EOT Trade Alert – May 6, 2008

May 6, 2008

Trade Alert:

    Buy EXM June 2008 $50 Calls at $2.90 or better (EXMFJ)  

Brief Company Background:

Excel Maritime Carriers (EXM) owns and operates dry bulk carriers.  They transport dry bulk cargoes like iron ore, coal, grains, bauxite, fertilizers, and steel products worldwide.

Short-Term Catalyst:

Today, Excel Maritime Carriers set a release date of May 19, 2008 for their first quarter results.  Just like our last trade with Diana Shipping I’m expecting these results to be good.  Let’s get a position on prior to the announcement.

This trade obviously isn’t risk free.  If the results miss analyst estimates the stock will trade lower.

The one thing that brings me comfort is The Baltic Dry Index, which measures drybulk shipping rates has been steadily increasing.  They’re now just under their all time highs from last November.

Trade Details:

Option Ticker Symbol:	EXMFJ
Underlying Stock Symbol:	EXM
Current Bid-Ask Price:	$2.55-$2.75
Option “Buy Up To” Price:	$2.90
Break-Even On Stock At Expiration:	$52.90
Maximum Risk Per Contract:	$290

Exit Strategy:

EXM is trading at 45.06.  I see resistance levels at 50 and 54.50, the peak of trading last December.  Support levels are 39 and 30. 

Chart:

Category: EOT Trade Alert