Time to Snipe FRE

Play February Calls Now!

By Bryan Bottarelli
Thursday, January 24, 2008 2:20 PM EST
Thu, 24 Jan 2008 19:20:00 GMT

PLAY: Buy the FRE February 35 Calls (FRE BG) at or under $2.00, good for the day.

Dear Bottarelli Research Member,

“Hammering” Hank Paulson just announced the details of his new economic stimulus package, and everyone who listened to the briefing is slightly disappointed with the $300 credit amount. Since policymakers are not shy about saying that plan to issue this money only to “those who will spend it,” let’s not mince words. They’re giving it to the poor so they can go to Wal-Mart and have a shopping spree. New fishing poles for the whole family!

Ok, perhaps I’m being cynical. After all, it’s important that steps are being made to correct our economy. But the real value of this new stimulus plan surrounds conforming versus non-conforming load limits. This could be massive shot in the arm for the mortgage industry, and that’s why I’d like to make a quick play on Freddie Mac (FRE – NYSE).

FRE

As you can see, the stock is just now dipping its head above the 50-day moving average. If this level acts as support, we could see shares make a big jump leading into next week’s Fed meeting. This trading thesis is similar to what I outlined for Goldman Sachs earlier today. Therefore, let’s make a quick “sniper” call play on FRE now!

PLAY: Buy the FRE February 35 Calls (FRE BG) at or under $2.00, good for the day. Plan to “sniper sell” then at the 15% to 20% profit mark, and place a protective stop limit at $0.70.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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