Add CTRP Puts

Playing Profit-Taking

By Bryan Bottarelli
Friday, August 15, 2008 10:52 AM EDT
Fri, 15 Aug 2008 14:52:00 GMT

PLAY: Buy the CTRP September 55 Puts (QCT UK) at or under $3.70, good for the day. Place a protective stop limit at $1.90 and a pre-determined sniper sell at $4.90.

Dear Bottarelli Research Member,

Over the first hour of today’s trading, our current positions have been jumping around. For instance, both Union Pacific (UNP – NYSE) and Amazon.com (AMXN – NASDAQ) have traded in the red and the green today, and this choppy trading behavior has pushed around our UNP September 75 Calls (UNP IO) and our AMZN September 90 Calls (ZQN IR).From a chart perspective, I continue to maintain my upside bias on each play, so hold both calls for more upside.

AMZN

UNP

At the same time, I’m still not convinced that Wachovia (WB — NYSE) can rally any further, so also maintain your WB September 16 Puts (WB UH) for forthcoming weakness.

WB

And in terms of a new trade, I’d like to zero in on shares of Ctrip.com (CTRP – NASDAQ).It’s quite obvious that the Chinese-based travel company just reported blockbuster earnings that were “goosed” by the Summer Olympics. As a result, the stock blasted from $43.00 up to $55.00 over a 2-day period.

CTRP

But with the Olympic travel trigger now in the rearview mirror, I think we’ll see profit-taking come into play. After all, I haven’t seen many stocks maintain pops of such magnitude in this current market environment, so let’s play CTRP September puts anticipating a coming pullback. Here’s the trade:

PLAY: Buy the CTRP September 55 Puts (QCT UK) at or under $3.70, good for the day. Place a protective stop limit at $1.90 and a pre-determined sniper sell at $4.90.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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