Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

PBR $64.60 +2.39 Petrobras

I have to admit that was a shock when my stop loss alarm went off on Thursday. I went back three months in Petrobras news and never saw an announcement for the 2:1 split. That is one of the problems with non-USA companies. They are not big on timely press releases.

I am glad they split because that will allow more people to buy shares. It is a proven fact that most companies that split return to the pre-split price within 12-18 months. Let's hope Petrobras maintains that trend.

There was some amazing news late Friday. Petrobras is expected to issue letters of intent to acquire as many as 17 new offshore rigs. These will be new drillships and semisubmersibles. The news came from investment bankers, Simmons and Co. UBS estimated last week that it would take $600 billion, that is BILLION, to develop the Tupi and Carioca fields. This is a massive windfall for service companies. Petrobras received 35 bids for the rigs.

Norway's SeaDrill (SDRL.OL) won a $4.1 billion contract last month and Noble (NE) also won a $4 billion deal. These are in addition to the 17 rigs discussed above.

We can expect a massive pop in the drillers when these bids are announced.

** See portfolio listing for any stop loss **

Breakout trigger: $125.50 hit 4/28

Position: 2010 $150 LEAP Call YMO-AV @ $22.10

********************

NE $62.62 +4.54 - Noble Corp

That was a near perfect entry on Noble the prior week and the market weakness had zero impact on NE shares this week.

Noble recently won a $4 billion contract to drill for Petrobras off the coast of Brazil. This is a monster payday and just one area of exploration for Noble.

** See portfolio listing for any stop loss **

Breakdown trigger $56.00 hit 4/29

Position: 2010 $70 LEAP Call YVJ-AN @ $8.10

******************

RIG $153.66 +1.74 - Transocean

RIG hit a new historic high at $162.28 on Wednesday and then declined about $10 on market weakness. They reported earnings on Wednesday and profits topped $1 billion for the quarter for the first time. Earnings were $3.71 per share compared to estimates for $3.34 per share. Gross margins jumped 10% for the first full quarter of results after the Global SanteFe acquisition.

RIG is the premier deep-water driller and there is no scenario where they don't continue to move higher.

** See portfolio listing for any stop loss **

Breakdown trigger: $150 Hit 4/29

Position:
Long 2010 $170 LEAP Call YDR-AN @ $24.00
Shrt 2010 $230 LEAP Call YDR-AW @ $8.50

***************

NOV $77.41 +10.21 - National Oilwell Varco

NOV kicked some major butt last week to close at a new 6-month high on Friday and post a major gain for the week. There was no specific news that I could find but something definitely kicked it into race mode at Thursday's open.

** See portfolio listing for any stop loss **

Breakdown trigger: $67 Hit 4/30

Position: NOV $80 Call NOV-KP @ $5.40

***************

USO $102.12 +8.72 - United States Oil Fund *** Closed ***

Unbelievable! A $13 spike in 7 days. This one is now worthless.

Depending on how the week goes I am anticipating entering another short on the day futures expire on May 19th.

Upside trigger: $90.00 Hit 4/15

Position: May $87 PUT UNA-QI @ $2.70

********************

FLS $121.26 -1.36 - Flowserve

After a monster prior week a $1 loss of no big deal. A competitor entered the market last week via IPO. The company was Colfax (CFX) and it rose +20% from the IPO price. Nothing really changed in the sector other than Colfax is now a public company. No other news.

** See portfolio listing for any stop loss **

Breakout trigger: $110 Hit 4/16

Position: OCT $120 Call FLS-JD @ $10.40

*********************

SPWR $82.30 +.20 - SunPower *** Stopped $80.00 ***

The Monday decline in SunPower hit our stop and took us out with a small profit. Solar stocks have been in the shade for the last 3 weeks.

** See portfolio listing for any stop loss **

Breakout trigger: $66 (hit 3/24)

LEAP Call Spread
Long 2010 $80 LEAP Call LMO-AP @ $20.00, exit $27.40
Shrt 2010 $130 LEAP Call LMO-AW @ $8.70, exit $13.70, +2.40

*******************

TS $53.35 -.56 - Tenaris *** Closed ***

Tenaris posted earnings on Tuesday that fell by -1.8% on higher costs for steel and lower shipments to the Middle East. They cautioned that although drilling was proceeding at a rapid pace the need to control costs was squeezing prices. Citigroup downgraded them on Friday.


** See portfolio listing for any stop loss **

Breakdown trigger: $46.00 hit 3/19

Position: SEP $50 Call TSW-IJ @ $3.40, exit $6.70, +3.30


****************************
Non-Energy Positions
****************************

MOS $126.42 +1.79 Mosaic

No specific news on the fertilizer group and all held their ground in the face of a declining market.

** See portfolio listing for any stop loss **

Breakdown trigger: $120 Hit 4/29

Long: 2010 $140 LEAP Call LXW-AX @ $35.10
Short: 2010 $240 LEAP Call KCA-AH @ $13.90

***************

EBAY $30.00 -1.11 - Ebay Inc *** Earnings Short ***

Is that closing price an omen? We have a $30 strike and a week to go and Ebay closed at $30. That could be a bad sign. However, Ebay traded lower all last week so maybe the trend is our friend. Target $28 as an exit.

** See portfolio listing for any stop loss **

Entry 4/14 @ 30.87

Position: May $30 PUT XBA-QF @ $1.10


****************************
Covered LEAP Calls
****************************

AAPL $183.45 +2.51 Apple Inc *** Covered LEAP Call ***

No change. Over $150 we are at max profits.

Position:
Long: AAPL @ open of $177.52 (Jan-14th open)
Short: 2009 $150 LEAP Call VAA-AW @ $20.80
Breakeven: AAPL @ $136.12

Position changes:
Closed $200 LEAP Short @ $9.40 ($30.00 - 9.40 = gain +20.60)
Replaced with $150 LEAP short @ $20.80
AAPL cost basis $177.52 - $41.40 (20.60 + 20.80) = 136.12
Breakeven: AAPL @ $136.12

********************

RIMM $132.27 +.85 Research in Motion

No change. We are at max profits over $110.

If we continue holding the position until January and let it get called away your profit will be $34.80 when the stock is called away for $110.

Alert entry 11/12 @ $102.60

Covered LEAP Call:

LONG RIMM @ $102.60 (cost $102.60 -9.10 $150 LEAP = 93.50)
SHORT 2009 $110 LEAP Call VHO-AB @ $18.30 on 1/14/08

Closed: 1/14
SHORT 2009 $150 LEAP Call XTB-AJ @ $18.50, close $9.40 +9.10
 

Leaps Trader Update Archives