Add AEM Calls

Playing a Gold Bounce

By Bryan Bottarelli
Wednesday, August 19, 2009 10:24 AM EDT
Wed, 19 Aug 2009 14:24:00 GMT

PLAY: Buy the AEM September 55 Calls (AEM IK) at or under $2.90, good for the day. Place a protective stop limit at $1.30 and a sniper sell at $5.00.

Dear Bottarelli Research Member,

First and foremost, congratulations on your GMCR profits from earlier this morning. Now that’s what I call trading! Enter right at the close, sell the very next day at the open, and lock in a 25% to 30% gainer. Going forward, I’ll look to hit more winners following this model.

In terms of a new trade, I’d like to add calls on gold miner Agnico Eagle Mines (AEM – NYSE). Right out of the gate this morning, I noticed that the market’s selling pressure caused small upside jumps in all of the metals stocks I follow. This could be an early indication that the fear that’s now creeping back into the markets (ignited by Monday’s big sell-off) could cause investors to adjust their sector allocations. In my view, this could trigger a rush to safety, which completely supports a coming bounce in gold and metals plays. At the same time, China has expressed intentions to buy up gold miners, which is also a very powerful catalyst. Combine both themes, and I’d like to get positioned to play a coming upside move in AEM now.

AEM

PLAY: Buy the AEM September 55 Calls (AEM IK) at or under $2.90, good for the day. Place a protective stop limit at $1.30 and a sniper sell at $5.00.

At the same time, continue holding your CREE September 35 Calls (CQR IG) and your OIH September 105 Calls (OIH IA). Both positions experienced minimal damage during this morning’s sell-off, painting a strong picture going forward.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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