Option Investor
Play Updates

In Play Updates and Reviews

Printer friendly version

NOK - 28.11 +0.35 Nokia

Nokia bounced with the RIMM news and the iPhone release but not with any conviction. Its brothers were claiming all the fame last week. If you read my Option investor commentary you saw where the e61 smart phone from Nokia has dozen of features the iPhone does not have. Once the Apple hype has worn off Nokia features will win the day and Nokia has over a third of the market share around the globe where nearly 2 billion phones are in service. Apple will be happy if they can sell only ten million over the next year. The difference in scope should be clear.

For initial commentary see June 24th newsletter

Breakdown trigger: $28.00 Hit 6/21

Position: 2010 $30 LEAP Calls WIK-AF @ $4.90


BRS - $49.55 -1.66 Bristow Group

Bristow held its ground all week until Friday's close. The CEO had a great interview on CNBC on Tuesday. Other than that there was no news and no change in the play. I think this was just profit taking from the May/June run.

For initial commentary see June 17th newsletter

Bristow has no LEAPS

Breakout trigger: $50.50 hit 6/14

Position: Dec $50 Calls BRS-LJ @ $5.00


MDR - $83.12 +1.79 - McDermott Intl

That was a very nice rebound from the Wednesday lows at $76.50. On Tuesday MDR announced it had won a pipeline contract in Vietnam. On Wednesday they announced another pipeline contract in Qatar. The contract was for two 38" diameter pipelines totaling 130 kilometers in length and two 22" connecting pipelines. The pipelines will connect three well platforms with onshore facilities.

For initial commentary see June 17th newsletter

Breakout trigger: $78.00 Hit 6/11

Position: 2009 $80 LEAP Call OYZ-AP @ $9.80


HOS - $38.76 -2.49 - Hornbeck Offshore *** Stop $36.50 ***

It was not a good week for Hornbeck with a sharp decline starting with a drop on Monday. There was no news for the week. I added a stop just in case the drop continues.

For initial commentary see June 10th newsletter

Breakdown trigger: $39.00 hit 6/08

Position: 2009 $40 LEAP Call ZIG-AH @ $8.00


HDY - $3.14 - +0.11 Hyperdynamics Corp

No news and no movement. Still waiting for the contract to be ratified.

The Guinea National Assembly is going to ratify the HDY contract for revenue sharing before the current special session closes. This contract when ratified will become a "Project of Law" or super contract that cannot in normal circumstances be broken. Once the contract is ratified HDY will begin a rapid development phase on its 31,000 square mile lease.

Once the contract is ratified I doubt we will see $3 again. Last chance!

For initial commentary see June 3rd newsletter.

Position: HDY stock @ $2.44


TSO - $57.15 -4.29 - Tesoro *** Stop Loss $52.50 ***

That was really painful! Citigroup downgraded TSO and VLO to "sell" and SUN to "hold" saying valuations on current strong margins were overdone. Citigroup expects margins to shrink as summer progresses and gasoline imports pick up. TSO aided the drop when its chief economist said on Wednesday that gasoline prices should keep dropping through mid July as refinery utilization rises. With help like that TSO took a nasty dive on Wednesday and barely held its gains by Friday's close.

I am adding a stop loss to protect what is left of our profits, which is still a considerable amount. I targeted support at just over $53 and put the stop just below. If that is too far to fall for your comfort level I suggest exiting now.

For initial commentary see April 29th newsletter.

Earnings: May 3rd, $1.67 vs 61 cents in comparison qtr

Breakout target: $55 hit 10:AM on 4/23/07

Position: 2009 $120 LEAP Call ZGC-AD @ $16.68
Post split: (2) 2009 $60 LEAP Calls ZGC-AL @ $8.34


ATW $68.62 -1.14 - Atwood Oceanics

Atwood closed back near its highs on Friday after the sharp drop on Wednesday. ATW is a potential takeover candidate. No news and no change in play.

Interesting article in Investors Business Daily regarding Atwood.

