Add More SDS Calls

Beefing Up Hedge as Market Fades

By Bryan Bottarelli
Monday, August 24, 2009 1:29 PM EDT
Mon, 24 Aug 2009 17:29:00 GMT

PLAY: Buy more SDS September 45 Calls (SSH IS) at market, good for the day.

Dear Bottarelli Research Member,

Is that a chink in the amour I detect?

As the morning has turned into afternoon, the major market averages have slowly drifted lower. As I write, the Dow is struggling to hold onto a gain, while the S&P 500 is just about to move into the red. Because of this reversal, our downside positions are creeping back from the dead. Our WYNN September 55 Puts (UWY UK), for example, have moved up to $3.20 per contract. While still down from our original $4.50 entry price, this goes to show you just how quickly this position can move in our favor. If today’s red tick sets a lower high, we’ll be back in business. Hold.

WYNN

We’re also seeing improvement in our ultra-short hedge play, represented by the SDS September 45 Calls (SSH IS).We entered this play on August 20th for $2.40, and you can now enter the calls for around $1.50. Let’s lower our cost basis and add to these ultra-short calls now. After all, since this is a 2x leveraged play, any downside move can snap this play back into the black very quickly. Let’s remain positioned to profit off such a move.

SDS

PLAY: Buy more SDS September 45 Calls (SSH IS) at market, good for the day.

At the same time, remain positioned to the upside via our WHR September 65 Calls (WHR IM) and MEE September 30 Calls (MEE IF). We all know how quickly the market has been buying up any temporary dip, so we certainly want exposure on both sides of the market.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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