Take DIA Profits!

Plus: Target a New Put Play on DJX

By Bryan Bottarelli
Tuesday, February 05, 2008 11:35 AM EST
Tue, 5 Feb 2008 16:35:00 GMT

PLAY: Sell your DIA February 122 Puts (DAW NR) at or above $1.45, good for the day.

Dear Bottarelli Research Member,

Armed with our FXI puts, we’re positioned to play any market weakness on a global scale. I would suspect that today’s U.S. weakness will be felt overseas, and this could hand us another nice downside put winner on the FXI later this week. But as I watch the Dow trade as much as 260 points lower, I think the smart play here is to lock in gains in our DIA February 122 Puts (DAW NR) and then possibly re-enter another downside put play that takes us out into March.

In fact, I may decide to play March contracts on the DJX instead of the DIA, which gives us a more accurate representation of the Dow’s movements. After all, the DJX is a pure index that traded at 1/100 the level of the Dow Jones Industrial Average, and playing the DJX could hand us an even higher return. Today, for example, the DIA is trading lower by 1.67% while the DJX is trading lower by 1.84%. While this “off-ness” is minor, we might as well make the most money we can off the same market move — and the DJX offers us this luxury. But more on adding DJX March puts in a moment. The first order of business is locking in gains on your current DIA puts. After all, there’s no sense exposing our very nice gains to some freakish mid-day rally (which this market is certainly capable of!), so let’s take the safe route and lock in our DIA profits now!

PLAY: Sell your DIA February 122 Puts (DAW NR) at or above $1.45, good for the day.

At the same time, continue to hold your FXI February 149 Puts (FFP NS) and your

SII March 60 calls (SIK CL).And when it comes time to enter the DJX March put play, you’ll be the firs to know. Until then,

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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