Add BNI Calls

Playing the Intra-Day Swings

By Bryan Bottarelli
Wednesday, December 03, 2008 2:55 PM EST
Wed, 3 Dec 2008 19:55:00 GMT

PLAY: Buy the BNI December 75 Calls (BNI LO) at or under $2.95, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $4.00.

Dear Bottarelli Research Member,

The major directional swings we’ve seen in today’s action are quite remarkable. It’s almost getting to the point where you simply wait for the Dow to be +100, and you short it. And then you let the Dow drop to -100 and buy back in. In today’s market, that seems to be the only tactical strategy that works!

As you know, we’ve positioned ourselves to capitalize on these intra-day moves by combining downside plays, like the DXD December 80 Calls (DZS LB) and the QLD December 22 Puts (QLA XV), with upside plays like the DE January 30 Calls (DE AF) which we sold this morning for a 33% profit.

INDU

Looking at the Dow chart, I continue to feel like the next major move will be down. But from a tactical standpoint, we’re now left with two downside plays versus zero upside plays. Therefore, I’d like to add another upside hedge by adding a new call to further capitalize on any forthcoming market rallies. And today’s candidate comes in the form of Burlington Northern Santa Fe (BNI – NYSE).

BNI

I’m quite shocked that the precipitous fall in oil prices has not offered a boost to railroad and airline stocks. But as you can see from the BNI chart below, the stock could easily move up past the $80.00 level before finding its next resistance point around $82.50. Similar to our Deere play, let’s add some protective BNI calls to participate in any upside push. Here’s the play:

PLAY: Buy the BNI December 75 Calls (BNI LO) at or under $2.95, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $4.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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