Bulls Losing Their Grip

Time to Over-Weight Puts

By Bryan Bottarelli
Wednesday, July 25, 2007 10:45 AM EDT
Wed, 25 Jul 2007 14:45:00 GMT

Dear Bottarelli Research Member,

Although the indicators might be early, it’s there are increasing clues that support over-weighting the put side of the ledger. For example, some of the market’s brightest stars like Google (GOOG – NASDAQ) recently dropped $30 in one day. And then yesterday, as the Dow was falling over 200 points, Apple Computer (AAPL – NASDAQ) dropped $9.00. Combine that with mounting sub-prime fears and the Dow’s apparent resistance level at 14,000, and you have a market that looks ready for a move south.

INDU

As a result, let’s officially close out our AGU August 45 Calls (AGU HI) and our TIE August 35 Calls (TIE HG).Both positions triggered our stop losses as yesterday afternoon’s downside momentum began to snowball, so let’s adhere to these stops and close these positions. This would leave us with a nicely-balanced position that consists of two puts and one call — all of which are either profitable or on the verge of being profitable. Therefore, maintain your MGM August 80 Puts (MGM TP), BSC August 30 Puts (BSC TF), and Crocs August 50 Calls (CQJ HJ).

Of course, I’ll always be on the lookout for new positions, and the moment something triggers you’ll be the first to know. If this market is due for a continued fall, we could really make a tremendous amount of money playing puts — so let’s continue to be nimble and quick in this increasingly volatile market. As always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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