End-of-Day Trade: Add MOO Calls
Playing Earnings Momentum
PLAY: Buy the MOO November 41 Calls (MOO KO) at or under $1.90, good for the day. Place a protective stop limit at $1.10 and a pre-determined sniper sell at $3.00.
Dear Bottarelli Research Member,
For most of the trading session, we’ve seen the major market averages drift higher. As a result, we’ve seen a nice move on our RIG November 95 Calls (RIG KS) and our AEM November 75 Calls (AEM KO).
At the same time, our FAZ November 18 Calls (FEW KR) are doing a good job of keeping us protected against a sell-off, and our AMZN November 100 Calls (QZN KT) stand to gain if earnings from Apple (AAPL – NASDAQ) ignites a tech rally. Going into tomorrow, maintain all positions.
But as one final trade, I’d like to add November calls on the ETF Market Vectors Agribusiness (MOO – NYSE). The MOO is designed to replicate the price and yield performance of the DAXglobal Agribusiness index. It does this by owning a collection of agriculture plays that include Archer Daniels Midland, John Deere, Monsanto, Potash of Saskatchewan, and Mosic.
Now I admit, I was bearish on POT and MOS when they were reporting (and forecasting) dismal earnings. But now, it’s clear that investors are aggressively buying this group in advance of a 2010 recovery. Whether or not this so-called “recovery” will happen is irrelevant for right now. The bottom line is, investors now believe these names will recover, and this has sparked a buying frenzy in the agriculture sector.
As you can see above, the MOO has clearly broken to the upside, which indicates the strength could continue. Throw upcoming earnings from BG and POT into the equation, and the upside could easily continue. But what I really like is the fact that the MOO November calls are so cheap. For an option that’s $0.80 in the money going into November, the risk versus reward completely justifies the cost. Therefore let’s ride this momentum by adding MOO calls now!
PLAY: Buy the MOO November 41 Calls (MOO KO) at or under $1.90, good for the day. Place a protective stop limit at $1.10 and a pre-determined sniper sell at $3.00.
And as always…
Lock and load!
Sincerely,
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