An Aggressive Maneuver

Add to JASO Calls

By Bryan Bottarelli
Monday, March 10, 2008 1:54 PM EDT
Mon, 10 Mar 2008 17:54:00 GMT

Dear Bottarelli Research Member,

When it comes to adhering to our trading rules, I typically play things by the book. But every once in a while, we have a situation where we need to adjust our tactics based on certain market conditions, and that’s exactly the case we have right in with JA Solar Holdings (JASO – NASDAQ). As you know, we entered the JASO April 15 Calls (QJP DC) on February 27th for $2.40 per contract. As I write you today, these calls are trading between $1.05 and $1.20. Under normal circumstances, this would trigger our stop loss order. But two things are telling me not to close this position out. First and foremost, JASO looks over-sold. As you can see below, the supplier of monocrystalline solar cells has dipped underneath its 200-day moving average, and this looks like an extreme over-reaction to the markets’ recent weakness.

JASO

Secondly, JASO is scheduled to report earnings on March 12th. That’s this Wednesday. Based on recent earnings reports from solar stocks like Canadian Solar (CSIQ – NASDAQ) and Trina Solar (TSL – NYSE), we could witness a strong upside reaction to good JASO earnings. And since these calls extend into April expiration, we have plenty of time for an up-swing to take effect. Therefore, I’d like to get aggressive on this position and add to it at current levels. Now, if your stop loss has been triggered, then this is the safe and conservative way to go. But in my view, the risk vs. reward scenario works in our favor on this one, so I’d like to add to our position now.

PLAY: Buy more JASO April 15 Calls (QJP DC) at or under $1.30, good for the day. Lower your protective stop loss to $0.55.

At the same time, maintain your LM April 60 Puts (LM PZ) and your DE April 90 Calls (DE DR) for continued market volatility. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

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.


Other Options Alerts From March 2008