EOT Trade Alert – April 18, 2008

April 18, 2008

Trade Alert:

    Buy VNO June 2008 $95 Calls at $4.00 or better (VNOFS)  

Brief Company Background:

Vornado Realty Trust is a real estate investment trust (REIT).  They own a number of office properties in New York, Washington, and northern Virginia.  They also have a number of retail properties in Puerto Rico.

Short-Term Catalyst:

Real estate is an interesting animal.  The REIT industry has been crushed over the last few months.  I think the sell-off is overdone.  Now, I don’t think we’re totally out of the woods with all of the bad news . . . but the news is getting easier and easier to swallow.

This to me is a signal that we may be at an inflection point.  Looking at the chart, it appears we have put in a double bottom with lows in late January and again in mid March.

We’ve seen an upturn in the 20 day moving average and we had a moving average crossover to the upside.  I’m not sure how long this trend will last, so let’s watch this trade very closely. 

Trade Details:

Option Ticker Symbol:	VNOFS
Underlying Stock Symbol:	VNO
Current Bid-Ask Price:	$3.60-$3.80
Option “Buy Up To” Price:	$4.00
Break-Even On Stock At Expiration:	$99.00
Maximum Risk Per Contract:	$400

Exit Strategy:

VNO is trading at 91.98.  Resistance levels are prominent at 100 and 105.  Support levels are 85 and 80.

Chart:

Category: EOT Trade Alert