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CVX - $85.20 -6.92 - Chevron Put *** Stop loss $94.50 ***

A great start for one of our crude price decline plays and crude has yet to decline. Chevron beat the street when they announced earnings last week but reported that production volume had fallen by -1% and would continue to be lower than last year for the rest of 2007. They produced the most earnings of any quarter in their 128-year history at $5.38 billion. They were rewarded for their performance with a -$2.26 drop in the stock price. Chevron benefited from the fat refining margins for the first 6-months of the year but will suffer as margins decline for the next six months. Chevron earned +21% more so far in 2007 than the first 6-months of 2006. I am leaving the stop loss high to allow for any bounces on higher crude.

For initial commentary see the July 22nd newsletter.

7/23/07 Position: Dec $90 Put CVX-XR @ $4.70

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TSO - $47.89 -6.49 Tesoro Put *** Stop Loss $58 ***

Tesoro continues to implode as gasoline prices fall and crack spreads narrow. I am looking for much lower levels on TSO as the summer draws to a close. Their strong gains since January added +$60 to the price of the stock pre-split and that is a lot of profit that needs to be captured.

For initial commentary see the July 22nd newsletter.

7/23/07 Position: Nov $50.00 PUT TSO-WJ @ $3.50

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XLE - $68.50 -5.50 Oil Drop Hedge Put *** Stop Loss $73.50 ***

The decline in the big oils and the market correction got us started south at a high rate of speed. Let's hope it continues. I lowered the stop loss to $73.50

For initial commentary see the July 15th newsletter.

Breakdown trigger: $72, hit 7/18

7/18/07 Position: Dec $70 Put XBT-XR @ $3.00

Initial profit target: XLE $67, secondary target XLE $64

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RIMM - $215.70 -14.80 - Research in Motion

RIMM gave up a lot of ground in the market drop but remains above the support at $210. Actually by retreating slightly our current profit increased because of the decline in the short call. Plenty of time before this play will close.

For initial commentary see the July 1st newsletter.

Earnings schedule: Sept 27th.

Breakdown trigger: $168.00 hit 6/25

Call spread:
Position: LONG 2009 $180 LEAP Call VHO-AP @ $32.60
Position: SHORT 2009 $230 LEAP Call VHO-AF @ $10.47

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NOV - $118.04 +0.34 - National Oilwell ** Stopped $115.00 **

That was not exactly how I would have played that if I had a crystal ball. The Tuesday drop in oil prices knocked NOV back to our stop taking us out of the play for close to a 100% profit. Wednesday's spectacular earnings jump of +$12 left us standing on the sidelines watching. Maybe someday I will learn to take a 100% profit gracefully. Until then I will kick myself for pressing this stop.

For initial commentary see the July 1st newsletter.

Earnings Schedule: July 25th

Breakdown trigger: $100 hit 6/27
(no leaps)

Position: Feb 2008 $110 Call NOV-BB @ $10.50
Exit 7/23 with stop at $115 for 19.60, +$9.10 profit

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GSF - $73.40 -1.34 - GlobalSantaFe *** Closed $78.75 ***

GSF and RIG announced a merger of equals on Monday and GSF spiked to $80 on the news. Fearing a decline in our LEAP price once the excitement wore off I sent everyone an email recommending we close at the $78.75 price at 3:PM Monday afternoon. Had you exited on that email the LEAP price was $13.50. It declined by Friday on GSF's -$7 drop in price to $11. It was a good merger and a quick profit. We will play them again once they complete the merger.

For initial commentary see the July 1st newsletter.

Earnings schedule: Aug 1st

Breakdown target: $70 Hit 6/27

Position: 2010 $80 LEAP Call WEJ-AP @ $10.10
Exit 3:00 7/23 @ $13.50, +2.40 profit.

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CNQ $67.92 -5.52 Canadian National Res *** Stopped $70.00 ***

CNQ retreated from its new high at $74 and stopped us out as planned when it hit $70 on July 24th. It was a quick 30-day play and a decent profit. No regrets here.

For initial commentary see the July 1st newsletter.

Earnings schedule: Aug 2nd

Breakdown target: $65 Hit 6/25

Position: Jan 2009 $70 LEAP Call OKR-AN @ $9.50 @ $12.70 7/24
Exit 7/24 at $70 stop, $12.70, +3.20 profit

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NOK - 27.96 -1.32 Nokia *** Stopped $28.50 ***

Nokia crashed with the market and took us out at our stop of $28.50 for a minor profit. Not exciting but better than a loss.

For initial commentary see June 24th newsletter

Earnings schedule: Aug 2nd

Breakdown trigger: $28.00 Hit 6/21

Position: 2010 $30 LEAP Calls WIK-AF @ $4.90
Exit 7/24 at $28.50 stop, $5.20, +0.30

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BRS - $51.80 -4.14 Bristow Group ** Stopped $50.50 **

Bristow cratered on Tuesday with no news and never looked back. We exited at the $50.50 stop for a -60 cent loss.

