Just a quick note, in addition to tonight's new candidate, readers may want to check out shares of Apple Inc. (AAPL). The high-profile tech stock has been hit pretty hard in the last couple of days. Shares are now testing support near their rising 50-dma. I would consider it an aggressive trade but this might be your buy-the-dip entry point. I think the challenge is where do you put your stop loss? AAPL has already seen a -7% pull back? Does it bounce here or will it drop all the way toward support near $320?
NEW DIRECTIONAL CALL PLAYS
Occidental Petrol. - OXY - close: 102.l4 change: -5.23
Stop Loss: 97.25
Target(s): 106.75, 109.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger
Why We Like It:
Oil companies were not exempt from the market's widespread sell-off this Tuesday. Traders were all too happy to lock in gains in OXY after the stock's recent surge to new highs over resistance at $100. Now that broken resistance should be support. Rising tensions in the Mideast should keep pressure on oil prices.
I am suggesting we launch bullish positions in OXY on a dip at $101.00. Aggressive traders could go ahead and buy calls now. More nimble traders could try and time a dip near the $100.00 mark instead. I'm expecting the 50-dma near $97.50 to offer some support. If we are triggered at $101.00 our targets are $106.75 and $109.75.
Investors will want to take note that this is not without risk. OXY does a lot of oil and gas exploration across the U.S. and internationally. The company does do business in Bahrain and Yemen, which have been two hotspots for protests and violence in the last couple of weeks. You can see from the chart that headlines from these two countries really did not have an affect on OXY on the stock. Today's move lower appears to be a reaction to the market-wide event.
Trigger @ $101.00
- Suggested Positions -
Buy the March $105 calls (OXY1119C105) current ask $1.89
- or -
Buy the April $105 calls (OXY1116D105) current ask $3.25
Entry on February xxth at $ xx.xx
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 4.9 million
Listed on February 22nd, 2010