A Late-Day Surge

Maintain Both Calls and Puts

By Bryan Bottarelli
Wednesday, June 13, 2007 3:19 PM EDT
Wed, 13 Jun 2007 19:19:00 GMT

Dear Bottarelli Research Member,

Yesterday we witnessed a late-session breakdown that dropped the Dow over 120 points. Today we’re witnessing the exact opposite — a late-session rally that’s taking the Dow higher by 150 points. What volatility! Just look at the last two days on the SPY and you’ll see what I mean:

SPY

Extreme market swings like this are why we’re holding both upside calls and downside puts — and it’s one of the reasons why I urged you to maintain both your IMO July 45 Calls (IMO GI) and your SII July 60 Calls (SIK GL). Today’s up-move is on the verge of pushing both positions into profitability, so maintain each play for future gains.

SII

Also pushing into the profit zone is the JOYG July 60 Calls (JQY GL) that we entered yesterday for $2.05. These calls just traded for $2.45, which is a nice 20% one-day return, to maintain this position for more upside as well.

JOYG

On the flipside, let’s also be sure to maintain our downside positions as well. After all, recent trends suggest that the markets could easily drop 100 points tomorrow, so we want to be in position to profit off a downside move like this as well. We tried to take a quick gain on our CELG July 60 Puts (LQH SL) this morning, but prices did not stay at our sell prices for long. As a result, we’re still in the position. Even with today’s up-move the CELG chart still looks weak, so maintain these puts.

CELG

Also maintain the BDK July 90 Puts (BDK SR). Similar to CELG, the bounce in BDK today still leaves the stock underneath the 50-day moving average, which could now convert into a resistance point. The chart continues to be bearish, so maintain these puts as well.

BDK

Until tomorrow,

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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