Preparing for Thursday

Add TBT Puts

By Bryan Bottarelli
Monday, May 04, 2009 10:34 AM EDT
Mon, 4 May 2009 14:34:00 GMT

PLAY: Buy the TBT June 50 Puts (TBT RX) at or under $2.55, good for the day. Place a protective stop limit at $1.60 and a pre-determined sniper sell at $4.00.


Dear Bottarelli Research Member,

The market continues to rally this morning, putting on another 150 points as I write. We used this upside push to lock in a nice gain on our DRYS June 7.5 Calls (OOC FU) first thing this morning. We’re also holding IBM June 105 Calls (IBM FA) and ABX June 30 Calls (ABX FF) to participate in further upside going forward. Right now, both of these plays are basically trading at our entry prices, so maintain both positions.

Going into Thursday’s release of the stress test results, I’d like to get positioned alongside the Fed. In recent trading, Treasuries (noted by the TLT chart below) have fallen far below levels that policymakers would like to see. In my view, the TLT will soon begin moving back up — especially if Thursday’s financial results spark a rush of “safe” money flowing back into Treasuries.

TLT

Therefore, I’d like to profit off this move by adding put options on the UltraShort 20+ Year Treasury ProShares (TBT). As Treasuries move up, the TBT will move lower at a 2x rate. As you can see from the TBT chart below, it looks primed and ready to pull back. Therefore, let’s add June puts on TBT now!

TBT

PLAY: Buy the TBT June 50 Puts (TBT RX) at or under $2.55, good for the day. Place a protective stop limit at $1.60 and a pre-determined s sniper sell at $4.00.

I’ll comment on our other positions later in the session. 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 May 2009