Mid-Morning Update

Modest 3-for-3 Streak to Begin 2010

Dear Bottarelli Research Member,

It’s nowhere close to noon, and it has already been a busy day.

A quick recap…

Yesterday, we took the safe approach and sold our MON January 85 Calls (MON AQ) and MON January 80 Puts (MON MP) for $2.60, good for a 26.83% gainer. For all the speculators out there, I recommended selling half of this position yesterday and then holding the second half going into MON’s earnings report this morning.

As I mentioned earlier, MON turned in their third straight stinker of a report, which initially dropped the shares by over $2.00. But then, CEO Hugh Grant spun this report as the sign of a bottom, which caused bottom-feeders to step in and buy MON’s dip. As a result, the stock has traded in a wide price range today, hitting a low of $82.50 and a high of $85.75. As is stands, the remaining half of our call/put basket is basically sitting just under the break even point. If you’re still holding the second half of this play, I would recommend using any future strength to sell your calls as close to their $1.90 high as possible. And from there, hold the puts for any forthcoming weakness.

Next up, we used a strong end-of-day rally yesterday to lock in a modest 11.54% gainer on our CTRP February 75 Calls (QCT BO). Looking back, it’s a good thing that we sold. After closing out our play, CTRP has moved lower alongside the rest of the online travel sector.

This brings up an interesting situation…

For example, Priceline.com (PCLN – NASDAQ) is down over $5.00 today. If the helium that’s been inflating the over-priced online travel sector is now leaving the balloon, I want to be sure to capitalize. With P/E ratios of 23 and 39 respectively, both PCLN and CTRP could easily fall. At some point, Wall Street will run out of suckers to buy these two near the top. When this happens, it’s time to add puts. More to come.

Then, we followed up the CTRP play by locking in a 22.22% gain on our STP February 18 Calls (STP BR). Once again, this was a well-timed sale as STP quickly gave back all of their gains. Nice play.

I admit, these are not the biggest home-run trades in the history of trading. But right now, this is what the market is giving us. Therefore, we just make do with the current market internals and lock in quick gains whenever possible. After all, starting off the year 3-for-3 is a good signal. Once we can get clear of this choppy trading, we can look to extend upon our gains in a safer fashion. But for now, we’ll keep collecting the quick-hit winners as best as we can.

In the meantime, maintain your GMCR February 85 Calls (QGM BQ) and your DV February 55 Puts (DV NK), both of which are slightly in the profit zone.

Also noteworthy is the fact that the Fed will release the minutes from their last meeting soon. If there is any hint of inflation in these notes, we’ll be sure to jump back into the gold sector. Until then…

Lock and load!

Sincerely,