NEW DIRECTIONAL CALL PLAYS

Cabot Oil & Gas - COG - close: 66.59 change: -1.38

Stop Loss: 57.00
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
We were very successful trading COG's mid August bounce. We want to be ready to do it again if this pull in energy stocks continues. Friday saw COG fall -2% and close under technical support at the 50-dma. We suspect COG will see a dip back toward the mid-July lows in the $63-62 zone.

I am suggesting we use a buy-the-dip entry point at $63.00 to buy calls. If triggered we'll use a stop loss at $57.00. Cautious traders may want to wait for a dip into the $61.50-60.00 zone instead as their entry point. COG bounced near its 100-dma two weeks ago. The 100-dma has risen to $60.62.

We'll set our first target at $69.50.

Buy-the-Dip @ $63.00

- Suggested Positions -

buy the OCT $70 call (COG1122J70)

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 2.22 million
Listed on August 20, 2011


Energy XXI Ltd. - EXXI - close: 23.50 change: -1.66

Stop Loss: 19.90
Target(s): 27.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The sell-off in EXXI is extremely overdone. The company's recent earnings report was nothing but good news. The bottom line was in line with estimates at 48 cents a share but revenues were up almost +103%. Reserves were up +54% while production was up +66%. Plus, their recent joint ventures with MMR look like they will be extremely successful wells.

If the market is going to test its recent lows then we want to be ready to take advantage of the weakness in EXXI. The August 9th low was $21.04. We are suggesting a buy-the-dip entry point at $22.00. If triggered we'll use a stop loss at $19.90. Our first multi-month target is $27.50.

Buy-the-dip @ $22.00

- Suggested Positions -

buy the DEC $25 call (EXXI1117L25)

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on August 20, 2011


NEW DIRECTIONAL PUT PLAYS

Alexander & Baldwin, Inc. - ALEX - close: 37.36 change: -0.73

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shipping stocks are getting hammered and investors have a right to be worried. A few years ago when shipping rates were soaring (they reached more than $220,000 a day back in the 2007-2008 period) the industry accelerated their orders for new double-hulled freighters. Shipping companies have been replacing old ships with new double-hulled ships ever since the Exxon Valdez spill. The combination of a slowing global economy and new ships coming online has killed the shipping rates. There is too much supply for demand and rates have fallen to less than $20,000 a day and for some of the busiest routes rates are essentially negative. Some of this shipping companies, like Frontline, need rates at $30,000 a day just to breakeven. Right now demand continues to look weak and new ships continue to come online. The group is likely to fall for weeks and months to come.

We like ALEX as a potential put play in the group. However, ALEX is not a pure shipping company. They also have a terminal services business, a railway, and truck shipping division. Plus, ALEX has its hands in the agriculture industry focused on sugars and molasses. Yet these extra businesses has not saved the stock price from a crushing August sell-off. Now the oversold bounce has failed and ALEX closed the week at a new multi-month low.

I am suggesting put option positions now. We'll start the play with a stop loss at $40.75. More conservative traders may want to consider a stop a little bit closer to the 10-dma (currently at $39.12). We'll set our target at $32.50.

- Suggested Positions -

buy the SEP $35 PUT (ALEX1117U35) current ask $1.20

- or -

buy the DEC $30 PUT (ALEX1117X30) current ask $1.45

Annotated Chart:

Entry on August 22 at $ xx.xx
Earnings Date 11/10/11 (unconfirmed)
Average Daily Volume = 279 thousand
Listed on August 20, 2011


Teekay Corp. - TK - close: 22.92 change: -0.06

Stop Loss: 24.55
Target(s): 20.25, 17.50
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
TK is another example of the over supply problem in shipping. The company focuses primarily on transporting crude oil. I discuss the shipping industry's troubles in the ALEX trade (above) tonight.

The oversold bounce in TK is failing. I am suggesting bearish put positions now. We'll use a stop loss at $24.55. Our targets are $20.25 and $17.50.

- Suggested Positions -

buy the SEP $22.50 PUT (TK1117U22.5) current ask $1.20

- or -

buy the OCT $20.00 PUT (TK1122V20) current ask $1.00

Annotated Chart:

Entry on August 22 at $ xx.xx
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 531 thousand
Listed on August 20, 2011