Buy Alert: November 28, 2012

Marcus Haber | November 28, 2012

Buy Alert: November 28, 2012

Trade Details

Buy McMoRan Exploration (MMR) January 2013 $9 Calls for $1.00 or better

Why?

McMoRan is an oil and gas exploration and production company run by famous wildcatter Jim Bob Moffett. The stock took a major hit this week (down 35%) as MMR announced a delay at a key well in the Gulf of Mexico, the Davy Jones.

The Davy Jones has the potential to provide access to trillions of cubic feet of gas. But, the company has also spent nearly $1 billion on it so far. As such, investors are particularly sensitive to delays.

Here’s the thing…

Moffett is known for taking huge risks – and they’ve almost always paid off. There’s a good chance he’s right about the prospects for the Davy Jones, and it’s just a matter of time.

I believe investors will come to their senses sooner rather than later. What’s more, MMR could potentially resolve their issues with the Davy Jones in the near future.

Let’s grab some calls on MMR and profit off the rebound. We’re going with January options this time to give us a little extra time for the scenario to play out.