Here Comes the Fall

Add MRO Puts Now

By Bryan Bottarelli
Thursday, March 08, 2007 2:51 PM EST
Thu, 8 Mar 2007 19:51:00 GMT

Dear Bottarelli Research Member,

As I mentioned this morning, I am skeptical that today’s rally can last. In the last 20 minutes the Dow has turned a 100-point advance into only a 35-point advance — which means that some renewed bearishness is seeping into the markets are we draw near the close of the day. As I watch this move unfold, there’s a good chance that we could open tomorrow in the red, so let’s get aggressive and add a speculative put option to our ledger on Marathon Oil (MRO – NYSE).

MRO

As you can see by the chart, MRO has been in a nice little run lately, but it now appears like the stock is due for a breather. As a more speculative play, we could be looking at a quick $2-$3 down move, so only take this one if you can handle a quick trade. My thinking is that we could be selling this play for gains on any MRO downside pressure by as early as tomorrow. Here’s the play:

PLAY: Buy the MRO April 95 Puts (MRO PS) at or under $4.00, good for the day. Current bid/ask spread is $3.70 to $3.80. Place a protective stop loss at $2.70.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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