Two New Plays

Add BEN Puts, UNP Calls

By Bryan Bottarelli
Tuesday, July 29, 2008 1:49 PM EDT
Tue, 29 Jul 2008 17:49:00 GMT

PLAY: Buy the BEN August 100 Puts (BEN TT) at or under $5.50, good for the day. Place a protective stop limit at $3.10 and a pre-determined sniper sell at $7.00.

PLAY: Buy the UNP August 80 calls (UNP HP) at or under $2.85, good for the day. Place a protective stop limit at $1.30 and a pre-determined sniper sell at $3.60.

Dear Bottarelli Research Member,

In this market, you really can’t get too excited about any single-day move. Therefore, I’d like to adopt this approach right now when issuing one new call and one new put play.

On one hand, I’d like to use today’s temporary upside pop in the financial sector as a prime opportunity to add puts on Franklin Resources (BEN – NYSE).

BEN

The asset management company is attempting to break past its 50-day moving average, but I’m not sure how much more market upside it’ll have left. After all, the Dow is up 200 points as I write, and any weakness into the close could see BEN dip underneath its 50-day moving average, setting the stage for selling pressure for the remainder of the week. Therefore, let’s capitalize on today’s pop by adding BEN puts.

PLAY: Buy the BEN August 100 Puts (BEN TT) at or under $5.50, good for the day. Place a protective stop limit at $3.10 and a pre-determined sniper sell at $7.00.

On the other hand, I’d like to use continued weakness in the price of crude oil to play an extended upside move in shares of Union Pacific (UNP – NYSE). As you can see, today’s bullish engulfing candlestick formation signals further upside in UNP, especially if oil prices continue moving lower. Therefore, let’s play this upside momentum using August calls.

UNP

PLAY: Buy the UNP August 80 calls (UNP HP) at or under $2.85, good for the day. Place a protective stop limit at $1.30 and a pre-determined sniper sell at $3.60.

At the same time, continue holding your ACI August 55 Calls (ACI HK), LAMR August 35 Puts (LJQ TG), and GENZ August 75 Calls (GAA HO). And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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