Taking Protection Profits!

Sell DJX Puts For One-Day Winner

By Bryan Bottarelli
Tuesday, June 06, 2006 10:09 AM EST
Tue, 6 Jun 2006 15:09:00 GMT

PLAY: Sell DJX July 110 Puts (DJV SF) at or above $2.00, good for the day.

Dear Bottarelli Research Member,

As I noted yesterday, the DJX has been calling the 50-day moving average its latest resistance point. Now that Wall Street is realizing this, I noted that we could experience another 100-poitns of downside before we witness any new support points.

At the tail-end of yesterday’s trading, we quickly paid $1.65 to enter into a protective July 110 put on the DJX. The basis for the play was to offer you a way to make a quick gain while the markets experienced continued weakness — and then quickly transition over into a series of upside calls when the indices have regained their footing.

DJX

As of this morning, the markets have not shown any signs of regaining their footing. For us, that’s equating into a near-term gain. The DJX July 110 Puts (DJV SF) you bought for $1.65 now trade between $2.00 and $2.05 today. That’s a 21% gainer overnight! I say we take the money off the table!

PLAY: Sell DJX July 110 Puts (DJV SF) at or above $2.00, good for the day.

Lock and load,

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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