EOT Trade Alert – March 25, 2008

March 25, 2008

Trade Alert:

    Buy RRC May 2008 $65 Calls at $4.00 or better (RRCEM)  

Brief Company Background:

Range Resources is an independent oil and gas company.  Their primary exploration is in the southern United States.  The company also owns and operates over 5,000 miles of gas pipelines.

Short-Term Catalyst:

Sticking with the strength in the oil and gas industry, we’ve identified another trade. Range has been setting new highs since late 2006.  I believe this trend will continue for some time . . . at least as long as the oil rally lasts.  Over the last 10 days oil has been testing the 100 level and it’s been holding strong.  This bodes well for a move higher in oil prices.

We’ll also benefit from end of the month window dressing.  Fund managers will look to shift ownership to stocks that have done well . . .and Range is one of them.  The options look a little undervalued in here as well. 

Trade Details:

Option Ticker Symbol:	RRCEM
Underlying Stock Symbol:	RRC
Current Bid-Ask Price:	$3.40-$3.60
Option “Buy Up To” Price:	$4.00
Break-Even On Stock At Expiration:	$69.00
Maximum Risk Per Contract:	$400

Exit Strategy:

RRC is trading at 62.25.  I see first levels of resistance around 65.  Above that we’re at new highs.  As a result, 70 will become a key psychological resistance level. Support levels are 57 and 54.

Chart:

Category: EOT Trade Alert