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New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
APA None None
MUR    
NOV    
OII    
XOM    

Play Editor's note: I am adding several oil and energy stocks tonight. The group is bouncing from its trendline of support so we have an opportunity to buy calls and use relatively tight stops. One of our biggest risks with the oil stocks is tomorrow's oil inventory report. If the report shows a big build in inventories then crude oil could see a short-term sell-off and we might get stopped out across the board in these energy stocks. More conservative traders may want to wait until after the report comes out. A few more energy stocks that look like potential plays are DO, RIG and the refiner VLO. A breakout over $50-51 in VLO could be a big buy signal. ARA is a Brazilian paper stock and it looks poised to hit new highs. SID is a Brazilian steel stock and we would be tempted to buy today's rally with a tight stop under Tuesday's low.

Please note that I am cautiously bullish. I think the market is poised to rally for a few more days but I am concerned that the market might roll over so don't get married to any of your bullish positions and be prepared to switch to bearish plays.


New Calls

Apache - APA - close: 138.97 change: +3.12 stop: 133.39

Company Description:
Apache Corporation is a large oil and gas independent with operations in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina. (source: company press release or website)

Why We Like It:
The bounce in oil today was timed perfectly. It seems like the whole oil and oil services sector is bouncing from its trendline of higher lows or some form of support. APA, an oil and gas company, is bouncing from its trendline (see chart). We're suggesting readers buy calls on the bounce with a stop loss under today's low. Part of our risk is tomorrow's oil inventory report, which might surprise the market with a build in inventory. Thus, patient traders may want to wait until after the report hits the market. Our short-term target in APA is the $147.00-148.00 range.

Suggested Options:
We are suggesting the June or July calls. Keep in mind that the June options expire in less than four weeks.

BUY CALL JUN 135 APA-FX open interest=2172 current ask $7.90
BUY CALL JUN 140 APA-FY open interest=5150 current ask $5.20
BUY CALL JUN 145 APA-FZ open interest=4333 current ask $3.20

BUY CALL JUL 135 APA-GX open interest=1773 current ask $10.90
BUY CALL JUL 140 APA-GY open interest=6171 current ask $ 8.20
BUY CALL JUL 145 APA-GZ open interest=1915 current ask $ 6.00

Picked on May 28 at $138.97
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 4.5 million

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Murphy Oil - MUR - close: 95.28 change: +1.57 stop: 91.85

Company Description:
Murphy Oil Corporation is a worldwide oil and gas exploration and production company with refining and marketing operations in the United States and the United Kingdom and crude oil and natural gas exploration and production operations in Canada. Murphy Oil also has an office in Kuala Lumpur to oversee its E&P activities in Malaysia. (source: company press release or website)

Why We Like It:
MUR is another oil and gas stock that is bouncing. We are suggesting readers buy calls on the bounce with a stop under today's low. We're setting two targets. Our first target is the $99.50 mark. Our second target is the $104.00 level.

Suggested Options:
We are suggesting the June or July calls. Keep in mind that the June options expire in less than four weeks.

BUY CALL JUN 95.00 MUR-FS Open interest=1513 current ask $3.80
BUY CALL JUN 100.0 MUR-FT Open interest= 418 current ask $1.70

BUY CALL JUL 95.00 MUR-GS Open interest= 606 current ask $5.70
BUY CALL JUL 100.0 MUR-GT Open interest=3324 current ask $3.60

Picked on May 28 at $ 95.28
Change since picked: + 0.00
Earnings Date 07/23/08 (unconfirmed)
Average Daily Volume = 1.6 million

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Natl. Oilwell Varco - NOV - cls: 83.15 chg: +2.51 stop: 78.69

Company Description:
National Oilwell Varco is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production, as well as in providing supply chain integration services to the upstream oil and gas industry. NOV recently completed its acquisition of Grant Prideco. (source: company press release or website)

Why We Like It:
NOV is another oil stock bouncing from support. Again we're suggesting readers buy calls on the rebound with a tight stop loss. Our target is the $88.50-90.00 zone. The P&F chart is bullish with a $105 target.

Suggested Options:
We are suggesting the June or July calls. Keep in mind that the June options expire in less than four weeks.

BUY CALL JUN 80.00 NOV-FP open interest=4715 current ask $5.80
BUY CALL JUN 85.00 NOV-FQ open interest=6353 current ask $3.20

BUY CALL JUL 80.00 NOV-GP open interest= 322 current ask $8.00
BUY CALL JUL 85.00 NOV-GQ open interest=3984 current ask $5.40

Picked on May 28 at $ 83.15
Change since picked: + 0.00
Earnings Date 07/30/08 (unconfirmed)
Average Daily Volume = 6.4 million

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Oceaneering Intl. - OII - cls: 73.36 chg: +2.10 stop: 69.95

Company Description:
Oceaneering is a global oilfield provider of engineered services and products primarily to the offshore oil and gas industry, with a focus on deepwater applications. (source: company press release or website)

Why We Like It:
Here's another stock in the oil services sector. Buy today's bounce or a dip in the $72-71 zone. We're suggesting a stop loss at $69.95. We have two targets. Our first target is $78.50. Our second target is $83.00.

Suggested Options:
We are suggesting the June or July calls. Keep in mind that the June options expire in less than four weeks.

BUY CALL JUN 70.00 OII-FN open interest=5316 current ask $5.20
BUY CALL JUN 75.00 OII-FO open interest= 519 current ask $2.55
BUY CALL JUN 80.00 OII-FP open interest= 413 current ask $1.05

BUY CALL JUL 70.00 OII-GN open interest=1266 current ask $7.10
BUY CALL JUL 75.00 OII-GO open interest= 708 current ask $4.50
BUY CALL JUL 80.00 OII-GP open interest= 757 current ask $2.65

Picked on May 28 at $ 73.36
Change since picked: + 0.00
Earnings Date 07/31/08 (unconfirmed)
Average Daily Volume = 1.0 million

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Exxon Mobil - XOM - close: 90.43 chg: +0.63 stop: 88.79

Company Description:
We are the world's largest publicly traded international oil and gas company, providing energy that helps underpin growing economies and improve living standards around the world. (source: company press release or website)

Why We Like It:
XOM is the last of our new plays in the oil sector tonight. The stock is bouncing from support at its trendline of higher lows and technical support at its 200-dma. Plus, the stock has produced a bullish engulfing candlestick at the bottom of a multi-day sell-off. This is our entry point to buy calls. Our target is the $94.85-95.00 range.

Suggested Options:
We are suggesting the July calls.

BUY CALL JUL 85.00 XOM-GQ open interest=19871 current ask $7.25
BUY CALL JUL 90.00 XOM-GR open interest=26937 current ask $4.00
BUY CALL JUL 95.00 XOM-GS open interest=65672 current ask $1.88

Picked on May 28 at $ 90.43
Change since picked: + 0.00
Earnings Date 07/24/08 (unconfirmed)
Average Daily Volume = 24.4 million
 

New Puts

None today.
 

New Strangles

None today.
 

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