A Coin Flip

500 Points Up or Down?

By Bryan Bottarelli
Monday, September 29, 2008 11:34 AM EDT
Mon, 29 Sep 2008 15:34:00 GMT

Dear Bottarelli Research Member,

I can’t stress enough just how dangerous the market is right now.

What I mean is, there’s a very good chance that the major market averages could fall another 500 points today and tomorrow. But there’s also an equally-probable chance that clarity on the bailout plan could spark a 500-point rally. In all honesty, I would rate the odds of a 500-point upside move and/or 500-point downside move as 50/50 right now.

A pure coin flip.

Because of this, I cannot recommend any new plays. What we’re currently holding right now represents the very best way to make money in this market, and adding any new positions is just not a smart idea in this environment.

I do, however, need to address today’s move on the PowerShares DB Agriculture (DBA – AMEX), because our DBA November 33 Calls (DBA KG) have unfortunately triggered out pre-determined stop loss. While I continue to like this position, especially considering the November expiration, today’s down-move has forced us to take the safe and sound tactical move and close the position out. As you can see, DBA has a solid bottom at the $31.00 level, so if I see a bounce coming, I might re-enter these calls. But for now, this position is officially closed.

DBA

This leaves us holding the KMB October 65 Calls (KMB JM) and the DIA Political Straddle. Looking at the DIA Straddle, I may take the put-side of our profits off the table if our gains continue to appreciate. That way, we can use any upside volatility that could be on the horizon to our advantage, maximizing our gains on the total basket. If (and when) the timing is right to let one side of the basket go, you’ll be the first to know. But 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 September 2008