Add ACI Puts

A Quick Downside Play

By Bryan Bottarelli
Monday, August 25, 2008 11:45 AM EDT
Mon, 25 Aug 2008 15:45:00 GMT

PLAY: Buy the ACI September 55 Puts (ACI UK) at or under $4.00, good for the day. Place a protective stop limit at $2.60 and a pre-determined sniper sell at $5.10.

Dear Bottarelli Research Member,

We’ve opened the last trading week of August with yet another choppy and volatile session. As the opening bell rang, the markets drifted lower — which offered a boost to the oil and energy sector. But within the following hour, the oil and energy sector reversed course and has now turned red. Given this erratic and irregular trading pattern, I’d like to make a quick downside play on shares of Arch Coal (ACI – NYSE).

As you know, we’ve had nice success playing coal’s recent upside bounce by playing FCL calls. But as you can now see from the ACI chart, an apparent failure under the 50-day moving average could signal that ACI could drop back down below the $50.00 level. Therefore, I’d like to make a quick and dirty downside put play on ACI.

ACI

The trade here is a move underneath the 200-day moving average — and that’ll be where we take profits. Then, we could very well transition right over into ACI calls and play a pending upside move. Therefore, don’t get too attached to this position, because it’s a quickie. But first thing’s first. Let’s establish ACI puts now.

PLAY: Buy the ACI September 55 Puts (ACI UK) at or under $4.00, good for the day. Place a protective stop limit at $2.60 and a pre-determined sniper sell at $5.10.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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