Things Could Get Ugly, Part II

Take Profits on ATI Puts

By Bryan Bottarelli
Thursday, June 07, 2007 1:53 PM EDT
Thu, 7 Jun 2007 17:53:00 GMT

Dear Bottarelli Research Member,

Earlier today, I issued an alert titled, “Things Could Get Ugly.”

Since that alert hit the wire, the Dow has dropped another 100 points and is now trading at the low of the session. All told, the Blue Chips have given back over 300 points over the last three days — and there could be even more weakness to come.

SPY

Here’s a graphic look at the SPY, which illustrates that the S&P 500 could still move down 20 points just to re-test the 50-day moving average. I hope you see the importance of holding our protective SPY August 150 Puts (SYH TT). After entering them for $2.15 they’ve just crossed the tape at $3.80, good for a 77% gain. I want to maintain this position for more downside protection.

CTRP

Also maintain your CTRP June 75 Puts (QCT RO). The stock is weak today, but not nearly as weak as it could be. These puts have now traded back up to our $2.50 entry price, so let’s hold them for a breakout into profitability.

But at the same time, let’s capitalize on today’s downside momentum to lock in the best profit we can on our ATI July 110 Puts (ATI SX). We entered these puts this morning for $4.70 and they’ve just hit the wire at $5.70 (and ticking even higher as I write). Just as predicted, ATI’s break below the 50-day MA is extending itself — so let’s go ahead and lock in our immediate profits now.

ATI

PLAY: Sell your ATI July 110 Puts (ATI SX) at or above $5.70, good for the day.

And although this may be difficult on a day like today, I’d like to hang tough on our open oil calls. Both the IMO July 45 Calls (IMO GI) and the SII July 60 Calls (SIK GL) are trading lower alongside the major market averages, but crude oil is once again trading $1.00 higher today — which leads me to believe that the oil plays will soon be rebounding and moving up. I’ll continue to follow these plays, and I think it might be a smart idea to lower our stops or add to both on any extended weakness. I’ll keep you up to date, but until then…

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 June 2007