For initial commentary see April 29th newsletter.

Earnings: May 8th est $1.08, actual $1.01

Breakout trigger $60.50 hit 4/23/07
Position: 2009 $70 LEAP Call ZFJ-AN @ $6.50


BHP - $59.75 +0.28 - BHP Billiton *** Stop Loss $56 ***

BHP fell -$3 on Wednesday on European weakness in mining issues. It was quickly bought and BHP was right back at the highs on Friday. I am adding a stop to preserve profits in the case of another dip.

Prior commentary:

BHP continues to rise on speculation that China could be eying a takeout of BHP to help fuel their metal needs. China recently formed a $237 billion investment company and BHP is thought to be a target of that investment. China has a history of buying commodity assets to prevent other countries from having access. China is consuming large amounts of metals and ores and taking BHP's assets off the market would be a major achievment for China and a serious problem for the rest of the world. BHP has mining assets in everything from coal, uranium, various metals and oil. With a marker cap of $163 billion it would be a big bite for China but entirely doable.

No earnings date announced.

For initial commentary see March 17th newsletter.

Earnings schedule: No date announced.

Breakout target $43.50 hit March 12th

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


CCJ - $50.74 -2.41 - Cameco *** Stop Loss $47.50 ***

CCJ continued to lose ground from its recent high and that loss accelerated into Wednesday's open. The drop to $46.75 was nearly $10 off its high from the prior week. No news to account for the drop. I added a stop to protect profits if the plunge continues.

In April Cameco projected sales would be 50% higher in 2007.

Worldwide there are 24 new reactors being built, 41 on the drawing boards and 113 in the proposal stages. If all were built it would be a 50% increase from the 435 reactors now in operation. In 2006 the world consumed 180 million pounds of uranium but produced only 103 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.

For initial commentary see March 10th newsletter.

Earnings: Apr-27th, -47% due to revenue timing

Breakout trigger: $37.50 Hit March 7th

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


PTR - $148.68 -0.58 - Petrochina *** Stop Loss $142.50 ***

PTR was one of the better behaved positions over the last week. We saw the Wednesday dip but it was minimal and quickly bought. I am putting a stop just under that dip to protect our nearly $35 in profits.

For initial commentary see March 10th newsletter.

Breakdown target:
$110 1/2 position - hit Mar-5th

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


CHK $34.60 -1.62 - Chesapeake Energy ** Stop loss $33.50 **

Simple math. Gas plunged to levels not seen since May-2005 and gas stocks imploded. Maintain the stop at $33.50 but don't close the put if the LEAP is stopped. No news and no change in play.

For initial commentary see Dec-9th newsletter.

Earnings: May 4th, 87 cents vs est of 78 cents

Current recommendation: Hold

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

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


MRO $59.96 -2.16 - Marathon Oil *** Stop Loss $57.50 ***

MRO continued its post split depression decline and hit a low of $58 on Wednesday on the refiner downgrades from Citigroup. I am putting a stop just under Wednesday's low to protect profits. No other news.

No change in play.

For initial commentary see Nov-18th newsletter.

Earnings: May 1st, $2.04 vs est $1.93

2:1 Stock Split June 18th, record date May 23rd

Current recommendation: Buy above $60

Position 2009 $100 LEAP Call VXM-AT @ $12.60
Cost update: Expired March put +65 cents to $13.25
Post split: (2) 2009 $50 LEAP Calls VXM-AJ @ $6.62

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


HES - $58.96 -0.76 - Hess Corporation *** Stopped $57 ***
(Formerly (AHC))

HES continues to under perform the rest of the sector and hit our stop on the Wednesday drop. HES also said it stopped drilling at its Pony No 2 well on the Green Canyon Block 468 due to rig inspection requirements. Drilling will resume in late September. Diamond Offshore will be responsible for costs incurred.

For initial commentary see Nov-4th newsletter.

