NEW DIRECTIONAL CALL PLAYS

Noble Energy, Inc. - NBL - close: 30.73 change: +0.52

Stop Loss: None, no stop at this time.
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 5.7 million
Entry on September -- at $---.--
Listed on September 5, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: Yes, see below

Company Description

Trade Description:
Unless you have been living under a rock the last several months then you already know that energy stocks have been crushed thanks to a plunge in crude oil prices. One side effect of this crash in energy stock is the potential for mergers and acquisitions as companies try and buy growth and assets while valuations are depressed.

According to the company, "Noble Energy (NBL) is a global independent oil and natural gas exploration and production company, with proved reserves of 1.7 billion barrels of oil equivalent at year-end 2014 (pro forma for the Rosetta acquisition). The company's diverse resource base includes core positions in four premier unconventional U.S. onshore plays - the DJ Basin, Eagle Ford Shale, Delaware Basin, and Marcellus Shale - and offshore in the U.S. Gulf of Mexico, Eastern Mediterranean and West Africa."

The bear market in oil stocks has pushed NBL down to five-year lows. Shares are hovering near round-number support in the $30.00 region. On Friday market watchers noted that someone bought 18,000 call options at the September $30 strike. That's rather unusual since there were only 863 contracts of open interest at that strike price. That got people talking that maybe there is a deal in NBL's future.

We are adding NBL as a very speculative bullish play. Tonight we are suggesting traders buy calls (October $32.50 strike) at the opening bell on Tuesday morning. However, we do not want to initiate positions if shares of NBL gap open more than $1.00 higher (or lower) on Tuesday.

Speculative trade = buy calls at the open on Tuesday morning

- Suggested Positions -

Buy the OCT $32.50 CALL (NBL151016C32.5) current ask $2.05
option price is a current quote and not a suggested entry price.

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

Option Format: symbol-year-month-day-call-strike

Daily Chart:




NEW DIRECTIONAL PUT PLAYS

Praxair Inc. - PX - close: 101.44 change: -1.57

Stop Loss: 105.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.5 million
Entry on September -- at $---.--
Listed on September 5, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: Yes, see below

Company Description

Trade Description:
Investors are worried that stocks' six-year bull market might be in jeopardy. Unfortunately for PX investors the rally in this stock stalled last year. Shares peaked in 2014 and after months of consolidating sideways the stock has begun to breakdown.

PX is suffering from a number of issues. They face rising competition and rising production costs. Their results are also being hurt by foreign currency headwinds. The economic slowdown in China and Brazil is also taking a toll on PX's business.

If you're not familiar with PX they are in the basic materials sector. According to the company, "Praxair, Inc., a Fortune 250 company with 2014 sales of $12.3 billion, is the largest industrial gases company in North and South America and one of the largest worldwide. The company produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings. Praxair products, services and technologies are making our planet more productive by bringing efficiency and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, primary metals and many others."

Looking at recent earnings results PX has seen revenues slowdown. They reported Q1 earnings o April 29th. Earnings of $1.43 per share missed estimates by a penny. Revenues were down -9% to $2.76 billion.

Their Q2 results were announced on July 29th. Earnings per share of $1.45 was in-line with Wall Street estimates. Yet revenues fell -12% to $2.74 billion. That missed expectations of $2.85 billion.

PX management lowered their guidance for the current quarter and 2015 below Wall Street's forecast. The company tried to mitigate the bad news by announcing an increase in their stock buyback program. In a separate press release PX announced their "board of directors has also authorized a new share repurchase program for up to $1.5 billion of Praxair's common stock. Praxair has approximately $500 million of repurchase authority available under its previously announced buyback authorization from January 2014, giving it approximately $2.0 billion available for stock repurchases under these programs."

Stock buybacks have lost their luster on Wall Street and PX plunged to new multi-year lows when the market corrected two weeks ago. The oversold bounce has already failed and PX is poised to breakdown under key psychological support at the $100 level. Tonight we are suggesting a trigger to buy puts at $99.85.

Trigger @ $99.85

- Suggested Positions -

Buy the OCT $95 PUT (PX151016P95) current ask $1.55
option price is a current quote and not a suggested entry price.

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

Option Format: symbol-year-month-day-call-strike

Daily Chart:

Weekly Chart: