“Get Me Out”

Dow Falls 750 (again)

By Bryan Bottarelli
Monday, October 06, 2008 2:54 PM EDT
Mon, 6 Oct 2008 18:54:00 GMT

Dear Bottarelli Research Member,

I can hear the phone calls across the country…

Panicked investors screaming to their brokers, “Get Me Out!”

This, my friends, is widespread panic.

Even Jim Cramer suggested going to cash. Wow.

And as you know, on multiple occasions, I’ve warned about the 1,000 point down-day on the Dow.

We could see it today.

So remember today’s date: Monday, October 6th 2008, the day the global markets went into free fall.

INDU

But through it all, we’ll continue our successful trading strategy, which involves making quick-hit winners whenever market opportunities come up.

In an amazing display of strength, shares of ICE have actually rallied in today’s session, pretty much rejecting our attempt to buy the ICE October 85 Calls (ICE JQ) at or under $3.30.

Prices have moved as high as $6.20 today on these calls, which would have given you a quick 100% gainer. But we just couldn’t time our entry price. Now, if you decided to pay up for these contracts, then you’re showing a strong gain. If this is the case for you, then hear me loud and clear. TAKE YOUR MONEY AND RUN! Absolutely, positively, lock in your quick gainer (*of course, this will not be listed in our track record).

Now, as I mentioned, we could have a devastating market sell-off into the close. Therefore, continue to work your $3.30 buy order on the ICE calls, good for the day. If prices trigger between now and the close, we’ll officially own this position going into tomorrow. If not, I’ll follow up tomorrow as well.

Also, going into tomorrow, I’d like to play puts on either the DUG or the SDS. After all, as I noted this morning, the extremely-high values on the VIX indicate that we could see a snap-back rally. But at the same time, I don’t want to catch a falling knife. Therefore, similar with our ICE play, I’m going to issue a buy recommendation, good for the day, at prices WELL BELOW today’s current prices. If we get filled going into the close, then we’ll be in good position going into tomorrow. And if we do not get filled, then no harm, no foul. I’ll simply follow up on this trading strategy tomorrow morning.

DUG

SDS

Armed with this game plan, I’d like to play the DUG October 55 Puts (DUD VC). Current bid/ask spread is $5.60 to $6.10 per contract. Let’s go ahead and enter a buy order at or under $4.90, good for the day. That way, if the markets continue to sell off, DUG will extend upon its gains. As a result, these puts will drop in value, allowing us to (hopefully) scoop them up for a nice entry price going into tomorrow. And once again, if these prices do not trigger, then do not enter the trade. As a review, here are the two orders we’re currently working:

PLAY #1: Buy the ICE October 85 Calls (ICE JQ) at or under $3.30, good for the day.

PLAY #2: Buy the DUG October 55 Puts (DUD VC) at or under $4.90, good for the day.

On a personal note, in these troubled market times, I’m glad you’re part of our elite trading group. Together, we will service and prosper. That’s my sincere promise to you.

And as always.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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