Company Description:
POSCO is a South Korean steel producer.
Why I Like It:
Calling tops or bottoms can be extremely hazardous to your trading account but that's what this play is attempting to do so be careful and prudent. The massive rally in PKX appears to have run out of gas. Friday's move was both a bearish close under $180 and a bearish engulfing candlestick (reversal) pattern. However, is this just a pause for PKX to catch its breath and continue higher or is it the beginning of a correction? The stock is very overbought but momentum plays always seem to get more overbought than we think they should, don't they. I suspect that with Friday being the end of the quarter, and with Asian markets at or near significant highs, that this stock could see some profit taking or at least some mutual fund "undressing" now that the quarter is over. I have to warn you again that this is a very aggressive position. The P&F chart is super bullish with a $268 target. I have two targets. My first target is the $171.50-170.00 range. My second target is the $165.00-160.00 zone. This should be a very quick play. While I do not have a confirmed earnings date the information I have found suggests that PKX will report earnings around October 8th and I will not hold over the report.
Suggested Options:
This is a high-risk, aggressive play so I'm going to go with some high-risk, aggressive options with the October puts. Remember - October strikes expire in three weeks. I expect to be out of this play in just a few days.
BUY PUT OCT 185 PKX-VW open interest= 59 current ask $11.80
BUY PUT OCT 180 PKX-VV open interest=148 current ask $ 8.90
BUY PUT OCT 175 PKX-VU open interest= 39 current ask $ 6.30
BUY PUT OCT 170 PKX-VN open interest=691 current ask $ 4.40
Earnings Date 10/08/07 (unconfirmed)
Average Daily Volume = 812 thousand
Have fun,
Regards,
