EOT Trade Alert – April 7, 2008
April 7, 2008
Trade Alert:
Buy APA May 2008 $135 Calls at $4.75 or better (APAEX)
Brief Company Background:
Apache is a top independent oil and gas exploration and development company. The company has producing operations in six geographic regions. The United States, Canada, Egypt, the North Sea, Australia and Argentina.
Short-Term Catalyst:
Oil has moved up and is threatening to break $110 a barrel. This is great news for Apache.
Just a few weeks ago, the company announced 2007 earnings. They exceeded expectations because of increased production and higher prices. All over the world Apache has been able to increase prices – including Australia and Argentina.
When Apache sold oil in 2006 they got just under $60 per barrel. In 2007 they got over $68 per barrel. In the fourth quarter they 2007 they sold their oil for $83 a barrel.
Now oil is almost at $110!
I don’t know about you, but I think they’re going to make more money this quarter.
One other observation. Just a few days ago APA had two important technical indicators indicate to the upside. The first was a breakout with confirmation above a key resistance line. The second was a short term moving average crossover.
Trade Details:
| Option Ticker Symbol: | APAEX |
| Underlying Stock Symbol: | APA |
| Current Bid-Ask Price: | $4.10-$4.40 |
| Option “Buy Up To” Price: | $4.75 |
| Break-Even On Stock At Expiration: | $139.75 |
| Maximum Risk Per Contract: | $475 |
Exit Strategy:
APA is trading at 128.60. Since the stock is trading at new highs, resistance will be found at the psychological levels of 135 and 140. Support levels are 120 and 110.
Chart:
Category: EOT Trade Alert
