Another Pop
Dow Rallies +700 Since Tuesday
Dear Bottarelli Research Member,
The markets are once again blasting higher this morning – with today’s pop coming thanks to comments be Ben Bernanke. The Fed chief indicated that he will be placing great emphasis on the recent deterioration in consumer spending, and this caused the market to assume that a 50 basis point cut will occur on December 11th and blast higher. In fact, since the open of trading on Tuesday, the Dow has gained 704 points, so you better believe that a 50-basis point cut is currently priced in.
Looking at our current positions, this unrelenting upside has forced us to trim down our put plays, so let’s go ahead and close off our DO December 110 Puts (DO XB). These puts hit our stop yesterday, but if you’re still holding them, let’s take the safe route and close them out for good right now.
At the same time, if you were unable to take profits on your CMG December 135 Calls (CMG LG) from yesterday, then you’ll most likely get a second exit opportunity today. These calls have once again traded as high as $6.40 today, so be sure to use today’s upside to lock in your profits.
Looking at our LEH December 60 Puts (LES XL), I’m still not convinced that we should close out this play. After all, after adding to the position, these puts came to within $0.30 of our break-even prices yesterday, but then today’s upside move negated those gains. All it’ll take is one news event to re-ignite the credit worries, so I’d like to maintain these puts into next week.
And finally, if you were unable to enter the MICC December 125 Calls (CQD LE) yesterday for $5.20, it looks like you’re getting a second opportunity this morning. After opening the day higher, MICC has pulled back a little, which offers you a nice opportunity to jump into these calls.
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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