Closing Thoughts

Position Guidance for Next Week

By Bryan Bottarelli
Friday, May 22, 2009 2:48 PM EDT
Fri, 22 May 2009 18:48:00 GMT

Dear Bottarelli Research Member,

PERSONAL NOTE: Back in October of 2001, I took a vacation for 10 days. After all, it was my honeymoon. Since this vacation eight years ago, I have not taken more than two days off from work. Now I admit, I love what I do, so I haven’t really noticed that I haven’t taken an extended holiday in over eight years. But my wife has noticed. And recently, I got the sense that if I didn’t take her somewhere — and soon — her bags were packed and she was out the door. So, in the spirit of maintaining martial bliss, I will be spending the next nine days in Hawaii. As a result, there will be no daily options alerts throughout the upcoming trading week. Since Monday is Memorial Day, the markets are closed. Therefore, you’ll only miss a total of four trading days. But just as a make-good, I will go ahead and extend your subscription for one full week. That way, you will not miss out on any paid subscription time during my vacation. This is the least that I can do for loyal members like you. So enjoy the holiday-shortened trading week, and we’ll get back to business on June 1st. In terms of managing our open positions, here’s what I’d like to do…

When it comes to our two Ultra-short plays, I would like to hold onto them until the first week of June. Therefore, maintain your SRS June 25 Calls (SAK FE) and your FAZ June 8 Calls (FAY FH) until I return. If we do not see any signs of a market pullback during the first week of June, we’ll be forced to close out these plays. But if we do see the downside move that’s indicated in the charts, we could get quickly back into the black on both plays. Hold.

Citigroup upgraded AGU today from “sell” to “hold,” which is primarily why the stock has jumped for most of today’s session. It’s beyond me how a brokerage house can even make a so-called “upgrade” like this in the first place. After all, how can you possibly “hold” something that you’ve already been told to sell? It makes no sense whatsoever. To be perfectly honest with you, I suspect that this move was nothing more than a pre-medicated move to spark an upside pop so that the brokerage houses can sell their position. In fact, they probably saw the same exact bearish breakdown formation we saw yesterday, and they wanted to artificially create one last upside move to liquidate their position. What a shell game. Either way, maintain your AGU June 50 Puts (AGU RJ) going into next week. Adhere to our protective stop at $2.10 and our pre-determined sniper sell at $6.00.

AGU

And finally, I continue to feel that the dry bulk shipping sector will remain hot. Therefore, let’s also maintain our DRYS June 7.50 Calls (OOC FU) for the next four trading days. We’ll re-evaluate this position upon my return on June 1st.

DRYS

On that note, have an enjoyable 3-day weekend — and have a good week of trading while I’m out. We’ll talk again on June 1st.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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