For initial commentary see June 17th newsletter

Earnings schedule: Aug 3rd

Bristow has no LEAPS

Breakout trigger: $50.50 hit 6/14

Position: Dec $50 Calls BRS-LJ @ $5.00
Exit 7/24 at $50.50 stop, $4.40, -0.60

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MDR - $79.40 -11.97 - McDermott Intl ** Stopped $88 **

That would have been extremely painful if we did not have a tight stop. We exited on Tuesday at $88 and spared ourselves a -$12 drop.

For initial commentary see June 17th newsletter

Earnings schedule: August 8th

Breakout trigger: $78.00 Hit 6/11

Position: 2009 $80 LEAP Call OYZ-AP @ $9.80 @ $22.40 7/24
Exit 7/24 at $88 stop, $22.40, +12.60

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HOS - $42.47 +0.83 - Hornbeck Offshore *** Stop $39.50 ***

Hornbeck rallied on Wednesday on news it was buying 20 ships from Nabors to increase its fleet. This was viewed as a strong positive by the analyst community. HOS spiked $5 on the news and although it gave back some on Thursday's market weakness it is still trending higher. I expect HOS to rally strongly once the market recovers. That assume it does not trip over earnings next week.

For initial commentary see June 10th newsletter

Earnings schedule: August 2nd

Breakdown trigger: $39.00 hit 6/08

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

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HDY - $3.13 +0.24 Hyperdynamics Corp *** Stopped $2.75 ***

This was a crazy week for HDY. On Monday news broke that Guinea was going to kick back the contract on HDY and not complete the ratification process. On Wednesday news broke that said Guinea was going to auction its offshore leases. HDY dropped to $2.32 on the news. Right at the close HDY spiked back to $2.82 on no news. On Thursday HDY issued a press release saying Guinea had sent them a letter claiming ratification of their lease could come at any time and HDY hit a new high for the month. I don't know what is fact or fiction and I would be cautious reentering the HDY play. We were stopped out at $2.75 on Monday. If HDY moves over $3.25 on real news that Guinea had approved the lease, not a HDY press release, I would consider taking a new position.

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.

For initial commentary see June 3rd newsletter.

Position: HDY stock @ $2.44
Exit 7/23 @ $2.75 stop, +.29

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ATW $68.77 -0.13 - Atwood Oceanics ** Stop Loss $67 **

So far so good. The GSF/RIG news spiked ATW to just over $75 on rumors that ATW could be another takeover target. That was nothing new to us but was good for a decent spike. The market weakness brought it back down to support at $68 and in danger of our stop if the weakness continues.

Interesting article in Investors Business Daily regarding Atwood.

For initial commentary see April 29th newsletter.

Earnings schedule: Aug 8th

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

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BHP - $61.34 -5.69 BHP Billiton *** Stopped $64.50 ***

BHP took a nasty hit from the decline in miners on overseas markets. Worries that the credit crunch would slow global growth and the Tuesday drop in oil prices caused BHP to trigger our exit stop at $64.50 on Thursday. I would not hesitate to reenter BHP once the market recovers.

For initial commentary see March 17th newsletter.

Earnings schedule: Aug 22nd

Breakout target $43.50 hit March 12th

Position: JAN-09 $50 LEAP Call ZPK-AJ @ $6.00
Exit 7/26 at $64.50 stop, $18.90, +12.90.

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CHK $33.78 -2.71 - Chesapeake Energy ** Stopped $34.00 **

The drop in gas prices and the downgrade by Fortis pressured CHK back into our stop at $34.00. We escaped with a minor profit but still have an October $30 put active. Maintain the put position per the previous instructions. If gas prices continue to fall we could benefit from that we well.

For initial commentary see Dec-9th newsletter.

Earnings schedule: Aug 2nd

Current recommendation: Hold

Position: 2009 $35 LEAP VEC-AG @ $5.30
Exit 7/25 at $34 Stop, $5.50, +0.20

Insurance put: KEEP OPEN
Oct $30 Put CHK-VF @ 90 cents. Profit stop $29

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Non-Energy Positions
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BZH - $15.60 -4.02 - Beazer Homes *** STOP LOSS $17.25 ***

Beazer posted a loss of $123 million or $3.20 per share that included charges of $188.5 million to write down inventory, goodwill and forfeited options on land. Analysts had expected a loss of -32 cents. Revenue fell -37%. Beazer said it had excess inventory in most of its markets that were forcing lower prices. It also disclosed various legal proceedings from the U.S. Attorney's office and the SEC, which had moved to formal status. Since Beazer has already admitted to firing the CFO for attempting to destroy documents relating to these cases the outcome should not be good. I had hoped to ride BZH to single digits but it failed to drop materially on Thursday afternoon or Friday. I am wondering if $15 may not be support. I am lowering the stop just in case.

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: July 26th, loss of $3.20 per share vs Est -.32

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

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