Another Crusher

Dow Down Another 200

By Bryan Bottarelli
Thursday, March 13, 2008 10:06 AM EDT
Thu, 13 Mar 2008 14:06:00 GMT

PLAY: Sell your DIA April 120 Puts (DAW PP) at market, good for the day.

PLAY: Close out your BG April 100 Calls (BG DT) at market, good for the day.

Dear Bottarelli Research Member,

After the market statistics that I presented yesterday, which concluded that a 3% up-move on the S&P 500 the day after hitting a new 52-week low has historically been very bullish, it’s quite clear that today’s early selling pressure was unexpected. As you can see below, the Dow has now given back over HALF of the gains that we witnessed on Tuesday.

INDU

Looking at our current positions, our protective puts on the DIA are certainly doing their job today. In fact, the DIA April 120 Puts (DAW PP) that we entered yesterday for $2.76 have traded as high as $4.30 today, good for an overnight return of 55%. Unfortunately, this gain has been eaten away from the stop-out on our BG April 100 Calls (BG DT). As I mentioned yesterday, I thought that BG was over-sold when the shared dipped underneath the 200-day moving average — and played called to capitalize on a quick snap-back. Obviously this is not happening, so let’s use the gains on our DIA put hedges to offset the losses on our BG calls. Let’s go ahead and close both positions now.

BG

PLAY: Sell your DIA April 120 Puts (DAW PP) at market, good for the day.

PLAY: Sell your BG April 100 Calls (BG DT) at market, good for the day.

Looking at our final two call positions, I’d like to maintain both the FCX April 105 Calls (FCX DA) and the APA April 120 Calls (APA DU). In a market like this, carrying a long position in metals and energy isn’t a bad idea, and a sharp market snap-back (which could happen anytime) could easily shoot both positions back into profitability. Until then…

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