Things Could Get Ugly

Add ATI Puts

By Bryan Bottarelli
Thursday, June 07, 2007 11:21 AM EDT
Thu, 7 Jun 2007 15:21:00 GMT

Dear Bottarelli Research Member,

For the third straight day, the markets are making a strong move to the downside. On one hand, this has provided a tremendous boost for the SPY August 150 Puts (SYH TT) that we rolled into on Tuesday. Trading for $3.30, that’s a 54% gain from our $2.15 entry price. Definitely maintain this downside position for more protection.

At the same time, I’d like to add a new downside put on Allegheny Technologies (ATI – NYSE). Recent action suggests that when ATI dips underneath its 50-day moving average, it quickly drops another $5.00 before finding a support point. With the stock one again dipping under this level today, I’d like to play a quick $5.00 drop via ATI July 110 Puts (ATI SX). Currently trading between $4.80 and $5.00 per contract, a $5.00 down-move could hand you a fast 50% gainer, so let’s use today’s downside momentum to make a quick hit. Here’s the play:

ATI

PLAY: Buy the ATI July 110 Puts (ATI SX) at or under $5.10, good for the day. Place a protective stop loss at $3.40.

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Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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