NEW DIRECTIONAL CALL PLAYS

Occidental Petroleum - OXY - close: 98.10 change: +1.59

Stop Loss: 95.75
Target(s): 104.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Energy and oil stocks were showing relative strength today. If crude oil can breakout past the $100 a barrel level then this sector could really outperform. OXY looks like a potential bullish candidate. Traders bought the dip near its 200-dma and 10-dma (essentially at $96.00).

I am suggesting we open small bullish positions tomorrow morning but only if both OXY and the S&P 500 index both open positive. We do want to keep our position size small because the oil stocks can be a volatile bunch and OXY is arguably a little bit overbought here. We will use a stop loss at $95.75. Our target is $104.50. FYI: The Point & Figure chart for OXY is bullish with a $116 target.

*see Entry Details Above* (small positions)

- Suggested Positions -

buy the DEC $100 call (OXY1117L100) current ask $4.30

- or -

buy the JAN $105 call (OXY1221A105) current ask $4.10

Annotated Chart:

Entry on November xx at $ xx.xx
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 5.4 million
Listed on November 10, 2011


NEW DIRECTIONAL PUT PLAYS

Deutsche Bank - DB - close: 37.48 change: +1.35

Stop Loss: 40.75
Target(s): 30.50
Current Option Gain/Loss: +0.0%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The escalation of the EU sovereign debt crisis from Greece to Italy is a major issue. The EU can live without Greece but Italy is the third largest economy in the union. You've probably heard it before. Italy is too big to bailout. Yesterday's spike past 7% in Italy's bond yields was a danger sign. Previously Greece, Ireland and Portugal all asked for a bailout when their bond yields hit 7%. These countries cannot finance their debt burdens when they're paying that much interest.

No one seems to have a solution for Italy's troubles. A new government and new austerity might help short-term but longer-term it's a major problem. I suspect it's going to get a lot worse before it gets better. These troubles are going to cause further declines for all the major banks in Europe and DB is one of the biggest targets we can trade (many of the European banks are already at single digit stock prices). We could see shares of DB drop toward their 2011 lows near $29 or the 2008-2009 lows near $22.

I am suggesting bearish positions starting tomorrow morning. You could choose to wait for a new failed rally under $40.00 instead. Bear in mind that this could be a very volatile trade with stocks jerking up and down in reaction to the various headlines spinning out of Europe. FYI: The Point & Figure chart for DB is bearish with a $30 target.

open positions tomorrow morning

- Suggested Positions -

buy the DEC $35 PUT (DB1117x35) current ask $3.10

- or -

buy the JAN $30 PUT (DB1221m30) current ask $2.60

Annotated Chart:

Weekly Chart:

Entry on November xx at $ xx.xx
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on November 10, 2011