Beginning The Week After

Addressing QID and UYG

By Bryan Bottarelli
Monday, October 13, 2008 9:48 AM EDT
Mon, 13 Oct 2008 13:48:00 GMT

Dear Bottarelli Research Member,

Good Monday Morning.More importantly, congratulations from surviving last week’s intense, historic, and bowel-shaking market action.

People throw around the term “off the charts” in common conversation, but last week’s action literally witnessed intra-day moves hat pushed the Dow and the VIX off their respective stock charts. I’ve never seen anything like it before.

In one week, the Dow dropped 1,874 points. And this morning, it’s opening up with a 355-point gain. Some floor traders are saying that the Columbus Day holiday will spark a low-volume rally. But at this point, the markets will take any rally it can get. I’m sure we’ll see some major intra-day swings, because without question, the tremendous volatility is here to stay for the rest of the year. Heck, the upcoming elections in November will just add to the volatile nature of this market.

Looking at our two open positions, it was a smart tactical move to sit out Friday’s trading. After all, the QID October 70 Puts (DYM VR) that we entered for $4.20 pretty much looked dead in the water in the opening moments of Friday’s trading. But as it turned out, the NASDAQ put in a strong recovery, closing Friday in the green. As I write this morning, these puts have traded as high as $4.70, officially putting you in the profit zone. Based on the tremendous market volatility, let’s go ahead and take our profits off the table anywhere at or above $5.00 per contract. This would represent a 19% gainer, which is quite acceptable in this market.

PLAY: Sell your QID October 70 Puts (DYM VR) if they trade at or above $5.00, good for the day.

At the same time, we’re also seeing the recovery that I expected in the financial sector. As I write, shares of Morgan Stanley (MS – NYSE) are leading the way. As you probably know, MS closed down at $9.68 per share on Friday on news that their $9 billion Mitsubishi investment deal wouldn’t go through. But as it turns out, the deal has indeed gone through, and this has helped MS shoot up 60% this morning. This has pushed the entire financial sector higher, which is great news for your UYG November 13 Calls (UUF KO).As you know, we’ve entered these calls on two occasions, which has lowered our cost basis down to $2.35 per contract. As I write, these calls have traded as high as $2.60 in today’s trading, so just like our QID puts, we’re officially moving into the profit zone as well. Therefore, let’s go ahead and set a pre-determined sell target now.

PLAY: Sell your UYG November 13 Calls (UUF KO) at or above $2.80, good for the day.

Of course, if anything should change, I’ll follow up with further alerts and updates. 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 October 2008