Yes! GRMN Falling

Plus, Taking Profits on ABX

By Bryan Bottarelli
Tuesday, August 01, 2006 10:32 AM EST
Tue, 1 Aug 2006 15:32:00 GMT

Dear Bottarelli Research Member,

Welcome to the first day of August, the worst-performing month of the calendar year. According to the Stock Trader’s Almanac, the S&P 500 has posted a monthly loss in August for the last 15 years! Combine that with a critical Fed meeting a week from today, and you probably understand why I’m looking to take any profits off the table as quickly as possible.

Today’s good news is that Garmin (GRMN — NASDAQ) has withstood the threat of approaching out stop loss and is now back to its falling pattern. As I write, GRMN is down $4.99, pushing your GRMN August 90 Puts (GQR TR) to a high of $6.00 in early trading.

GRMN

As you can see, GRMN has indeed called the 50-day resistance, just as I noted yesterday. But, as I tend to do with all earnings-related plays, the conservative road is to take your profits before the actual announcement. On one hand, that eliminates the possibility of hitting a huge winner if GRMN falls, but it also eliminates the threat of getting stopped out of GRMN rallies. To get the best of both worlds, my advice is to take HALF of your gains if your puts trade at or above $6.00 today, and then let the remaining half of the position ride into tomorrow’s earnings report.

PLAY: Sell HALF of your GRMN August 90 Puts (GQR TR) at or above $6.00, good for the day. Hold the remaining half as a speculative earnings play for tomorrow.

I’d also like to take our profits on Barrick Gold (ABX).

ABX

As you know, we’ve been holding the ABX October 30 Calls (ABX JF) since May — adding to the position on any near-term weakness. With an average entry price of $2.35, these calls currently trade between $2.60 and $2.70 per contract. Let’s go ahead and take our profits off the table leading up to next weeks’ Fed meeting. Since this was a longer-term play, I’ll set the trade good for the week.

PLAY: Sell the ABX October 30 Calls (ABX JF) at or above $2.65, good for the week.

In terms of our other positions, maintain your CSX November 65 Calls (CSX KM) and your CAT November 75 Calls (CAT KO).

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 August 2006