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Play Updates

In Play Updates and Reviews

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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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TS - $47.87 -0.52 - Tenaris

The breakout over $48 was short lived but TS is positioning for another attack. Earnings are two weeks away.

To see the initial commentary on this position click here

Earnings schedule: May 4th

No LEAPS

Position: Sept $50 Call TSW-IJ @ $3.80 Stop TS @ $45.50

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BHP - $50.44 +.03 - BHP Billiton

Serious volatility but no change for the week. No news and no change in play.

To see the initial commentary on this position click here

Earnings schedule: No date announced.

Breakout target $43.50 hit March 12th

Position: JAN-09 $50 LEAP Call ZPK-AJ @ $6.00

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CCJ - $46.71 -.61 - Cameco

Cameco is holding the high ground with uranium prices spiking +19% in the prior week. That was the biggest weekly jump since tracking began on prices in 1968. There has not been a weekly drop in uranium prices since 2003. The NYMEX announced it would begin trading a uranium commodity contract on May 7th. The contract would cover 250 pounds of uranium. No change in play.

Worldwide there are 28 new reactors being built, 64 on the drawing boards and 158 in the proposal stages. If all were built it would be a 57% increase from the 435 reactors now in operation. In 2006 the world consumed 180 million pounds of uranium but produced only 100 million pounds. The rest came from Russian nuclear warheads being decommissioned. The supply from those warheads is dwindling and will be completely gone by 2015.

To see the initial commentary on this position click here

Breakout trigger: $37.50 Hit March 7th

Position: JAN-09 $40 LEAP Call ZBK-AH @ $7.80

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PTR - $116.70 +0.28 - Petrochina

The China implosion on Thursday took out our short put but the damage was minimal with a profit on the position of +$2.25. PetroChina reported on Sunday that they increased oil and gas production by 3.7% in the first quarter. The number of service stations increased by 2.31% to 18,385. PTR is the worlds 5th largest oil producer.

To see the initial commentary on this position click here

Breakdown targets:
$110 1/2 position - hit Mar-5th
$105 1/2 position - not yet triggered

Position: JAN-09 $120 LEAP Call ZJK-AD @ $10.70
Cost reduction 4/19 $10.70 -2.25 = $8.45

Cost reduction play:
Position: stopped @ $114 4/19
Short June $105 Put PTR-RA @ $3.40, exit $1.15. +2.25

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SNP - $89.40 -2.35 - Sinopec

Sinopec was hammered on the -4.5% drop in Chinese stocks on Thursday. There were fears that the soaring Chinese GDP of 11.1% and inflation of 3.3% might cause regulators to hike rates. I doubt China will take this action ahead of the 2008 Olympics. They need to complete as much expansion as they can before attendees show up for the games. No change in play.

To see the initial commentary on this position click here

Breakdown target $82.50 hit on 2/27

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

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CHK $32.81 -0.88 - Chesapeake Energy ** Stop loss $30.50 **

CHK did give up some ground after testing resistance at $34 but there is still no clear evidence it is going to make another round trip to $29. Just in case it does I am going to add insurance in the form of an October $30 put for 90 cents. No news.

Insurance put:
Buy Oct $30 Put CHK-VF currently 90 cents. Profit stop $28.

To see the initial commentary on this position click here

Earnings schedule: May 4th

Current recommendation: Hold

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

Insurance put: none

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MRO $100.55 -1.44 - Marathon Oil

MRO was downgraded to a market underweight (sell) at Bear Stearns on fears that refining margins were about to fall across the sector. BSC said MRO was the most susceptible to changes in margins. BSC also downgraded FTO, VLO and SUN. No change in play.

To see the initial commentary on this position click here

Earnings schedule: May 1st

Current recommendation: Buy at $85

Position 2009 $100 LEAP Call VXM-AT @ $12.60
Cost update: Expired March put +65 cents to $13.25

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

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HES - $57.56 -0.31 - Hess Corporation
(Formerly (AHC))

Hess rebounded sharply on Friday after three days of declines. They were named as one of the top five value stocks and investors rushed to enter positions. Earnings are next week so expect some volatility. I am adding a cheap put as earnings insurance.

Insurance put:
Buy May $55 Put IGG-QK currently 80 cents. Profit Target $51

To see the initial commentary on this position click here

Earnings schedule: April 25th

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: 2/26/07
MAY $50 PUT IGG-QJ @ $1.35, profit stop $46

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BTU - $46.55 +0.37 - Peabody Energy

BTU reported earnings that fell -32% blaming the drop on acquisition expenses, the weak dollar and a blizzard that shut down the Powder River Basin shipments for nearly two weeks in late March. Their guidance was positive and the hits to earnings were one-time events. This allowed BTU to cling to the high ground and finish the week slightly positive in spite of the earnings.

To see the initial commentary on this position click here

Earnings schedule: April 19th, -32% on special items

Current recommendation: Buy at $37.50

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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SLB $75.23 -0.77 Schlumberger

SLB reported earnings that spiked +63% on strong international growth. Net income rose to $1.18 billion or 96 cents per share. Analysts were expecting 91 cents. CEO Andrew Gould said accelerated oilfield activity in Europe, Africa, the Middle East and Asia created a heavy demand for their services. Analysts suggested SLB could see $90 per share soon.

To see the last full commentary on this position click here

Earnings schedule: April 20th, 96 cents vs est of 91 cents

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 $72.39 -2.36 - Sunoco

SUN retreated from its highs on a downgrade from Bear Stearns and problems at a Philadelphia refinery. I believe it is just profit taking from the +18 run in 2007.

To see the last full commentary on this position click here

Earnings schedule: May 3rd

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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VLO $65.93 -2.47 - Valero Energy

Valero took a header on the Bear Stearns sector downgrade but has already begun to rebound. The Texas refinery is back in production at about a 60% rate and the backlog of WTI crude at Cushing should begin to ease over the next couple weeks. No change in play.

To see the last full commentary on this position click here

Earnings schedule: April 24th

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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DO - $82.19 -1.31 - Diamond Offshore ** Stop $73.00 **

DO failed to break resistance at $85 and pulled back slightly ahead of earnings. No news and no change in play.

To see the last full commentary on this position click here

Earnings schedule: April 26th

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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Non-Energy Positions
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BZH - $33.44 +4.13 - Beazer Homes ** LEAP PUT **

A +4.13 gain on a put position is painful but I believe the legal problems at Beazer will eventually push it to lower lows. Beazer jumped sharply after an investment partnership announced it had acquired an 8.8% stake in the struggling builder. Why they would step into the gap is anybody's guess. BZH has earnings next week so we should hear something on their various problems.

I I am going to personally buy some of the May $30 puts ahead of earnings to average down my cost in the LEAP play. They closed at 60 cents on Friday so the cost of entry is cheap.

Beazer is being flooded with suits, some seeking class action status on charges it practiced predatory lending, filed illegal loan documents and manipulated its stock price. These types of suits appear whenever bad news appears about a company but in this case it looks grim.

To see the last full commentary on this position click here

Earnings: April 26thbr>
Position: Jan-08 $25 PUT WZF-ME @ $3.10

No stop loss
 

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