PLAY: Sell both sides of your DIA Political Straddle at market, good for the day.
Dear Bottarelli Research Member,
I continue to have mixed feelings about managing our DIA Political Straddle.
On one hand, selling both our October 110 calls and puts right now would result in a respectable 14% gain. In an intensely volatile market such as this, we should not turn our noses at this return.
On the other hand, it looks like the House will pass the revised bailout plan. If so, I suspect that the markets will soar. Therefore, selling our DIA puts and holding our DIA calls would be the tactical move to make right now.
The wild card in this equation is the “unknown” news item — which could dramatically alter the movements of the major market averages. Will the bill fail once again? Will the mood on Wall Street indicate that the bill will not help our economy?
All of these factors could negatively affect the decision to sell DIA puts and hold DIA calls. What’s worse, every directional factor right now involves headline risk, which is impossible to predict. Therefore, I think the best course of action is to lock in our 14% return and sell off both sides of the Straddle right now.
PLAY: Sell both sides of your DIA Political Straddle at market, good for the day.
If you care to speculate, you can sell your puts and hold your calls. If you decide to go this route, I’ll continue to offer you guidance. But right now, I must tell you, the safest play is locking in profits by selling off the entire position.
While we have a moment, I’d like to take a second to address another important investing strategy with you. See below:
TINY STOCKS, BIG RETURNS
In a recent issue of Kiplinger’s Personal Finance, author Elizabeth Ody makes an interesting argument that I’d like to share with you. If you want to make big bucks, she says, then now is the time to make bold moves. “Today, one of those moves appears to be stashing money into micro-caps. Micro-cap stocks could lead the way out of this down market.” When you look at the historical performance of small-cap stocks, she could be on to something. For example, coming out of the bear market of 2002, the Russell 2000 Small Cap index gained a whopping 47% in 2003. And heading into 2009, we could see a similar performance in the small-cap sector. That’s why it might be a good idea to consider adding our Bottarelli Research Small Caps service to your investment arsenal.
You may or may not know this, but every Friday afternoon, I send an elite group of readers a new small-cap pick. These powerful stocks represent the most explosive small-cap companies your money can buy. Many of them, in fact, have 10-to-1 profit potential. And with the markets so low right now, adding some of these companies to your portfolio could lead to bowel-shaking profits.
Case in point, consider our newest small-cap pick from this past Friday, which was a company called Cosan (CZZ – NYSE). Cosan is one of the largest sugar-producers in the entire world. You won’t hear this in the mainstream financial media, but sugar is vitally important right now thanks to a major (and grossly under-reported) shift in the ethanol business. You see, due to wild price fluctuations in the commodity sector, the benefits of corn-based ethanol are quickly disappearing. And this makes a powerful case for sugar. You see, sugar-based ethanol is 7x more efficient than corn-based ethanol. And as Wall Street begins to recognize the impact this will have on CZZ’s business, you’ll soon see shares of this $7.00 stock blast upwards. In fact, Cosan gained 17% on Monday, which happened to be the day that the Dow dropped 777 points. Unbelievable!
If you would like to begin receiving these Friday afternoon small-cap picks, then I invite you to become part of Bottarelli Research Small Caps today. When you look back a year from now, buying into these companies today could be the savviest investment decision you’ve ever made. For all the details about Bottarelli Research Small Caps, please review the special “invitation” letter below. And as always, I look forward to you expanding your Bottarelli Research investment arsenal! Full details below:
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Lock and load!
Sincerely,
