As Expected, HHH Drifting Lower

Your Puts Gained 40% Already!

By Bryan Bottarelli
Thursday, January 25, 2007 12:46 PM EST
Thu, 25 Jan 2007 17:46:00 GMT

Dear Bottarelli Research Member,

On Monday January 22nd, I issued an alert titled, “Transport Sector Set to Fall.” In this missive, I highlighted a double-top formation in the Dow Transports ($TRAN) which was a clear indication of pending weakness. Now I admit, I was slightly concerned when Jim Cramer came on TV that evening and gave a bullish call on the Transports, but it looks like my original thesis is the one that’s winning out. Just look at today’s Dow Transport chart and you’ll see what I mean:

TRAN

To profit off this forecasted down-move, I indicated that Norfolk Southern (NSC – NYSE) was showing the weakest chart patterns — which warranted a play on NSC March 50 Puts (NSC OJ). As you know, we entered these puts for $1.60 and tried selling them off for $2.00 before getting executed at $1.80. It was a nice, quick gainer, for sure. But as I write, NSC continues to fall, and these puts are now trading as high as $2.65. So if you assumed more risk for greater rewards, you’re payoff today is even greater. If you still own NSC, take your profits now!

NSC

Another quick mover that we’re seeing is our morning play on the Internet HOLDRs (HHH – AMEX).Just as I expected, this morning’s upside is fading away, and the HHH February 55 Puts (HHH NK) that we entered for $0.75 are now trading as high as $1.06. That’s a gain of 41% in a matter of hours! If you know me, that’s an immediate gainer that I cannot pass up, so let’s go ahead and lock in our profits as the HHH continues to drift lower.

HHH

PLAY: Sell your HHH February 55 Puts (HHH NK) at or above $1.00, good for the day.

I also received some questions about our LFC February 50 calls (LFC BJ). Although the position quickly hit our stop loss, I’d like to continue to follow the trade for those speculators who continue to hold. Depending on your risk tolerance, I still feel the play represents a good risk to reward ratio worth monitoring.

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 January 2007