I Don’t Trust It

Play DIA Puts & IBKR Calls

By Bryan Bottarelli
Thursday, January 31, 2008 12:34 PM EST
Thu, 31 Jan 2008 17:34:00 GMT

PLAY: Buy the DIA February 122 Puts (DAW NR) at or under $1.50, good for the day. Place a protective stop limit at $0.60.

PLAY: Buy the IBKR March 35 Calls (QBO CG) at or under $1.80, good for the day. Place a protective stop limit at $0.90.

Dear Bottarelli Research Member,

Since our last correspondence, shares of BG and ICE have put in strong recoveries alongside the rest of the market. But I have to tell you, a little voice in my head is telling me “don’t trust it.” After all, if the bulls really wanted to leave an impression, they would have extended upon the Fed-induced rally from yesterday. But as you know, this certainly did not happen. Now, the safety net of the Fed is gone — leaving the markets exposed to a re-test of their January lows. Therefore, I’d like to follow up on what I said this morning and enter another round of DIA puts.

PLAY: Buy the DIA February 122 Puts (DAW NR) at or under $1.50, good for the day. Place a protective stop limit at $0.60.

Let’s also take a careful position that’ll capitalize on any extended upside using Interactive Brokers Group (IBKR – NASDAQ).As I mentioned this morning, the stock is hitting new 52-week highs despite the boarder market’s weak internals, so adding this cheap upside call play going into March seems to me like a reasonable precautionary move. Here’s the play:

PLAY: Buy the IBKR March 35 Calls (QBO CG) at or under $1.80, good for the day. Place a protective stop limit at $0.90.

EDITOR’S NOTE: One positive result of the market’s downside weakness is that it’s now offering you remarkable price valuations on some of the top small-cap companies. For example, in my sister publication Bottarelli Research Small Caps, we bought shares of E*Trade Financial (ETFC – NASDAQ) on January 14th 2007 for $3.19 per share. And as I write, ETFC shares have just crossed the tape at $4.95, good for a 55.17% return. If you are not yet a member to our small-cap service, I recommend that you join us today. Since you’re not fighting against an expiration date with small-cap stocks, getting positioned in some of the market’s fastest-growing companies for today’s severely reduced valuations could offer you substantial returns — and I want to be sure that you’re fully taking advantage of these unique and profitable opportunities. Tomorrow’s newest small-cap pick, for example, will take advantage of a pure “Downside Gift Gap,” so if you’d like to supplement your Bottarelli Research Options membership, I suggest that you join our Small Caps service today! For all the exciting details, click here:

http://www.bottarelliresearch.com/small-caps/offer/E79Y3GJTG7/

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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