Add FXI Puts
A Sharp Downside Move
Dear Bottarelli Research Member,
The market is getting clobbered this morning. The Dow is off 200 points as I write. So in a market like this, it’s time that we take a very cautions approach to our trading. After all, now that the Fed can no longer come to the rescue, the bulls have lost their lifeline and the bears are taking full advantage. As a result, we must add a new downside put, and the best candidate today comes in the form of iShares FTSE/Xinhua China 25 Index (FXI – NYSE).
As you can see, this basket of top Chinese companies has been in quite a run, but if the U.S. markets are set to take a breather, than you’re sure to see a big follow-on down move on the FXI. Let’s get positioned right now to profit off this fall. Here’s the play:
PLAY: Buy the FXI November 200 Puts (FNQ WR) at or under $6.00, good for the day. Current bid/ask spread is $5.40 to $5.70. Place a protective stop limit at $3.00.
Let’s also close off our OEH December 65 Calls (OEH LM). We entered them on October 29th for $4.00 and the current bid/ask spread is $4.00 to $4.60. Let’s trim our upside exposure and lock in a gain wherever possible.
PLAY: Sell your OEH December 65 Calls (OEH LM) at or above $4.00, good for the day.
We must also close off our BID November 55 Calls (BID KK) and our BHP November 85 Calls (BHP KQ), as each position is witnessing strong downside action today. We’ll re-evaluate each stock once the dust settles, but for now we must take the safe approach and close these positions as well. As far as the EXM play from yesterday, it moved too quickly for anyone to enter, but if you happened to pay up to take this trade, close it off as well. I’ll be out later today with further updates — but until then, add those FXI puts. And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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