Take AEM Profits

Lock in Quick Gainer

By Bryan Bottarelli
Thursday, September 17, 2009 12:54 PM EDT
Thu, 17 Sep 2009 16:54:00 GMT

PLAY: Sell your AEM October 70 Puts (AEM VN) at or above $4.40, good for the day.

Dear Bottarelli Research Member,

When it comes to quick and nimble trading, our latest downside put position on Agnico Eagle Mines (AEM – NYSE) is as good as it gets. If you recall, we noticed that gold prices were shooting up yesterday, yet gold stocks (like AEM) failed to participate in the rally. This was an early indication that the upside momentum was fading.

As a result, we quickly jumped into the AEM October 70 Puts (AEM VN) for $3.70 per contract. As I write, shares of AEM are dipping down, as expected, which has pushed these contracts up to a bid/ask spread of $4.40 to $4.50, good for an overnight winner of just around 20%. Since gold has been remarkably strong, I don’t want to press our luck too much. Therefore, let’s take the money off the table now!

AEM

PLAY: Sell your AEM October 70 Puts (AEM VN) at or above $4.40, good for the day.

When it comes to our other positions, POT has remained strong while our Chinese-based casino plays have drifted lower. To my eye, today’s move on LVS and WYNN is a classic “bait and switch” play going into WYNN’s IPO roadshow next week. In other words, pro traders will push these stocks lower, indicating that the upside momentum has come and gone. Then, just as every recreational investor has exited them in fear of losing out on their gains, the pros will step back in and push each stock much higher. Since we have October contracts, let’s be sure to profit off this move — and not get fooled by this gamesmanship. Hold.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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