Position:
1/2 9/11/06 @ $8.60
1/2 9/12/06 @ $8.00
Position: 2009 $70 LEAP Call VWY-AN @ $8.30
Cost update for expired Jan put +2.00 = $10.30

Insurance Put: 9/18
Position: Jan $50 Put SLB-MJ @ $2.00, expired

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SUN $66.25 +4.47 - Sunoco

Sun caught an upgrade to "buy" from Deutsche Bank and the short squeeze began. SUN rallied from $60 to $67 over the last two weeks as refiners moved to the front of the headlines. DB said margins were improving due to a shrinkage of imported gasoline. No other material news and no change in play.

To see the last full commentary on this position click here

Earnings: Jan-31st, -57% $1.00 vs $.96 analyst est.

Current recommendation: Buy at $60, stop at $54

LEAP Position:
9/12/06 Position: 2009 $70 LEAP Call VUN-AN @ $13.50
Cost update expired Jan put +2.40 = $15.90

Insurance Put:
Position: Jan $55 Put SUN-MK @ $2.40, expired

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PXP $47.82 -.54 - Plains Exploration ** Dropped **

PXP announced earnings that were less than exciting and drew a couple of downgrades in the process. Reserves shrank 12% and they sold off a large portion of their proven assets. I am electing to exit now for a minor loss rather than wait for a break of support at $47.50.

To see the last full commentary on this position click here

Earnings: Feb-22nd, 46 cents vs 39 cents

Current recommendation: Buy at $44, stop $40

LEAP Position:
9/12/06 Position: 2009 $50 LEAP Call ZXL-AJ @ 7.50
Cost update expired Jan put +1.90 = $9.40
2/26/07 Exit @ 7.90, -1.50

Insurance Put:
9/25 Jan $40 Put PXP-MH @ $1.90, expired

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FST $33.39 +.11 - Forest Oil

Forest continues to trend higher despite the fractional gains for the week. Earnings are still ahead and I expect a strong report. No news and no change in play.

Enercom conference presentation

To see the last full commentary on this position click here

Earnings schedule: Feb-27th

Current recommendation: Buy at $30, stop at $27

LEAP Position: 9/12/06
Position: 2009 $40 LEAP Call OJG-AH @ 4.50

No insurance due to cheap LEAP

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VLO $58.77 +2.81 - Valero Energy

Valero spiked on the rise in gasoline and also on the upgrade and positive comments by Friedman Billings Ramsey Group. (FBR) The analyst there said Valero could earn $7.80 in 2007 and would be flush with about $3 billion in cash by year end. He speculated that with no acquisition targets Valero would spend that cash on an aggressive stock buyback program of as much as 20% of the outstanding. Valero prints money and having future cash flows is not a problem. Valero hit a new 6-month high on the combination of factors.

They presented at the Credit Suisse Energy Conference on the 8th. You can listen to that presentation here

No other news and no change in play.

To see the last full commentary on this position click here

Earnings: Feb-1st

Current recommendation: Buy at $50, stop at $45

LEAP Position:
9/24/06 Position: 2009 $60 LEAP Call VHB-AL @ $7.70
Cost update expired Jan put +2.25 = $9.95

Insurance Put:
Position: 9/25 Jan $45 Put VLO-MI @ $2.25, expired

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PBR - $95.61 +1.56 - Petroleo Brasileiro ** Stop $89.50 **

Petrobras finally posted a gain when it rebounded off support at the 100-day average. In the world of weird Petrobras and Russian giant Gazprom signed a memorandum of understanding on Friday. Why these gas giants would cooperate a world apart is confusing but Petrobras did say they were interested in Gazprom technology for development, storage and transport of LNG. You can bet this technology will not come cheaply from Russia. No change in the play.

To see the last full commentary on this position click here

Earnings schedule: N/A

Current recommendation: Buy at $92, stop at $85

LEAP Position:
9/08/06 Position: 2009 $100 LEAP Call VDW-AT @ $14.90
Cost update Jan expired put +1.80 = $16.70

Insurance put:
9/11 January $70 PBR-MN @ $1.80, expired

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DO - $79.84 +1.25 - Diamond Offshore

After last week's massive ex-dividend drop any gain was helpful but it only returned DO to resistance at $80. This could be a long road back from that -$6 dividend hit. No change in play.

