Add TBT Calls

A Move To $50

By Bryan Bottarelli
Friday, April 03, 2009 11:33 AM EDT
Fri, 3 Apr 2009 15:33:00 GMT

PLAY: Buy the TBT June 44 Calls (TBT FR) at or under $3.50, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.50.

Dear Bottarelli Research Member,

It’s been a relatively quiet day thus far, which is surprising when you consider that the U.S. unemployment rate rose to 8.5% after another 663,000 jobs were lost in March. In my view, the fact that the major market averages are shrugging off news like this tells me that the bulls remain temporarily in control. As you can see from the Dow chart below, the Blue Chips are down slightly today — but they’re still hugging closely to the 8,000 level.

INDU

While I remain very skeptical about this recent rally, I would like to add one new trade to our ledger today — and it comes in the form of the UltraShort 20+ Year Treasury ProShares (TBT – NYSE).As you can see below, the TBT recently dipped under its 50-day moving average but has since established a support level at $42.50. Now, it appears like a move back above the 50-day moving average, followed by a possible re-test of the $50 level, could be shaping up.

TBT

Plus, as more investors decide to re-establish a position in the stock market, you could see falling Treasury prices (which would benefit an ultra-short play like TBT). Therefore, let’s play this move using June contracts, which give us plenty of time for the upswing to play out. Here’s the trade…

PLAY: Buy the TBT June 44 Calls (TBT FR) at or under $3.50, good for the day. Place a protective stop limit at $2.10 and a pre-determined sniper sell at $5.50.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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