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OXPS Weakness Leads to Quick Gainer

By Bryan Bottarelli
Tuesday, June 27, 2006 12:11 PM EST
Tue, 27 Jun 2006 17:11:00 GMT

PLAY: Sell the OXPS September 25 Puts (QYB UE) at or above $4.50, good for the day.

Dear Bottarelli Research Member,

Yesterday, I initiated a new put trade on OptionsXpress (OXPS – NASDAQ) based on the fact that a new SEC court settlement will most likely cause a decline in their future trading volumes. As of today, I don’t feel that the magnitude of this settlement has been priced into the stock yet. Therefore, I’d expect more downside to come in the future.

Nevertheless, OXPS is down $1.30 today based on news that online brokers are expected to see a 20% drop in June trading volumes from the previous month. And although larger firms such as Ameritrade, Schwab and E-Trade could withstand such dips, smaller firms like OptionsXpress feel the pain at an accelerated level. That’s a good reason the stock is down today.

OXPS

This down-move has pushed your September 25 Puts (QYB UE) from $3.80 up to $4.50. That’s a one-day gain of 18%. Because we’re in such a choppy market, the conservative move is to take the profits off the table now.

PROFIT SUMMARY: SELL THE OXPS SEPTEMBER 25 PUTS (QYB UE) AT OR ABOVE $4.50, GOOD FOR THE DAY.

Rest assured, I may get back into these puts at a later date. If you’re a speculator at heart, you may even decide to hold them a little longer. But for now, I’d like to take the money off the table and sell.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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