Take GLD Profits!

Lock in 25% Gainer

By Bryan Bottarelli
Monday, September 29, 2008 10:12 AM EDT
Mon, 29 Sep 2008 14:12:00 GMT

PLAY: Sell your GLD October 87 Calls (GLD JI) at or above $5.00, good for the day

Dear Bottarelli Research Member,

Good Monday morning. The market hates uncertainty, and that’s clearly evident with the brutal 300-point sell-off we have this morning. Since Congress failed to release any details on their $700 billion bailout plan, we’re faced with a new rash of investor panic. As you can see below, the Dow is now setting a lower-high. From a technical perspective, this is not a good sign. As I read this chart, I’d have to say that 10,500 will be the next target. And if that level doesn’t hold, we’ll be in the 9,000 level in the blink of an eye.

INDU

Then again, any clarity about the details of the bailout plan could blast the major markets averages aggressively higher. And luckily for us, we’ve done a good job of positioning ourselves to withstand this volatility. For example, the GLD October 87 Calls (GLD JI) that we added to on September 22nd have now traded as high as $5.30, good for a 33% gainer. In this market, we need to remain as nimble as possible. Therefore, let’s go ahead and lock in our profits now!

GLD

PLAY: Sell your GLD October 87 Calls (GLD JI) at or above $5.00, good for the day.

At the same time, our so-called “Political Straddle” on the Dow Diamonds (DIA – AMEX) is performing beautifully. As you know, we entered the DIA October 110 Calls and the DIA October 110 Puts on September 25th for a combined value of $7.05. As I write, the puts are trading for $4.40 and the calls are trading for $3.10, good for a total of $7.50. This is exactly how this play is designed, so maintain both sides for more gains.

And finally, we’re holding the DBA November 33 Calls (DBA KG) and the KMB October 65 Calls (KMB JM). I consider both of these positions to be protective as well, so maintain each position for more upside. And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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