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Add to DIA Put Hedges

By Bryan Bottarelli
Friday, October 27, 2006 2:45 PM EST
Fri, 27 Oct 2006 19:45:00 GMT

Dear Bottarelli Research Member,

In yesterday’s position update, I noted the timing pattern of the Dow’s last 52-week high — and subsequent sell-off. In short, 20 calendar days fell between the Dow hitting a new 52-week high and the Dow beginning its major 900-point sell-off.

I consider this an important study because yesterday marked the 21st trading day after the Dow broke to a new high, and low and behold, today we’re seeing the blue chip average trading 70 points lower. Since our DIA November 120 Put Hedges (DAW WP) are currently trading between $0.75 and $0.80 per contract, I’d like you to once again add more to your position and lower your cost average even more.

DIA

PLAY: Buy more DIA November 120 Put Hedges (DAW WP) at or under $0.90, good for the day.

My thinking is that these DIA put hedges, in tandem with our MRO November 85 Puts (MRO WQ) and CAL December 35 Puts (CAL XG) will allow us to take nice gains off any coming market pressure.

In terms of our GS November 200 Calls (GPY KT), I think you’re seeing why I called this play a fast mover. Since entering these calls for $1.75, they’ve traded as high as $2.20 and as low as $1.40, representing quite a wide swing in price ranges. My thinking is that GS has one final upside push left in them up to $200 a share — and I’d like us to be along for this ride. Maintain your upside calls into next week, as we may end up adding to the position at cheaper levels early next week.

*SPECIAL OFFER REMINDER: Don’t forget that our special renewal offer expires on October 31st. That’s next Tuesday! This offer gives you 9 more months of service for the price of 6, which equates to three months of service for free. If you’re planning on continuing your membership, it may be a good idea to take this offer while it’s still available. To lock in this special rate, follow this link:

https://www.bottarelliresearch.com/renew/?21NF3Z6T0Z

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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