The Best Month of the Year

Take WFT and BIG Gains Now!

By Bryan Bottarelli
Friday, March 30, 2007 11:54 AM EDT
Fri, 30 Mar 2007 15:54:00 GMT

Dear Bottarelli Research Member,

Good news! Next week starts the trading month of April. Why is this important? Because according to the Stock Trader’s Almanac, April ranks as the Dow’s top-performing month of the year, with a historical monthly increase of 1.8%. For this reason it might be a good idea to play some calls options early next week — and I continue to like the upside potential of John Deere (DE – NYSE).

DE

Just today, for example, a new report hit the wire that said ethanol demand will boost corn planting by 15% in 2007 — making this the largest corn crop since 1944. The U.S. Department of Agriculture’s annual prospective plantings report said that this year’s 90.5 million acres will be 12.1 million more acres than in 2006, as farmers are using the corn price increases to over-emphasize corn and under-emphasize soybeans, cotton, and rice. Chart-wise, the stock continues to hug its 50-day moving average, so it’s not exactly the time to buy just yet. If we can catch any dips next week, I’ll most likely jump on some longer-dated calls.

In the meantime, I’m happy to report that we can finally start taking some of our put profits off the table. I know that this week has been a little slower than our typical trading, but that’s what you get sometimes when the markets are shorting out their next directional move. With the Dow about to tick down by 60 points (as I type), we’re seeing some nice put gains and I’d like to take full advantage.

First up is our WFT May 45 Puts (WFT QI). I admit that this was one was a nail-biter, as we dealt with soaring oil prices. But we held to our convictions and it’s paying off today. As I write, the puts you entered for $1.75 have traded as high as $2.10, so let’s take our 20% gains off the table now.

WFT

PLAY: Sell your WFT May 45 Puts (WFT QI) at or above $2.10, good for the day.

Also moving lower is our Big Lots May 35 Puts (BIG QG). The upside looks to be capped out — which signals more downside selling pressure — but I’d rather not be exposed during April’s historic strength. So let’s lock in our profits now. The puts we entered for $3.40 have traded as high as $4.10 today, so let’s lock in this gainer as well.

BIG

PLAY: Sell your Big Lots May 35 Puts (BIG QG) at or above $4.00, good for the day.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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