Add MTB Puts
Further Financial Weakness Ahead?
PLAY: Buy the MTB February 45 Puts (MTB NI) at or under $5.10, good for the day. Place a protective stop limit at $2.20 and a pre-determined sniper sell at $7.50.
Dear Bottarelli Research Member,
First off, congrats on your BG January 50 Puts (BGW MJ). It’s always nice to start off the trading session with a triple digit winner! Now let’s get into today’s market action.
As you can see from the Dow chart below, the Blue Chips are putting in their sixth down-day in a row, and today’s move is quite a doozy. In fact, the Dow has just broken below the 8,200, which brings it back to early-December’s levels. What’s more, today could officially be a true “wash-out” day, where over 90% of stocks are trading in the red.
If that’s the case, then we have an interesting situation on our hands. After all, the recent Dow low came in mid-November at 7,500. If today is, in fact, a climactic selling day, then we’ll most likely set a higher low. And that means we could see an upside recovery within the next few sessions.
As a result, let’s continue to hold our three current positions, which are the ABX February 32.5 Calls (ABX BZ), MON February 90 Calls (MON BU), and LVS February 7.5 Calls (LJJ BU).Without question, today’s move could ignite a rush of investment dollars moving back into gold, which would benefit ABX going forward. And in terms of MON and LVS, a forthcoming market bounce could push each position noticeably higher. Therefore, maintain all three February positions.
But just to balance out the ledger, I’d like to add puts on M&T Bank Corp. (MTB – NYSE).
Just like any other bank, MTB offers business and residential real estate loans, investment and trading securities, and commercial/retail banking services from 704 banking offices in New York, Pennsylvania, Maryland, Delaware, New Jersey, Virginia, West Virginia, and the District of Columbia. But for whatever reason, shares of MTB are only down -35% over the last 52-weeks, which is far better than the -56% loss of the entire financial sector. Heck, Bank of America (BAC – NYSE) is down -72% over the last 52 weeks. And Citigroup (C – NYSE) is even worse, posting a -78% loss during the same timeframe.
Based on these benchmarks, I feel that any further financial jitters will take shares of MTB easily down another 25% to 30%. In fact, considering the performance of its peers, MTB should be trading around $30 right now. Therefore, with shares currently setting new 52-week lows at $44.00, let’s profit off a continued downside move by adding February puts now. Here’s the play…
PLAY: Buy the MTB February 45 Puts (MTB NI) at or under $5.10, good for the day. Place a protective stop limit at $2.20 and a pre-determined sniper sell at $7.50.
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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