Add AZO Puts
50-Day Rupture Could Spark Selloff
Dear Bottarelli Research Member,
There could be trouble ahead for AutoZone (AZO – NYSE). The specialty retailer of automotive replacement parts and accessories has just dipped below its 50-day moving average, and this could be the trigger that sparks additional selling pressure in the very near future.
Combine a weak retail environment leading into Christmas, and it AZO looks ready to re-test its September 10th low of $109.03. Let’s profit off this move using December puts. Here’s the play:
PLAY: Buy the AZO December 120 Puts (AZO XD) at or under $7.70, good for the day. Current bid/ask spread is $7.20 to $7.50. Place a protective stop limit at $3.20.
At the same time, maintain your CHL December 90 Puts (CHL XR), as this position is just now breaking into the profit zone. And also, if we continue to see weakness in our PCU December 130 Calls (PCU LF), I might add to the position going into December. While PCU is not a pure gold play, per say, it is the best all-around metals play you can own, offering exposure to copper, molybdenum, zinc, silver, gold, and lead. To my eye, this diversified mix of metals looks like a great way to play the metals sector all in one shot. If the time comes to add to your position, you’ll be the first to know. Until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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