New Trade Opportunities

AXP, CTRP, and GRMN All Pan Out

By Bryan Bottarelli
Thursday, December 14, 2006 10:37 AM EST
Thu, 14 Dec 2006 15:37:00 GMT

Dear Bottarelli Research Member,

On December 7th, I outlined a handful of pending trading opportunities in American Express (AXP – NYSE), Ctrip.com International (CTRP – NASDAQ), Garmin (GRMN – NASDAQ), and Suntech Power Holdings (STP – NYSE). Since that alert, we played STP puts and made a nice 45.83% gainer, but my analysis on each of the other stocks proved to me spot on target.

Let’s start with American Express (AXP – NYSE).

AXP

As expected, the stock is breaking to new 52-week highs, which supports holding call options into January. My original thesis was that AXP’s upside was being overlooked due to Mastercard’s incredible run — and AXP’s options were significantly cheaper than MA’s options. I highlighted the AXP January 60 Calls (AXP AL), which are trading between $1.20 and $1.25 per contract at the time. Now, these contracts are trading for $2.20 and going higher, so let’s go ahead and enter the position now.

PLAY: Buy the AXP January 60 Calls (AXP AL) at or under $2.30, good for the day. Place a protective stop loss at $1.30.

Let’s also get an upside position in Garmin January 55 Calls (GQR AK).Currently trading between $1.70 and $1.85 per contract, it’s clear that GRMN has upside momentum and wants to break past its previous high at $54. Let’s get positioned to ride this upside:

GRMN

PLAY: Buy the Garmin January 55 Calls (GQR AK) at or under $1.85, good for the day. Place a protective stop loss at $1.20.

Also, let’s go ahead and set a $6.50 sell order on our DO January 80 Calls (DO AP), goof for the week, and see if it triggers. The last trade on these contracts was $6.30, so we’re getting awfully close to locking in yet another winner.

PLAY: Sell the DO January 80 Calls (DO AP) at or above $6.50, good for the week.

And finally, if your’e still holding GS, the stock is up $2.00 today. Any upside momentum and you could be right back in the game.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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