Morning Update

Set APC Profit Target

By Bryan Bottarelli
Tuesday, May 19, 2009 10:02 AM EDT
Tue, 19 May 2009 14:02:00 GMT

Dear Bottarelli Research Member,

Good morning. The APC June 45 Calls (APC FI) that we entered yesterday for $2.15 opened today’s trading session trading for a high of $2.60, good for a quick 20% gainer. But just as quickly as those gains came, they moved right back down. In a market like this, I don’t want to mess around with these profits, so if your APC calls move back up to $2.60, go ahead and lock in the gains.

APC

PLAY: Sell your APC June 45 Calls (APC FI) at or above $2.60, good for the day.

At the same time, shares of SQM continue to shoot higher, so if you were unable to sell your SQM June 35 Calls (SQM FG) yesterday, you’re getting a second chance to lock in a $2.60 sell price today. Sell.

SQM

We also have our DRYS June 7.50 Calls (OOC FU) and our AEM June 55 Calls (AEM FK) moving back in our direction, so maintain both plays for more upside.

DRYS

And although my patience is running thin on our two ultra-short hedge plays, I’d like to keep holding onto them. As you know, our SRS June 25 Calls (SAK FE) worked their way back to break-even at $4.60 before yesterday’s housing news reignited signs of a recovery. But then this morning, housing stats for April plummeted, which dispelled this myth of recovery.

In terms of our FAZ play, the financials were the sector group that lost the most value last week, which helped the FAZ rally 30% on the week. But this still hasn’t kick-started our FAZ June 8 Calls (FAY FH). If the financials can string together consecutive selling days, we could be back in business. But thus far, this has simply not happened. If the bulls continue to buy any dips, we’ll have to close this position out. But for now, we’ll give it a little more time.

As always, I’ll keep you fully updated throughout the trading session. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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