Trading Cramer's Lightning Round - March 8, 2011

The following are trades based on tonight's Mad Money Lightning Round.

Provident Energy Trust (PVX) - Cramer Says Buy

Provident Energy is a natural gas stock play. In terms of energy, Natural Gas is an abundant resource in the U.S. and highly under-utilized. PVX has a forward P/E of 17.55 and a dividend yield of 6.4%. I'm not overly excited about this stock, but Cramer must like the Natural Gas aspect of the investment, especially with oil near $105/barrel. Rising energy prices will cause consumers to think about alternative energy sources. Natural gas is one of those.

Looking at the chart, there is a definite uptrend, which I would correlate with the price of oil. I'd advise selling puts against the shares, which would obligate you to buy shares if the price drops. Sell the September 2011 $10 put for $1.65. If the price rises, you could buy the puts back and make a nice profit. If you end up having the puts executed, you'll own shares at $8.35 and the dividend pays you to wait for the right moment to sell your shares.

Freeport-McMoRan Copper & Gold Inc. (FCX) - Cramer Says Buy

Cramer likes Copper, probably because copper has actual value as a commodity used in things like pipes and wires. The forward P/E of FCX is 8.07.

Looking at the options prices, I'm going with a Bull Call Spread on this stock. The April 2011 $45 call is selling for $6.10. The April $50 call can be sold for $2.73. This means you can buy shares for $51.10 and sell them for $52.73 by entering into the Bull Call Spread. With the current share price over $50, both calls are in-the-money. So, you enter into the transaction knowing that it could possibly be closed in 38 days. The profit on the trade is $1.63 (less commissions) on an investment of $6.10, or 26% over the next 38 days (256% annualized), assuming the price stays above $50.

The risk with this transaction is that the price falls. The break-even on this trade is $48.37 ($45 plus $6.10 less $2.73).

Randgold Resources Ltd. (GOLD) - Cramer Says Sell

Unlike Copper, Gold is a commodity that really has no practical use. Yet, for some reason, I hear commercials all day long on the radio and TV where people are asking me to bring my gold jewelry in an exchange it for cash. This sounds like a bubble.

For this trade, I would simply buy a $60 January 2012 Put option for $3.70. However, I would limit my portfolio's exposure to this trade, as it is high risk. This put options is an out-of-the-money put and has no intrinsic value.

Disclaimer: The writer has no position in these stocks. The trades are hypothetical and intended for educational or entertainment purposes.