Add QID Puts

Play a Tech Rebound

By Bryan Bottarelli
Wednesday, October 08, 2008 11:18 AM EDT
Wed, 8 Oct 2008 15:18:00 GMT

PLAY: Buy the QID October 75 Puts (DYM VW) at or under $7.60, good for the day. Place a protective stop limit at $4.10 and a pre-determined sniper sell at $10.50.

Dear Bottarelli Research Member,

We’re flying by the seat of our pants today.

We really have no other choice.

After all, the intra-day price swings are utterly remarkable. One minute, the market is down 200 points. The next minute, it’s up 45 points. And then it’s up 150. I run some stock scans, and we’re back down 100 points. And well, you get the idea.

Looking at today’s action, I think we have a nice little opportunity to play puts on the UltraShort QQQ ProShares (QID – AMEX), which moves at a rate of twice the inverse of the NASDAQ-100. As you know, the NASDAQ 100 is a basket of stocks that includes names like Apple, Cisco, Gilead Sciences, Google, Intel, Microsoft, Qualcomm, Teva Pharmaceuticals, Research in Motion, and Oracle. In short, it’s a well-diversified basket of top technology and biotech companies. And when I look at the chart, I’m seeing signs that the QID has now hit a near-term top. Check it out:

QID

Based on this formation, I think the QID will settle back in around the $65.00 level, which is good for a $10.0 down-move from current levels. Therefore, let’s go ahead and play this move using QID October puts now!

PLAY: Buy the QID October 75 Puts (DYM VW) at or under $7.60, good for the day. Place a protective stop limit at $4.10 and a pre-determined sniper sell at $10.50.

At the same time, maintain your UYG November 13 Calls (UUF KO) for more upside, and today’s early-morning move could have marked the bottom.

UYG

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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