Take MOS Profits, Part II

Second Shot at Gains

PLAY: Sell your MOS October 50 Puts (MOS VJ) at market, good for the day.

Dear Bottarelli Research Member,

Good morning. In yesterday’s alert, we attempted to use a downside push in Mosaic (MOS – NYSE) to sell our MOS October 50 Puts (MOS VJ) at or above $3.70. As it turned out, MOS was never able to achieve these levels, so we did not lock in our profits. But this morning, as the major market averages are once again moving lower, we’re getting a second opportunity to lock in our gains. Let’s not let this opportunity slip through our fingertips. Lock in your profits now!

PLAY: Sell your MOS October 50 Puts (MOS VJ) at market, good for the day.

At the same time, be sure to maintain additional downside exposure by holding onto your WYNN October 70 Puts (UWY VN) and your SHLD October 65 Puts (KTQ VM). As we begin Q4 2009, I get the sense that the upside move has been played out. Therefore, let’s maintain a downside bias in our trading ledger.

As you can see from the Dow chart below, there’s a good chance that we’ll see a re-test of 9,500, which would represent a 4.2% retrace off the recent highs. A retracing of 10%, which is appropriate given the recent run-up, would fall around 8,910. Both levels are distinct possibilities this month. Therefore, until proven otherwise, we’ll play it down.

Now, just in case we witness a reversal, we’re also holding DRYS October 6 Calls (OOC JF), which have been strong despite today’s weakness. Our other upside call play on WHR October 70 Calls (WHR JN) has triggered our stop loss. So if you haven’t already done so, close out this position now.

As always, I’ll keep you fully informed as the trading day progresses.

But until then…

Lock and load!

Sincerely,