An Aggressive Move Lower

Lock in Second Half of SPY Puts

By Bryan Bottarelli
Friday, June 22, 2007 2:26 PM EDT
Fri, 22 Jun 2007 18:26:00 GMT

Dear Bottarelli Research Member,

First off, I’d like to congratulate all those members who held their ground and took profits today on the CELG July 60 Puts (LQH SL). The last few trading sessions have sparked some strong intra-day volatility, but in the end the 50-day moving average did indeed act as resistance (as expected when I initiated the play) and anyone who held their ground locked in a nice little gainer.

CELG

Also moving in our direction is the second half of the SPY August 150 Puts (SYH TT) that we entered on June 5th for $2.15. As I’m writing this alert, these puts just ticked up to an intra-day high of $3.10 per contract, good for a 45% gainer. Given today’s strong move downward, I’d like to lock in gains on the second half of this play — and the reason for selling this protective position today is simple.

SPY

Looking at today’s SPY chart, you’ll notice that the index is making a very strong stand at the 50-day moving average. Today’s intra-day action probed under the 50-day average but was quickly bought up — indicating that this could potentially be an area of support. If that’s the case, it’s prudent to use today’s selling pressure to lock in our SPY puts gains now. We can always re-enter another protective put position next week, but for now let’s sweep our profits off the table.

PLAY: Sell the second half of your SPY August 150 Puts (SYH TT) at or above $3.00, good for the day.

I’d also like to quickly comment on United States Steel (X – NYSE) and Cleveland-Cliffs (CLF – NYSE), as each stock is displaying amazing strength in an otherwise very weak market environment. Based on today’s moves, I’m confident that CLF could hand us a nice gainer, so you can look forward to another call winner next week. I’m also getting ready to initiate a new upside play on X, so if all the triggers remain in place you can look forward to that trade next week as well. Until then, have a good weekend and we’ll continue our string of recent winners next Monday!

Oh, and in case you overlooked the small cap notice that I included in this morning’s alert, I’ve attached it again for your review. If you have yet to join our new small cap service, you won’t want to miss this:

SMALL CAPS NOTE: I’m about to publish our newest small-cap pick after the close of trading today, and this $2.25 stock is the premier geothermal company in the country — if not the world. They expect to have their first plant online in November, which means the time to buy this stock is now. You’ll get all the details tonight in our Bottarelli Research Small Caps alert, so if you’d like to join this new service please follow this link:

http://www.bottarelliresearch.com/small-caps/offer/O2710K2SYZ/

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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