Earnings: Apr-25th, $1.17 vs $2.22

Current recommendation: Hold

11/05/06 2009 $50 LEAP Call VHS-AJ @ $6.80
Cost adjustment put exit +1.60, cost = $8.40
Cost adjustment May puts +2.15, cost = $10.55
Exit 6/26 @ $12.70, +2.15

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 expired
May $55 Put IGG-QK @ $.80 expired


BTU - $48.38 -0.80 - Peabody Energy *** Stopped $48 ***

BTU continued to crash on news that coal-to-liquids produced twice the emissions of regular refining. The presidential politics got quite a run out of that news.

For initial commentary see Oct-22nd newsletter.

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

Current recommendation: hold

10/22/06 Jan-2009 $50 LEAP Call ZZT-AJ @ $8.70
02/05/07 March put stopped -$1.00, cost = $9.70
Exit 6/25 @ $10.20, +0.50

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


SLB $84.94 -4.26 Schlumberger *** Stop Loss $83 ***

SLB held all week to plunge at the close on Friday. Since the prior Friday was a new historic high the -$4 looks worse than it actually was. Maintain the stop at $83.

For initial commentary see Oct-14th newsletter

Earnings schedule: July 20th

Current recommendation: hold

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
Cost update for expired June put +1.15 = $11.45

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

Insurance put:
Position: June $70 PUT SLB-RN @ $1.15, expired


SUN $79.68 -4.07 - Sunoco *** Stop Loss $76 ***

That was close. The Citigroup downgrade sent SUN to a low of 76.26 on Wednesday and our stop was $76. No other news. Maintain the stop at $76.

For initial commentary see Oct-14th newsletter

Earnings: May 3rd, 70 cents vs 59 cents in comparison qtr

Current recommendation: Hold

LEAP Position:
9/12/06 Position: 2009 $70 LEAP Call VUN-AN @ $13.50
Cost update expired Jan put +2.40 = $15.90
Cost update expired June put +0.85 = $16.75

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

Insurance put:
Position: June $70 PUT SUN-RN @ 85 cents, expired.

Non-Energy Positions

TEX - $81.30 -2.20 Terex Corp *** Stopped $80.00 ***

TEX finally broke support on Wednesday and triggered our stop at $80. After more than a month of sideways performance I am not sad to see it go.

For initial commentary see May-13th newsletter

Breakout target $81.00 Hit 5/07

Position: Jan-09 $90 LEAP Call VXQ-AR @ $16.40, exit $14.10 -2.30


ATI - $104.88 -1.89 - Allegheny Tech *** Stopped $105 ***

The Nucor warning in the prior week continued to weigh on all the metals and ATI broke support at $106 on Tuesday to hit our stop at $105. The spread could have been closed for almost exactly a breakeven when the stop was hit.

For initial commentary see May-5th newsletter

Breakdown target $110.00 hit 04/30

Call spread:
LONG JAN-09 $110 LEAP Call OYG-AX @ $21.50, exit $20.00
SHORT JAN-09 $140 LEAP Call ZKG-AH @ $9.50, exit $7.83


BZH - $24.67 -4.77 - Beazer Homes *** STOP LOSS $28.75 ***

Beazer was the best performer for the week with the stock moving nearly $5 in our direction. The breakdown came when Beazer admitted firing its Chief Accounting Officer for attempting to destroy documents pertaining to the current multi-jurisdictional regulator probe. Since you would not need to destroy documents unless there was something incriminating the odds are good Beazer has more troubles ahead. Citigroup also downgraded the stock because Beazer will not abandon deposits on land options as other builders have done. The analyst said Beazer will likely take the belated write offs and show a longer period before returning to profitability because of it. That of course assumes that regulators don't shut them down.

Beazer has several suits pending, some seeking class action status on charges it practiced predatory lending, filed illegal loan documents and manipulated its stock price.

For initial commentary see March-31st newsletter

Earnings: April 26th, -1.12 vs +2.35 in the comparison quarter.

Position: Jan-08 $25 PUT WZF-ME @ $3.10

Leaps Trader Update Archives