Careful Speculation, Part II

Add MELI Calls

By Bryan Bottarelli
Wednesday, September 23, 2009 2:46 PM EDT
Wed, 23 Sep 2009 18:46:00 GMT

PLAY: Buy the MELI October 40 Calls (QMB JH) at or under $1.55, good for the day. Place a protective stop limit at $0.90 and a sniper sell at $2.60.

Dear Bottarelli Research Member,

As expected, the Fed meeting has sparked a market rally. They also gave themselves another pat on the back (which we fully expected). If the Fed all showered together after their meetings (similar to professional sports locker rooms), I’d bet that everyone would be playfully cracking their wet towel at Bernanke’s behind. But enough of this talk, let’s get into today’s action.

To increase our upside exposure to this rally, we carefully added the QID October 23 Puts (QOI VW) prior to this meeting. Now that we see the market’s reaction, we can carefully speculate on a continuation move. We’ll do this using the eBay of Latin America, Mercadolibre (MELI – NASDAQ). As you can see, the stock is hitting new 52-week highs. Let’s ride this momentum using October calls.

MELI

PLAY: Buy the MELI October 40 Calls (QMB JH) at or under $1.55, good for the day. Place a protective stop limit at $0.90 and a sniper sell at $2.60.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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