COF, Revisited

In Case You’re Still Holding…

By Bryan Bottarelli
Thursday, July 27, 2006 3:02 PM EST
Thu, 27 Jul 2006 20:02:00 GMT

Dear Bottarelli Research Member,

While I don’t mean to beat a dead house, I’d like to quickly comment on the down-move we’re seeing today in Capital One Financial (COF – NYSE).

On Tuesday, we entered the COF August 80 Puts (COF TP) based on a downside forecast — but we got stopped out the next day based on the overall market strength. While this position will remain a loss on our model portfolio, I did receive notes from Charter Members who decided to keep holding these puts based on my downward thesis. If that happens to be you, then you really like today’s downside action. Just check out the COF chart:

COF

This big down-move has pushed your COF August 80 Puts (COF TP) up to $4.20, good for a 20% gain off our original entry price. If you took additional risk and held the COF puts, I’d use today’s down-move to take your profits off the table!

*Now don’t get me wrong. If you closed this position based on our protective stop-out, you did the right thing. Sometimes, the markets just behave irrationally, and this was one of those cases. Those who took the most risk simply got rewarded. So if you still own the COF puts, take your gains!

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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