Add AEM Calls

Plus: QID Straddle Update

By Bryan Bottarelli
Wednesday, March 11, 2009 10:28 AM EDT
Wed, 11 Mar 2009 14:28:00 GMT

PLAY: Buy the AEM April 45 Calls (AEM DI) at or under $6.00, good for the day. Place a protective stop limit at $2.80 and a pre-determined sniper sell at $9.00.

Dear Bottarelli Research Member,

In the process of locking in our TBT gains, I didn’t even get a chance to say “good morning.” So there you go. Better late than never, right?

Also, congratulations on your TBT profits. I still feel that Treasuries can fall further, which supports maintaining the TBT call position. But with gains in hand, I didn’t want to risk seeing these gains evaporate on a market reversal. That’s why we locked in our profits. If we need to jump back into TBT calls, I’ll certainty do so.

In the meantime, let’s review where we stand with our QID March 69 Straddle. This morning, the March 69 Puts (DYM OQ) traded as high as $10.20, which was a mere $0.20 below the $10.40 price that we originally paid for both the QID March 69 calls and QID March 69 puts. Based on this move, we closed off the put side of our straddle. Officially, I am using a sale price of $9.40.

QID

This means that in order to show a profit on this play, we need the QID March 69 Calls (DYM CQ) to trade for more than $1.00. This could easily happen. In fact, all we need is one strong downside day, and we’ll be in the money. As you can see from the QID chart below, support at the 50-day moving average could ignite the next upside move. Therefore, hold your calls for more upside.

In terms of a new trade, I’d like to get repositioned in gold via Angico Eagle Mines (AEM – NYSE).As you can see from the chart below, the recent drop in gold prices has pushed AEM down to over-sold levels. A recovery in gold prices could easily push AEM back up past the crossing of the 50-day and the 200-day moving averages at $50.00, possibly pushing it as high as $55.00. Let’s get repositioned in gold by adding AEM April calls to our ledger now.

AEM

PLAY: Buy the AEM April 45 Calls (AEM DI) at or under $6.00, good for the day. Place a protective stop limit at $2.80 and a pre-determined sniper sell at $9.00.

And be sure to maintain your Visa April 50 Puts (V PJ), as the stock is giving back all of yesterday’s gains — and dipping back under the 50-day moving average. This is a bearish indicator, so we should be in for more selling pressure ahead. See what I mean below:

V

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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