Dow Now Off 400!

Play FXI Puts

By Bryan Bottarelli
Thursday, July 26, 2007 2:41 PM EDT
Thu, 26 Jul 2007 18:41:00 GMT

Dear Bottarelli Research Member,

Unreal!The Dow has now traded lower by 400 points, making this one of the most violent single-day sell-offs in recent history. So here’s an idea that was just brought to my attention: iShares FTSE/Xinhua China 25 Index (FXI – NYSE).

FXI

The theory is simple: The ripple effects of this major U.S. sell-off will certainly spook the International markets overnight, and that could lead to big time selling over in China’s super-volatile index. Since FXI is an ETF tied directly to Asian stock performance, any overseas panic selling could easily push the FXI down another $10.00 overnight. For that very reason, let’s add August puts on FXI now!

PLAY: Buy the FXI August 135 Puts (FAH TE) at or under $6.10, good for the day. Current bid/ask spread is $5.40 to $6.00. Place a protective stop limit at $3.00.

In other news, your BEN puts should have triggered, so that’s another winner to add to today’s tally. Let’s keep it rolling!

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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