Add GMCR and SHLD Puts

Establish Downside Protection

By Bryan Bottarelli
Tuesday, September 22, 2009 11:42 AM EDT
Tue, 22 Sep 2009 15:42:00 GMT

PLAY: Buy the SHLD October 65 Puts (KTQ VM) at or under $2.15, good for the day. Place a protective stop limit at $1.40 and a sniper sell at $3.00.

PLAY: Buy the GMCR October 65 Puts (QGM VM) at or under $2.35, good for the day. Place a protective stop limit at $1.80 and a sniper sell at $3.90.

Dear Bottarelli Research Member,

Over the last four (4) trading sessions, the S&P 500 has traded in a tight and narrow range between 1,074 and 1,064. This tight trading range could indicate that the bulls are running out of momentum.

SPX

Therefore, I’d like to use this opportunity to add two additional downside plays to our ledger, both of which come on companies with weak chart formations. These two candidates are Sears Holdings Corporation (SHLD – NASDAQ) and Green Mountain Coffee Roasters (GMCR – NASDAQ).

SHLD

Starting with SHLD, you can see that the stock has moved from $60.00 in early September to fill in the gap at $72.50. But now that this gap has been filled, SHLD could reverse course and drift lower. Let’s establish a new position in SHLD October puts to profit off any forthcoming pullback.

PLAY: Buy the SHLD October 65 Puts (KTQ VM) at or under $2.15, good for the day. Place a protective stop limit at $1.40 and a sniper sell at $3.00.

Looking at GMCR, today’s sizable engulfing pattern has set a double-top at $70.00, which could easily spark a move back down to $62.50. Let’s get positioned to profit off this downward move as well.

GMCR

PLAY: Buy the GMCR October 65 Puts (QGM VM) at or under $2.35, good for the day. Place a protective stop limit at $1.80 and a sniper sell at $3.90.

At the same time, let’s adhere to our tight stop loss on our CELG October 55 Calls (LQH JK).The momentum play that we attempted to ride yesterday has quickly faded, which means that CELG has been unable to extend upon yesterday’s gains. We added CELG calls in the mid-afternoon after the stock popped to a new high of the day, but this proved to be a false breakout. Let’s cut this one off at the knees and close it now. Sell.

And as always…

Lock an Load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From September 2009