Take CHL Profits!
Lock in Another Overnight Gainer
Dear Bottarelli Research Member,
We’ve once again successfully played China Mobile Limited (CHL – NYSE) to the downside. As I write, the stock is off another $3.90 and the CHL December 90 Puts (CHL XR) that we entered yesterday for $7.80 have now traded as high as $9.40, good for a nice 20.5% overnight return. As you know, these China-based plays are extremely volatile both on the upside and the downside, so it’s imperative that we remain nimble and handle them with caution. Therefore, despite the likelihood of another $7.00 of CHL downside, I think the smart course of action is to lock in our profit now!
PLAY: Sell your CHL December 90 Puts (CHL XR) at or above $9.20, good for the day.
Let’s also go ahead and add to our PCU December 130 Calls (PCU LF) at or under $7.10, with the hopes that the 50-day moving average will serve as a strong support point.
Adding to our position at current levels will lower our cost basis down to around $8.00 per contract, which is more than achievable before December expiration. Once you’ve added to your position, adjust your stop limit down to $3.10.
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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