Add DXD Calls

Playing a Double-Top

By Bryan Bottarelli
Wednesday, May 20, 2009 12:02 PM EDT
Wed, 20 May 2009 16:02:00 GMT

PLAY: Buy the DXD June 48 Calls (DXD FV) at or under $2.80, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $4.90

Dear Bottarelli Research Member,

After an opening-session pop, the majority of financial stocks have turned lower. As a result, the major market averages are struggling to hang onto their earlier gains. The Dow, for example, has trimmed a 100-point gain into a 20-day point gain. But more importantly, this could have set up a double-top formation just above 8,500. Check it out below:

INDU

If that’s the case, then I’d like to make a quick trade on a downside move going into the extended Memorial Day weekend. After all, it makes perfect sense for traders to lock in their gains going into a 3-day holiday. Therefore, let’s capitalize on any forthcoming selling pressure by adding DXD calls now (which, as you recall, is a position that moves at the rate of twice the inverse of the Dow).

DXD

PLAY: Buy the DXD June 48 Calls (DXD FV) at or under $2.80, good for the day. Place a protective stop limit at $1.40 and a pre-determined sniper sell at $4.90.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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