To see the last full commentary on this position click here

Earnings schedule: Feb-8th

Current recommendation: Buy at $75, stop at $69

LEAP Position:
8/29/06 Position: 2009 $80 LEAP Call VCT-AP @ 14.20
Cost reduction: Oct $70 Put profit -3.15, cost now $11.05
Cost increase: Dec $60 put expired -2.40, cost now $13.45

Insurance Put:
10/08 Dec $60 Put DO-XL @ $2.40, expired

Position closed:
10/03 October $70 put DO-VN @ $1.65, exit @ $4.80, +3.15

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ATPG - $42.94 +1.81 - ATP Oil and Gas Corp

ATPG continues to move to new 2-month highs and earnings are scheduled for next Friday. Let's hope they do something right.

To see the last full commentary on this position click here

Earnings schedule: Mar-2nd.

Current recommendation: Buy at $38, stop at $34

LEAP Position:
8/20/06 Position: 2009 $40 LEAP Call VCL-AH @ $11.70
12/17/06 Cost update expired Dec 35 put -1.50 = $13.20

Insurance put:
9/06 Position Dec $35 PUT HKU-XG @ $1.50, expired

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PTR - $120.52 -2.31 - Petrochina ** New Stop $119 **

PTR took some heat with news that Warren Buffet is being urged to divest the nearly three million shares Berkshire owns. Petrochina's parent CNPC operates in the Sudan and activists are pressing Berkshire to divest to protest the genocide in Darfur. Buffet responded that he had no intention to divest since it would have no impact on Petrochina. PTR has no activities in Sudan. My belief that PTR will recover strongly once money starts flowing back into the markets after the Chinese New Year has been shaken. I am adding a stop despite believing in the prospects. We have a 2008 LEAP on PTR and I would rather take my lumps now if the stop is hit rather than watch the premium bleed accelerate over the summer. The chart shows increasing pressure to the downside at $120. I am setting the stop at $119.

To see the last full commentary on this position click here

Earnings schedule: N/A

Current recommendation: Buy under $125.50, stop at $119

LEAP Position:
5/14/06 Position: 2008 $120 LEAP Call LJC-AD @ $16.20
Cost adjustment: Close short Dec $115 call +1.30 = $17.50
Cost adjustment: Close long July $90 puts +3.00 = $20.50
Cost adjustment: Close long Sept $110 put -2.60 = $17.90
Cost adjustment: Expired Dec $100 put +2.20 = $20.00
Cost adjustment: Closed Jan $135 put -2.60 = $17.40

Insurance put: (12/31)
1/03/07 Jan $135 Put PTR-MG at $138.50, $1.90
1/04/07 Profit stop at $132.50, $4.50 for +2.60.

Insurance put: (9/11)
Position: December $100 Put PTR-XT @ $2.20, expired

Insurance put: (8/13)
Position closed:
Sept $110 Put PTR-UB @ $2.40, stop @ $106 @ $5.00, +2.60

Insurance combo: Closed
Short: Dec $115 Call PTR-LC @ $3.20, 6/13, exit $4.50, -1.30
Long: (2) July $90 Puts PTR-SR @ $3.70, 6/13, exit $0.70, -3.00

Insurance puts: (Closed 6/7)
Closed: June $105 PUT PTR-RA, @ $4.20 (5/22), exit 6/7 @ $4.30


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Non-Energy Positions
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DHI - $27.02 -1.19 - DR Horton ** Dropped **

The three week slide in DHI and the constant bad news from the housing sector has poisoned my mindset about DHI. We are profitable in the LEAP but the premium is bleeding with every downtick. Support is still well below at $26 but I am electing to dump DHI as a non core asset as they say in the energy sector.

To see the last full commentary on this position click here

Earnings: Jan-23rd, +35 cents vs 98 cents in 2005.

Current recommendation: Hold

LEAP Position:
9/24/06 Position:
2009 $25 LEAP Call VEI-AE @ $5.10, exit 6.30, +1.20

Insurance put: None
 

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