Take SDS Profits

Lock in Quick Gainer

By Bryan Bottarelli
Friday, June 12, 2009 10:21 AM EDT
Fri, 12 Jun 2009 14:21:00 GMT

PLAY: Sell your SDS July 54 Calls (SSH GB) at market, good for the day.

Dear Bottarelli Research Member,

Good morning.In yesterday’s alert, we once again “faded” the intra-day market rally. And after some mixed signals, our thesis played out right on target, as the Dow surrendered a 100-point gain and closed the day up only 33 points. And then this morning, a pullback in the commodities sector (notably oil and metals) has been met with another moderate round of selling pressure. As it stands, both the S&P 500 and the Dow appear to be ready to test the support levels at their respective 200-day moving averages. Since we’re currently tracking the S&P, this support levels falls just under 925. Chart below:

SPX

My concern, of course, is that we’ll once again see buyers step in and buy this dip. Therefore, I think the smart play right now is to lock in gains on our SDS July 54 Calls (SSH GB). As you know, we entered these calls yesterday for $2.85 and they’ve hit a high of $3.40 in today’s action. Let’s go ahead and lock in these profits now!

PLAY: Sell your SDS July 54 Calls (SSH GB) at market, good for the day.

At the same time, we unfortunately have to bid farewell to our DRYS June 7.50 Calls (OOC FU). Although the stock is still resting on the 50-day support level, it has not been able to put together two consecutive days of upside momentum. So, while DRYS treads water, we’re now faced with June time decay. Therefore, let’s cut this one loose now. Sell.

DRYS

This will leave us holding the APA July 85 Calls (APA GQ), GDX July 40 Calls (GDX GN), and JRCC July 22.50 Calls (JQM GX). If we see the typical dip-buying, all three positions should be fine. I’ll follow up later in the session with more updates. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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