Add DUG Calls
Play a Commodity Unwinding
PLAY: Buy the DUG March 25 Calls (DUG CY) at or under $2.50, good for the day. Place a protective stop limit at $1.30 and a pre-determined sniper sell at $4.50.
Dear Bottarelli Research Member,
In yesterday’s alert, I warned about the possibility of a 1,000-point down-day on the Dow. As I write today, we’re off nearly 400 points, so my gut-feeling wasn’t entirely off base.
As you can see from the Dow chart below, today’s devastating red candlestick formation could be the catalyst that sparks a move back down to the November 2008 lows. And if the selling pressure really starts to snow-ball, we’ll get there rather quickly.
As a result, I’d like to get positioned in another Ultra-Short position with high profit-potential. Based on the returns we saw today playing QID, this could be another quick-hit winner. And similar to the QID, I’m seeing signs that a bottom has been established on the UltraShort Oil & Gas ProShares (DUG – NYSE). Check it out:
As you probably know, the DUG corresponds to twice the inverse of the movements of the Dow Jones U.S. Oil & Gas Index. And looking at today’s upside tick, the unwinding of the oil/energy sector could be ready to get started once again. If so, the DUG could quickly jump back up to $30.00, which is a strong $7.00 up-move from current levels. Considering the dangerous market conditions we’re facing right now, I want to be fully protected against further downside movements. Therefore, let’s add DUG March calls now!
PLAY: Buy the DUG March 25 Calls (DUG CY) at or under $2.50, good for the day. Place a protective stop limit at $1.30 and a pre-determined sniper sell at $4.50.
At the same time, the commodity sell-off has officially stopped out our AKS March 10 Calls (ASJ CB). If you have not already done so, close this position now. Maintain your FDX March 50 Puts (FDX OW), DV March 60 Calls (DV CL), and AEM March 60 Calls (AEM CL). And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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