Take Put Profits!

Lock in LSTR Gains as Markets Bleed

By Bryan Bottarelli
Tuesday, February 27, 2007 9:46 AM EST
Tue, 27 Feb 2007 14:46:00 GMT

Dear Bottarelli Research Member,

I can’t remember the last time I saw the Dow futures down 100 points, but when you combine an assassination attempt on Vice President Dick Cheney, Alan Greenspan’s “recessionary” comments, and the Shanghai Composite Index dropping nearly 10% overnight (which was their biggest fall in 10 years), all that adds up to a very weak U.S. open.

To be honest, we all knew this was coming. In fact, fear-based drops like this are why we’ve been adding an increasing amount of put options to our ledger, notably our LSTR April 45 Puts (QRY PI) and our protective DIA March 126 Puts (DAW OV). The LSRT puts, which we entered yesterday for $1.75, have traded as high as $2.55 in today’s action, good for a 45.71% gain overnight. Let’s use the selling pressure to take out profits off the table!

PLAY: Sell your LSTR April 45 Puts (QRY PI) at or above $2.40, good for the day.

At the same time, the DIA March 126 Puts (DAW OV) that we entered for $1.40 are back up to $1.70 in today’s trading — so maintain these puts for additional downside protection.

As with most fear-induced sell-offs, we’re witnessing a lot of crushing downside moves today — as some of my favorite stocks like Allegheny Technologies (ATI – NYSE) and Titanium Metals (TIE – NYSE) are getting walloped in today’s action. This could set up a buying opportunity, but the trick is to let the selling pressure subside before jumping back in. In the meantime, our upside play on LVS March 95 Calls (LVS CS) was stopped out in yesterday’s action, so this position is now closed. And one final note, our AGN April 115 Calls (AGN DC) have held up remarkably well — as the stock is only down $1.00 amidst the big time selling pressure. If AGN can withstand today’s action, we should be in fine shape on this position. I’ll be out with more updates as the day progresses, but until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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