Play CELG and BDK Puts

Plus Maintain Oil & Metal Calls

By Bryan Bottarelli
Tuesday, June 12, 2007 10:32 AM EDT
Tue, 12 Jun 2007 14:32:00 GMT

Dear Bottarelli Research Member,

The Dow is down 95 points as I write, and there is a good possibility that the major market indices could extend these losses as the trading day progresses. This is why I want you to hold the second half of your SPY August 150 Puts (SYH TT). If you recall, we sold the first half of this position on June 5th but let’s continue to maintain the second half for more downside protection.

SPY

At the same time, the calls we have are actually quite defensive positions. Plays like the PCU July 90 Calls (PCU GR), IMO July 45 Calls (IMO GI), and the SII July 60 Calls (SIK GL) offer us exposure to metals and oil, which could perform better in the midst of a weak market. But as this newest down-strong gains momentum, it’s time that we add two new put plays in stocks that I’ve mentioned in previous alerts: Celgene (CELG – NASDAQ) and Black & Decker (BDK – NYSE).

CELG

Looking at CELG, the stock’s inability to find support at the 50-day moving average signals a forthcoming fall, so let’s play this move using CELG July 60 Puts (LQH SL). Here’s the trade:

PLAY: Buy the CELG July 60 Puts (LQH SL) at or under $3.40, good for the day. Current bid/ask spread is $3.10 to $3.30. Place a stop limit at $2.00.

Looking at BDK, the stock has finally ruptured the 50-day moving average which also signals a forthcoming downside fall, so let’s play this move using the BDK July 90 Puts (BDK SR). Here’s the trade:

BDK

PLAY: Buy the BDK July 90 Puts (BDK SR) at or under $3.60, good for the day. Current bid/ask spread is $3.30 to $3.50. Place a protective stop limit at $2.30.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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