Take AGU Profits

Prepare to Take CLF Profits Too

By Bryan Bottarelli
Thursday, May 01, 2008 10:09 AM EDT
Thu, 1 May 2008 14:09:00 GMT

PLAY: Sell your CLF May 145 Puts (CGJ QI) at or above $4.50, good for the day.

PLAY: Sell your AGU May 80 Puts (AGU QP) at or above $5.50, good for the day.

Dear Bottarelli Research Member,

Welcome to May, one of the historically worst market months of the year. After yesterday’s Fed announcement completely rejected a 170-point market rally (and more importantly encountered weakness at the critical 1,400 level on the S&P 500 and 13,000 level on the Dow), my near-term bias is to the downside.

SPX

Based on that near-term bearish view, we’re currently holding the CLF May 145 Puts (CGJ QI), the SPY May 140 Puts (SFB QJ), and the AGU May 80 Puts (AGU QP). While the SPY puts are currently trading in the black, CLF and AGU are also in the verge of breaking into profitability as well. Therefore, let’s adjust our pre-determined “sniper sell” prices on each of these two so we can lock in profits the moment our prices trigger.

For the CLF May 145 Puts (CGJ QI), let’s go ahead and take profits if they trade at or above $4.50 per contract. And for the AGU May 80 Puts (AGU QP), let’s go ahead and take profits if they trade at or above $5.50, which is happening as I write.

PLAY: Sell your CLF May 145 Puts (CGJ QI) at or above $4.50, good for the day.

PLAY: Sell your AGU May 80 Puts (AGU QP) at or above $5.50, good for the day.

In terms of your SPY May 140 Puts (SFB QJ), we’ll continue to hold them without any pre-determined sell. I also continue to like the idea of holding the ABX June 42.5 Calls (ABX FV), as ABX remains extremely over-sold at these levels. This was a $54.00 stock in mid-March, and a month and a half later it’s trading for $38.00? That’s quite a haircut — and I fully expect to see ABX bounce back soon. I may even add to this position once again, but I’ll reserve that recommendation for a little later. For now, maintain your June calls.

ABX

It also appears like I sold off our NVDA June 20 Calls (UVA FD) too soon. As you can see below, the stock making a strong move past its 50-day moving average — and this is a very strong technical sign going forward.

NVDA

I was cautions on this position in advance of the Fed announcement, but from the looks of things today, this should be a position that we re-enter on any forthcoming dips. When it’s time to act, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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