Take AZO Profits
Plus: Bite Down and Hold PCU
Dear Bottarelli Research Member,
“Gut-wrenching” is how CBS Marketwatch described today’s opening session move. As you can see from the chart below, the Dow made a very strong recovery in yesterday’s session, reversing nearly all of its intra-day loss of 200 points to close above the all-important 200-day moving average.
This should have been a big time confidence booster for the bulls — one that sparked a strong rally today (or at least that’s what I thought!) But as it turns out, the Dow has opened 160 points lower, once again putting the Blue Chip average underneath its critical 200-day MA. When you see moves like this, you have to recognize the fact that he bears could have more control of this market than we originally thought. Therefore, we’ll continue to play a carefully balanced ledger of calls and puts — taking quick profits along the way. Case in point, let’s go ahead and lock in gains in AutoZone (AZO – NYSE).
Today’s $3.80 drop has pushed your AZO December 120 Puts (AZO XD) from our $7.80 entry point all the way up to $9.60, good for a nice 23% overnight winner. Let’s lock in these gains now!
PLAY: Sell your AZO December 120 Puts (AZO XD) at or above $9.00, good for the day.
At the same time, bite down and hold your PCU December 130 Calls (PCU LF). Considering the behavior of this recent market, the Dow could turn green by lunchtime, and we want to maintain exposure to both the upside and the downside. Therefore, let’s use our December expiration to our advantage and hold onto this position. And until further notice,
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.
Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.
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