Add DUG Calls

Short the Oil Pop

By Bryan Bottarelli
Wednesday, March 04, 2009 12:21 PM EST
Wed, 4 Mar 2009 17:21:00 GMT

PLAY: Buy the DUG March 32 Calls (DUG CF) at or under $2.70, good for the day. Place a protective stop limit at $1.25 and a pre-determined sniper sell at $4.10.

Dear Bottarelli Research Member,

I think we have a quick trading opportunity on the UltraShort Oil & Gas ProShares (DUG). As you know, the DUG moves at a rate of twice the inverse of the Dow Jones U.S. Oil & Gas index. As you probably know, the oil/gas sector is putting in a strong upside move this morning, which has pushed DUG nearly $3.00 lower. But if you look at the recent trends, you’ll notice that oil prices tend to quickly give up any single-day gains. Therefore, let’s short this rally by adding DUG calls now.

DUG

PLAY: Buy the DUG March 32 Calls (DUG CF) at or under $2.70, good for the day. Place a protective stop limit at $1.25 and a pre-determined sniper sell at $4.10.

At the same time, continue holding your JPM March 20 Puts (JSA OD). Despite a strong market, JPM has taken a turn for the worse today, as indicated below. We should see prices dip under the $19.00 level soon, which would hand you a nice winner. Hold.

JPM

Let’s also maintain your TBT April 48 Calls (TBT DV), AAP April 40 Calls (AAP DH), and ABX April 27.5 Calls (ABX DA). Taken collectively, these plays offer us a broad-based position that will profit off any market condition. In this volatile market, that’s exactly what we need. When it’s time to lock in profits on any of these upside plays, you’ll be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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