Add COST Puts

Playing New 52-Week Lows

By Bryan Bottarelli
Thursday, November 13, 2008 12:26 PM EST
Thu, 13 Nov 2008 17:26:00 GMT

PLAY: Buy the COST December 45 Puts (PRQ XI) at or under $3.40, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.20.

Dear Bottarelli Research Member,

With the markets starting to roll over, let’s once again beef up our downside exposure to the retail sector using Costco (COST – NASDAQ) as today’s victim. As you can see from the chart below, the warehouse retailer has just hit a new 52-week low, which indicates that further weakness is on the horizon.

COST

It looks to me like Wal-Mart (WMT – NYSE) is the only retailer who’ll make it through the next three months without significant damage, and that paints an ominous picture for every big-box store in the country. Therefore, let’s go ahead and add COST puts now!

PLAY: Buy the COST December 45 Puts (PRQ XI) at or under $3.40, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.20.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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