Option Investor
Play Updates

In Play Updates and Reviews

Printer friendly version

XLE $72.50 +2.24 - Energy Spyder *** Stopped $72 ***

The XLE Put play was stopped on Wednesday at $72. I wanted to stay in but in hindsight it was the right move. We never know what the future holds and when a play goes against us we need to exercise the discipline to exit.

Breakout Trigger: $69.50 Hit 8/31

Dec $67 Put XBT-XO @ $2.55, exit $2.10, -.45
Dec $67 Put GQQ-XO @ $2.70, exit $2.25, -.45

GQQ-XO is a quarterly strike listed by mistake.


UPL $56.33 +2.64 - Ultra Petroleum *** Stop Loss $52 ***

No news on UPL but gas prices and stock prices rose last week on news that CHK and STR were curtailing production until prices improved. There is no reason to sell gas for low prices simply because there is no place to store it. The major producers are cutting back to give the storage facilities time to deplete some storage and keep prices level.

Ultra returned to the top of their recent range and well above our stop.

Prior comments:

They have identified three more producing zones at their Pinedale field that could substantially increase production. They also expect to receive some further downsizing on well placement allowing them to drill 2-4 times as many wells. They also expect to receive permission from the State of Wyoming to drill during the winter months effectively giving them an extra quarter or more of production per year. Now, we just need winter to show with some teeth this year and deplete the 3 tcf of gas currently in storage.

Ultra Petroleum presentation

Breakdown target: $52.50 Hit 8/30

Position: Jan 2009 $60 LEAP Call OZH-AL @ $8.00


CHK $34.95 +0.96 Chesapeake Energy

CHK continues to improve on news of their upcoming $1 billion limited partnership sale covering some natural gas assets. CHK also plans to sell $2 billion in other assets and reiterated its strong hedging program of 80% of production for the next two years in the $6-$8 range. S&P reaffirmed their credit rating a BB.

CHK was recently upgraded to 5 stars by Morningstar.

Link to Enercom presentation

Position: 2010 $35 LEAP Call WZY-AG @ $6.60 ** No Stop on LEAP **

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


HP $33.15 +1.32 Helmerich & Payne *** Stop Loss $27.50 ***

HP continued to creep higher and is about to break back over the 100-day average. No news other than a great looking chart.

Enercom presentation here

Position: Jan 2009 $35 LEAP Call ZQA-AG @ $4.50


HERO $25.49 +1.80 Hercules Offshore ** Stop Loss $24.00 **

Hercules finally found some traction and moved to a new 4-week high. Not quite a breakout yet but at least the turn was positive. News that the CEO was buying shares in the open market provided some of the lift. Maintain the stop at $24.

Enercom presentation

Position: 2008 April $30 Call HIQ-DF @ $3.00


GLBL $24.71 +0.26 Global Industries ** Stop Loss $18.50 **

SSlower than molasses in January but the trend is still positive. There was no news.

Enercom presentation

Position: 2008 March $25 Call GQO-CE @ $3.30


BHP - $65.94 +1.76 BHP Billiton ** Stop Loss $47.50 **

BHP continues to be a strong performer and hit a new two-month high on Thursday. No specific news but BHP is mentioned positively in some article nearly every day.

Breakdown target: $55 hit 8/15/07

Position: 2010 $70 LEAP Call LPH-AN @ $9.00


NOV - $133.58 +3.72 National Oilwell ** Stopped 127.00 **

NOV hit our trailing stop on Monday and took us out for nearly a $20 profit on the option. No complaints here and we will get back in after the 2:1 split on the 28th.

2:1 split date: Sept 28th.

Breakdown target: $100 hit 8/16/07

Position: FEB $110 Calls NOV-BB @ $9.70 exit 9/10 $28, +18.30


CCJ - $44.68 +4.11 Cameco ** Stop Loss $30 **

CCJ exploded on the news of its buyback and a deal to acquire an interest in Cue Capital Corp, a Paraguay explorer. CCJ also gained the right to acquire a 60% interest to develop uranium discoveries in Paraguay. CCJ also owns 53% of CenterraGold and with gold prices at multiyear highs does not hurt that value either. CCJ said last week it was going to buy back 5% of its outstanding shares or 17.7 million shares.

Breakdown target: $35 Hit 8/16/07

Position: 2010 $50 LEAP Call LTA-AJ @ $7.20

Non-Energy Positions

RIMM - $87.26 +6.78 - Research in Motion

No slowdown on RIMM and another new high on Thursday. RIMM will release a new version of the Pearl in mid October. The new version is said to be more consumer friendly and contain some iPhone type features. It is being marketed to the older more business oriented person that still would like some better browsing features. RBC Capital Markets called RIMM a top pick on Friday with a price target of $110.

For initial commentary see the July 1st newsletter.

Earnings schedule: Sept 27th.

Breakdown trigger: $56.00 hit 6/25

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

Call spread post-split:
Position: LONG (3) 2009 $60 LEAP Call VHO-AL @ $10.87
Position: SHORT (3) 2009 $76 LEAP Call VHO-AU @ $ 3.62


BSC $117.19 +11.82 - Bear Stearns *** Stop Loss $97 ***

That was close. I was beginning to worry that BSC would be too close to the stop on earnings day and take us out on a volatility dip. Now $20 above the stop we should be in good shape but it would really help if they surprise to the upside or at least don't screw up to bad.

Earnings are Sept-13th.

Breakdown target $100 hit 8/06/07

Position: 2010 $120 LEAP Call YBO-AD @ $25.60


CFC - $19.42 +1.21 Countrywide Financial ** Stop Loss $15 **

A gain on Countrywide! What is the world coming to? Next thing you know oil will be over $80. The bounce came on the news that CFC had arranged another $12 billion in financing and had funded $34 billion in loans in August. That was -17% below August 2006 but way above what anyone expected to be done. They also reported $62 billion in the pipeline. I would bet the bottom is now behind us.

Breakdown target $20.00 hit 8/15/07

Position: 2010 $30 LEAP Call YJD-AF @ $7.00

Leaps Trader Update Archives