Add WHR Calls

Playing a Bounce

By Bryan Bottarelli
Thursday, August 27, 2009 11:54 AM EDT
Thu, 27 Aug 2009 15:54:00 GMT

PLAY: Buy the WHR September 65 Calls (WHR IM) at or under $2.50, good for the day. Place a protective stop limit at $1.40 and a sniper sell at $4.00.

Dear Bottarelli Research Member,

As I mentioned this morning, I really liked the market’s early downside action, but wondered if it could last throughout the session. As the day progressed, we did see evidence of dip-buying, which makes me a little nervous. As much as I feel this market is due for a big correction, and as much as I like our three downside positions, we must trade this market with the highest degree of caution. After all, we’re walking through a minefield here, so we must make darned sure that we’re fully protected for whatever comes our way. In that spirit, I’d like to carefully add a new upside call play on Whirlpool Corp. (WHR – NYSE).

WHR

As you know, we had success earlier this week with WHR calls, so let’s use the dip over the last few days to our advantage. If nothing else, think of this call play as a safety net that protects our three downside positions. On that note, here’s the play…

PLAY: Buy the WHR September 65 Calls (WHR IM) at or under $2.50, good for the day. Place a protective stop limit at $1.40 and a sniper sell at $4.00.

At the same time, maintain your SHLD September 65 Puts (KTQ UM), SDS September 45 Calls (SSH IS) and WYNN September 55 Puts (UWY UK). And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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