NEW DIRECTIONAL CALL PLAYS

Genco Shipping & Trading, LTD - GNK - close 16.91 change +0.04 stop 15.50

Target(s): 17.70, 18.20, 18.75
Key Support/Resistance Areas: 18.25, 17.75, 16.90, 15.75
Time Frame: 1 to 3 weeks

Company Description:
Genco Shipping & Trading Limited (GS&T) is engaged in transporting iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes.

Why We Like it:
Basic materials have been exploding as investors are flocking to hard assets and the stocks that mine and produce them. However, the shippers haven't fared as well and I believe they are due for a run higher as these materials need to be stored and shipped around the world. GNK has been forming an ascending triangle over the past six weeks and closed near the top of its base today. I would prefer to catch a pullback in the stock but a breakout play is also a good set-up. I suggest we enter long positions if GNK trades to $17.15 (a breakout) or $16.55 (a pullback). Our stop is below the stock's 20 and 50-day SMA's and an ascending trend line and will be adjusted as the trade develops.

Trigger: $16.55 or $17.15

Suggested Position: Buy November $17.00 CALL, current ask $1.00. Estimated ask at lower entry $0.75.

Note: Readers who want to give this more time to work may want to buy the JAN 2011 $17.50 CALLS that have a current ask of $1.45

Annotated chart:

Entry on October XX
Earnings 11/1/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on October 11, 2010