NEW DIRECTIONAL CALL PLAYS

Yanzhou Coal Mining. - YZC - close: 23.93 change: +.51 stop: 22.50

Why We Like It:
Everybody knows coal is the preferred fuel for electric generation in China. They are building new coal fired plants at the rate of 10 per month and they still do not have enough electricity. In the recent cold spell they had to limit power to much of the country because they did not have enough coal. China was previously a coal exporter but that is rapidly changing. Very shortly they will be a net importer.

Yanzhou just acquired Australian coal miner Felix Resources for $2.9 billion. In addition to the addition of Felix's thermal and coking coal assets in eastern Australia they received a 15.4% stake in one of the world's largest coal export terminals at the Port of Newcastle. This was called nothing less than a strategic development both for Yanzhou and for China. This positions Yanzhou as a supplier not only to China but to the other pan-Asian coal markets and moves them up into the competitive space held by Peabody (BTU) and Rio Tinto (RTP).

Suggested Options:
I'm suggesting the April $25 calls.

BUY CALL APR 25 YZC-DE open interest=1,078 current ask $1.80

Annotated Chart:

Entry  on   January 19 at $23.93
Change since picked:       + 0.00
Earnings Date            (Unknown)
Average Daily Volume =       444,000  
Listed on   January 17, 2010         


NEW DIRECTIONAL PUT PLAYS

Interoil Corp. - IOC - close: 74.67 change: -1.46 Stop: 76.50

Why We Like It:
This is an oil company in Papua New Guinea that has gained over 200% since September. The big ramp in price was reportedly on buying by George Soros hedge fund. Rumors now suggest he might be trying to ease out of the position and take profits. The stock is very over extended and volatility has been increasing as is normally the case when a top is forming.

I am not recommending a trigger because I expect oil prices to decline the next couple days and take IOC down with them. Futures expire on Wednesday and inventories are expected to rise. I would like to be in a profitable position with a tight stop by Thursday. This will start out as a quick play with the potential to go longer if it moves in our direction.

Suggested Options:
I'm suggesting the February $70 Puts. The ideal target would be $67

BUY PUT FEB 70 IOC-NN open interest=2,982 current ask $4.20

Annotated Chart:

Entry  on   January 19 at $74.67
Change since picked:       + 0.00
Earnings Date            (Unknown)
Average Daily Volume =       1.1 million  
Listed on   January 17, 2010