Position Update

Slow Day Sets Up Next Week

By Bryan Bottarelli
Friday, June 16, 2006 4:09 PM EST
Fri, 16 Jun 2006 21:09:00 GMT

Dear Bottarelli Research Member,

Today was certainly a slow trading day, as both buyers and sellers took a breather after a furious two-day market rally. The primary objective of floor traders today was dealing with expiration of their June positions, which further muted the day’s overall trading. On the week, the Dow closed in on a 1.1% gain, which was the first week we’ve closed in the green in quite a while. Could this pattern carry forward into next week? I’d say yes.

With that backdrop, there isn’t too much to report on our specific open positions other than a couple of minor news items, so I’ll keep this alert short and sweet.

The best thing that happened today was that we finally witnessed some much-needed “PEP” in shares of Pepsico (PEP – NYSE).

This morning, UBS upgraded PEP to "buy" and raised their price target from $64 to $74 based on valuation and consistent double-digit earnings-per-share growth. With the stock currently trading for $59.70, that’s quite a strong upgrade. They gave special attention to continued strength in Gatorade sports drinks and growth in international markets.

PEP

As you can see by the chart, the stock jumped right off its 50-day moving average, which validates why we added to the position this past Wednesday. Your PEP October 60 Calls (PEP JL) have traded as high as $2.55 today, and continued strength next week could take them over $3.00. Hold for more gains.

Our other trading position comes in the form of the Las Vegas Sands July 70 Calls (LVS GN).A quick look at the chart shows the stock closed slightly down today, but there appears to be a strong level of support where the stock currently sits right at the 50-day moving average. In fact, the last time LVS dipped below this level it snapped right back up. My thesis for this trade was a return of this trading pattern.

LVS

I’ve been watching LVS for quite a while, and the stock tends to make very large upside moves. If we get any carry-forward strength next week, we should be looking at another nice winner. Hold your Las Vegas Sands July 70 Calls (LVS GN).

With that, have a good weekend. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From June 2006