A Friday Shake-Down

Plus, the “Busy Man” Solution

By Bryan Bottarelli
Friday, March 17, 2006 10:43 AM EST
Fri, 17 Mar 2006 15:43:00 GMT

Dear Bottarelli Research Member,

In a March 3rd alert titled “Intel’s Pain is Your Gain,” I recommended that you use the news of Intel’s lowered guidance to take profits on your April 22.5 Puts (NQ PX).

After sending this alert, I received numerous notes from speculative Charter Members saying that they’re going to assume more risk and hold the puts longer for bigger gains. Well today, that risk is paying off!

INTC

As I write, Intel just hit a new 52-week low of $19.49 and the April 22.5 Puts we bought for $2.25 have traded as high as $3.10. That’s a nice 37.7% winner. If you’re one of the Intel speculators, you may consider taking your profits now!

More good news: After yesterday’s alert hinting of a heavy flow of military spending, the entire sector is getting a boost today, pushing DRS up to a new 52-week high of $56.00. The DRS April 50 Calls (DRS DJ) you bought for $5.60 currently trade between $6.30 and $6.50 and are looking to move even higher.

DRS

On the flipside, both your ICE April 70 calls (ICE DN) and your MDC June 65 Puts (MDC RM) are getting stopped today. Now this brings up an interesting point, as I sent a minimum of two “take profits” alerts on each of these plays. That means each play was indeed profitable at one point, and in fact, some of you emailed me about your gains on each position. The problem was that the prices moved so quickly, getting your orders executed ultimately proved difficult.

ICE

As I mentioned yesterday, the addition of auto-traders would significantly help with this issue. But there’s another trick you can implement that I’d like to introduce. And that trick is entering “pre-emptive” sell orders ABOVE your entry price.

For example, if you know you’re going to be busy for the next few days and you won’t be at your computer — then setting a sell target of 20% to 25% above your entry price and letting that order sit will most likely end up getting triggered and making you money.

For example, the ICE April 70 Calls were entered for $5.30 and then hit a high of $6.90. A pre-programmed sell would’ve executed at these levels. Same with the MDC June 65 Puts, which were entered for $7.10 and then traded up to $8.00. The obvious flipside is that maybe you’ll take a 25% gain when you could’ve taken a 50% gain, but when you’re busy and can’t watch the tape, that’s certainly an allowance you can live with.

For all of our upcoming plays — especially the volatile ones — I’ll plan to implement a “busy man” pre-programmed sell order that you can place to ensure winning execution even while you’re away. Combined with the other improvements noted yesterday, you’ll turn these quick movers into quick winners!

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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