Re-Loading the Put Ledger
Add VZ and CRM Puts
PLAY: Buy the VZ April 30 Puts (VZ PF) at market, good for the day. Place a protective stop limit at $1.90 and implement our scaled-selling technique as your position achieves gains of 50% (and greater).
PLAY: Buy the CRM May 25 Puts (CRM QE) at market, good for the day. Place a protective stop limit at $2.20 and implement our scaled-selling technique as your position achieves gains of 50% (and greater).
Dear Bottarelli Research Member,
Today’s alert will re-load the put-side of our ledger.
As you know, we used Monday’s 670-point sell-off to lock in gains ranging from 48% to 171% on our Wynn Resorts January 35 Puts (UWY MG), Visa January 55 Puts (V MK), Auto Zone January 100 Puts (AZO MT), and Toyota Motors January 65 Puts (TM MM).Not to be outdone, we also locked in 50% profits on half of our CASY February 30 Puts (CQO NF) later in the week. All told, it was another good week. Congratulations on these tremendous winners.
In an effort to maintain the proper balance of downside exposure, we’ll be adding two more puts on companies that have recently rallied — but are now facing very strong resistance levels at their 50-day and/or 200-day moving averages.
One company, in fact, is currently trading at a sky-high P/E multiple of 101. We’ve made money playing put options off this stock before, and I plan on doing it again today. After all, in this challenging market environment, a P/E multiple of 101 is completely unsustainable. Both of these new candidates are outlined for you below.
So let’s get started!
Today’s first put play candidate comes in the form of Verizon Communications (VZ – NYSE).As you can see from the chart, VZ has run right up to their 200-day moving average, where they experienced a major level of resistance. This indicates that more selling pressure is on the horizon for the global wireline and wireless service provider. As of last December, Verizon provided services to 65.7 million customers, but if you look at the recent trends, times are getting more difficult.
For example, the top U.S. phone company, AT&T (T – NYSE), forecasted challenging economic times for the majority of 2009, which is why they are eliminating 12,000 jobs (and taking a $600 million severance hit in Q4). As you can see, the weak macro environment is certainly taking its toll on AT&T’s business, and you better believe that Verizon will have similar problems. Adding to VZ’s trouble is their current balance sheet, which shows total cash of $1.67 billion versus total debt of $44.78 billion. In a difficult market, this is certainly not a powerful cash position. Therefore, I fully expect to see more downside selling pressure in shares of Verizon. Let’s profit off this by adding puts now!
PLAY: Buy the VZ April 30 Puts (VZ PF) at market, good for the day. Place a protective stop limit at $1.90 and implement our scaled-selling technique as your position achieves gains of 50% (and greater).
Your second put play candidate comes in the form of Salesforce.com (CRM – NYSE). If you recall, we played CRM November 55 Puts (CRM WK) back on July 14th, which resulted in a nice profit. Today, the CRM chart indicates that it’s time to make a similar downside put play — which you can see by the failure at the 50-day moving average.
From a business perspective, Salesforce.com provides on-demand customer relationship management (CRM) services to businesses and industries worldwide. Within the last week, Goldman Sachs slashed their estimates and price targets on most of the enterprise software companies, which reflects the slowdown in IT spending. And as you can imagine, this means slower growth for a company like CRM. Therefore, I cannot fathom how the stock can maintain their trailing P/E multiple of 101.76.
In fact, their Price/Sales ratio of 3.86 and their Price/Book ratio of 6.26 all look ridiculously high. Therefore, let’s get positioned to profit as the stock trades down to more appropriate levels. Here’s the play…
PLAY: Buy the CRM May 25 Puts (CRM QE) at market, good for the day. Place a protective stop limit at $2.20 and implement our scaled-selling technique as your position achieves gains of 50% (and greater).
UPDATES
PPH February 50 Puts (PPH NJ): Big Pharma is showing no signs of life, even as the markets rallied on Tuesday and Wednesday. The trend on PPH remains down, so continue to hold your puts. Hold.
MCD June 55 Calls (MCD FK): As consumers across the world scale back their daily expenses, McDonalds continues to outperform. YUM Brands — operator of KFC, Pizza Hut, Taco Bell, and Long John Silver’s — just forecasted 10% earnings growth in 2009. This bodes well for MCD. In fact, based on the strength of our MCD calls (which traded as high as 41% this week), I may add upside calls on YUM as well. In the meantime, hold your MCD calls. And be sure to lock in profits on HALF of the position if they hit 50% profits. Sell half at 50%.
Teva Pharmaceuticals January 2010 45 Calls (WTX AI): Here’s another company that’s positioned to outperform in difficult market times. As the top genetic drug-maker in the world, TEVA looks quite strong going into 2009. Hold.
iShares MSCI Emerging Markets Index March 24 Puts (MBY OX): Our downside put play on the continued deterioration of emerging markets traded as high as 42% this week. The chart pattern remains bearish, so be sure to lock in HALF of your profits at the 50% level. Sell half at 50%.
ADM January 2010 20 Calls (WRA AD): Just like MCD and TEVA, ADM continues to hand us profits within a weak market environment. Our calls have traded as high as 41% above our entry price, so be sure to lock in HALF of your gains at the 50% level. Sell half at 50%.
Casey’s General Store February 30 Puts (CQO NF): We locked in 57% profits on half of our position this Thursday, which leaves us holding the remaining half for more selling pressure. Sell remaining half at 100%.
AKS January 2010 15 Calls (YDF AC), Ultra Financials June 8 Calls (UUF FH), Excel Maritime March 15 Calls (EKN CC), & Tesoro January 2011 5 Calls (ZGC AA): Our “severely over-sold sector rebound plays” continue to hammer out a bottom. I’m still bullish on the rebound prospects in the steel, oil refining, dry bulk shipping, and financial industries. Therefore, maintain all four recovery positions. Hold.
Apex Silver Mines January 2010 2.5 Calls (YSB AZ), Southern Peru Copper January 2010 25 Calls (YPV AE), & Barrick Gold January 2010 40 Calls (WRX AH): Going into 2009, I think metals could be one of the strongest sector performers, and this bodes well for all three of these positions. Hold.
 | SPECIAL “END OF YEAR” RENEWAL |
Right now, you can lock in our special “End of Year” renewal offer that extends your LEAPS membership for the lowest price we’ve ever offered in the history of Bottarelli Research LEAPS. As I mentioned, I now feel like a new “Age of Volatility” is upon us. In other words, the incredible volatility levels that we’ve seen this year are no longer the exception — they’re now the norm.
The only way to prosper during these times is by carefully positioning yourself in the best call and put plays — and locking in gains the instant these plays move your way.
Over the last three months, you’ve seen this tactical strategy work perfectly, as we locked in profits of 130.36% on Visa January 55 Puts (V MK), 48.12% on Wynn Resorts January 35 Puts (UWY MG), 171.79% on AutoZone January 100 Puts (AZO MT), 168.52% on Zale February 20 Puts (ZLC ND), and 88.52% on Toyota Motors January 65 Puts (TM MM).
As we head into 2009, I want to ensure that you continue receiving these winning plays, and that’s why I’m offering you the opportunity to add 9 months onto your membership for the lowest price of the year. Please don’t miss out.
This special offer expires on Saturday, December 20th, so act now. Give yourself an early Christmas present and lock in this discounted membership offer now!
https://www.bottarelliresearch.com/renew/?service=leap&offer=150264F1RS
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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