Add ICE Calls

Playing Alongside Buffett

By Bryan Bottarelli
Friday, October 17, 2008 10:00 AM EDT
Fri, 17 Oct 2008 14:00:00 GMT

PLAY: Buy the ICE November 85 Calls (ICE KQ) at or under $9.30, good for the day. Place a protective stop limit at $4.40 and a pre-determined sniper sell at $13.50.

Dear Bottarelli Research Member,

Another day, another 500 points. That’s how I feel about trading this market.

As I noted yesterday, volatility levels are at historic highs, which means that we’re truly experiencing unprecedented market events. Why is volatility so high, you ask? Well, if you take a step back and look at what’s happening, you’ll realize that we’re in the midst of four (4) major market bubbles busting.

It first started with housing. Then it moved into commodities (including oil, energy, fertilizer, and metals). Then, the most devastating bubble was undoubtedly the financials, which absolutely obliterated the markets both here in the U.S. and around the globe. And finally, we’re now entering into the last bubble to burst, which will be felt in the retail sector leading into the holiday shopping season.

So there you have it. Unlike the 2001-2002 technology crash (which was contained to one single sector), we’re now facing four major sectors blowing up in our face. And as a result, we have the VIX (also know as the “fear gauge”) at all-time highs.

I bring this to your attention because it brought about some rather interesting comments from Warren Buffett. In his opinion column in the New York Times, he wrote the following: “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.” While Buffett acknowledged that the economic news was bad, he also noted that this is the time to be carefully buying. And on that note, I’d like to carefully buy alongside him. And as you know, one of my favorite upside plays lately has been Intercontinental Exchange (ICE – NYSE).

ICE

As you can see, the stock has been attempting to hammer out a bottom underneath the $70.00 level. From the looks of things, the next upside push will take the stock over the 50-day moving average, and this could spark a strong surge of upside momentum. Therefore, let’s get positioned to ride this move using ICE November calls. Here’s the play:

PLAY: Buy the ICE November 85 Calls (ICE KQ) at or under $9.30, good for the day. Place a protective stop limit at $4.40 and a pre-determined sniper sell at $13.50.

I’ll be out with further updates as the day progresses. But until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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