Add RIG Calls
Plus, Add FAZ Calls as Protection, Close PRU
PLAY: Buy the RIG November 95 Calls (RIG KS) at or under $2.70, good for the day. Place a protective stop limit at $1.80 and a pre-determined sniper sell at $4.50.
PLAY: Buy the FAZ November 18 Calls (FEW KR) at or under $2.05, good for the day.
Dear Bottarelli Research Member,
With the U.S. dollar continuing to fall, the case for commodities plays (especially oil) continues to look promising. In particular, I’ve noticed that oil service plays such as DO and DRQ have hit new 52-week highs, but fellow deepwater driller Transocean (RIG – NYSE) has yet to follow in the same footsteps. This is something I’d like to take advantage of now. If the rally continues, RIG will soon break out to a new high, so let’s get positioned to profit off this move now!
PLAY: Buy the RIG November 95 Calls (RIG KS) at or under $2.70, good for the day. Place a protective stop limit at $1.80 and a pre-determined sniper sell at $4.50.
At the same time, I’d also like to maintain some downside protection. As a result, let’s add November calls on the Direxion Daily Financial Bear 3X Shares (FAZ – NYSE).
Right now, every stock and sector I’m studying is overbought – but you cannot fight against the market’s powerful momentum. So, when it comes to a hedge play, the idea is to add something that’s cheap, yet still offers you downside exposure in a manner that protects your current long plays. Plus, if your downside protection comes in a market sector that’s been unusually weak, that’s an added bonus. Right now, I think the FAZ offers all three benefits. First, the November calls are cheap downside insurance. Second, the banking sector has been weak in the face of this run-up. And third, you’re getting 3x leverage on your money. As a protective play, let’s add FAZ November calls now!
PLAY: Buy the FAZ November 18 Calls (FEW KR) at or under $2.05, good for the day.
At the same time, let’s cut bait on our PRU November 50 Puts (PWQ JW).Our original downside protective play just cannot gain the weakness it needs in a market that’s so strong. Let’s close this position now and move into a FAZ position that offers better leverage for our money. Sell.
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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