Action Alert: GIS Sizzles

Maintain GIS April 70 Calls

By Bryan Bottarelli
Wednesday, September 17, 2008 10:27 AM EDT
Wed, 17 Sep 2008 14:27:00 GMT

Dear Bottarelli Research Member,

If you skim today’s headlines, you’ll probably see that General Mills (GIS – NYSE) reported earnings that fell 3.6% to $278.5 million ($0.79 per share) versus $288.9 million ($0.81 per share) one year earlier. But in reality, this is a truly fantastic earnings report.

After all, this was a higher-than-expected quarterly profit from GIS, which has done a superb job of maintaining profitability in this difficult market environment. Furthermore, declines in commodity prices has allowed GIS to raise their full-year forecast, as cash-strapped consumers are now buying more frozen pizzas, Cheerios, Betty Crocker baking mixes, and Green Giant vegetables to save money. This makes a very strong case for GIS stock going forward.

GIS

On the news, GIS has pushed up to a new 52-week high, and the General Mills April 70 Calls that we entered on Monday for $4.00 have now traded as high as $5.00, good for a quick 25% gainer. Continue to maintain this position for more upside!

In other news, we’re also seeing a pick-up in other positions that I’m quite bullish on, notably the ABX January 2010 40 Calls (WRX AH), UNG January 40 Calls (UNG AN), and the VLO January 35 Calls (VLO AG). Maintain these positions, along with our other current positions, for further upside. And don’t forget about our CBOE Volatility Index October 25 Calls (VIX JE), which are finally breaking into the profit-zone as well!

VIX

Now, aside from our current positions, I wanted to take a quick moment and address two important pieces of information with you.

PERSONAL NOTE #1: These are truly extraordinary times — ones which will be talked about for decades to come. And throughout this financial crisis, I wanted to take a quick moment to thank you for being part of Bottarelli Research. You see, I’m honored that you’re part of our elite trading group, and I’m fully dedicated to helping you survive and prosper during these difficult market conditions. So in that spirit, I simply wanted to express my appreciation that you’re part of our group. I’m glad you’re with me.

PERSONAL NOTE #2: I also want to stress the importance of protecting and preserving your wealth in times like this. First and foremost, that means not maintaining any bank accounts over the FDIC insured limit of $100,000. If you have excess monies, the safest place to put them right now is in cash in your brokerage account. Schwab is paying 2.5% interest in cash holdings right now, and I’m sure other brokers are offering the same rates. For amounts over $100,000, this is now safer than having it parked at any bank. It’s amazing, when you think about it. But in my view, no bank is safe.

Secondly, if you maintain multiple accounts over $100,000 at any single bank, it’s imperative that you have these accounts structured in a way that has every single cent fully insured by the FDIC. The FDIC pamphlet states that “deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.” I spent a great deal of time over the last few weeks studying how you can properly structure accounts to have all of your money fully guaranteed. And here’s the one single resource that I found infinitely useful: The “edie” calculator on the FDIC Web site.

Simply plug your accounts into this calculator, and it’ll show you exactly what is FDIC insured and what is not FDIC insured. Then, you can easily correct any un-insured monies in a way that protects everything that you have deposited (by adding beneficiaries, re-structuring account “language,” and things like that). It’s truly a wonderful tool, and I urge you to use it if you fear that any of your money is exposed. Financial planners will charge you tens of thousands of dollars for this information (trust me, I’ve seen them do it!), but I’m showing you how to do it yourself for free. Please check it out. Here is the link:

http://www.fdic.gov/edie/calculator.html

On that note, have a great day.

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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