Dear Bottarelli Research Member,
Good morning. Our decision to add to our Toyota January 65 Puts (TM MM) could not have been timed any better! This morning, Japan’s leading vehicle manufacturer reported a 48% decline in net income, which forced them to slash their full-year profit forecast. Vice President Mitsuo Kinoshita said “The financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly.”
On this news, shares of Toyota are getting clobbered, down $12.00 as I write. The puts that we’re holding with an average entry price of $6.10 have ticked up to a high of $7.80 today, but I think we have more profits ahead. Let’s continue to hold these puts, but be sure to lock in profits on half of your position at the 50% profit level (which is around $9.20). Congrats on a well-timed entry price.