Position Update

Close out Visa & Maintain PRU, ADM, RGLD

By Bryan Bottarelli
Wednesday, March 18, 2009 11:25 AM EDT
Wed, 18 Mar 2009 15:25:00 GMT

Dear Bottarelli Research Member,

On Monday, I told you that the 7,500 level on the Dow could be the next level to enter into an aggressive short position. Since then, the Dow has continued to push towards the 7,500 level, which could equate to a 1,000-point bounce off the 6,500 lows. See for yourself below:

INDU

I’ve never heard so many market watchers claim that the bottom has now been set. Personally, I’m a little hesitant to dive head-first into a rash of long positions. But because of this impressive bounce, we must at least respect the possibility of an upside breakout. That’s why we’re positioned in ADM April 30 Calls (ADM DF), which continue to look good.

ADM

On the other hand, a sell-off would help our remaining positions. The PRU April 20 Puts (PRU PX), in particular, are ready to shoot aggressively higher if PRU can give up some of its recent upside move. Hold.

PRU

Our RGLD April 40 Calls (MJQ DH) are also setting up for a strong upside move. According to Bloomberg, gold miners should earn between 6% and 10% more profits in 2009 than in 2008. And if gold prices find a bottom and begin moving up again, companies like RGLD could be in for some sizable upside. Hold.

RGLD

In terms of our Visa April 50 Puts (V PJ), I’ve stubbornly held onto them based on a chart formation that is due to fall at any time. But I simply cannot justify waiting any longer, especially when these puts have repeatedly traded below my pre-determined stop loss. As a result, let’s officially close this position now. Sell.

V

The same goes for the call side of our QID March 69 Straddle. We’re going to need a really powerful down-move to turn this one around — and unfortunately time is running out. Therefore, use any weakness over the next three days to close out your calls. Sell.

Looking at new trades, I’m tempted to jump back into calls on the UltraShort 20+ Year Treasury ProShares (TBT – NYSE). We’ve done very well trading the TBT lately, and depending on what the Fed says later today, this dip could be another call-buying opportunity.

TBT

If it’s time to make any new plays, you’ll certainly be the first to know. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From March 2009