Balance Risk: Add SSO Calls
Hedging to the Upside
PLAY: Buy the SSO February 38 Calls (SUC BL) at or under $1.70, good for the day. Place a protective stop limit at $0.95 and a pre-determined sniper sell at $2.70.
Dear Bottarelli Research Member,
Right now, our ledger is very put-heavy…
After unloading the call side of our earnings plays on HOG and WDC, we now own WDC February 43 Puts (FJI NQ), IOC February 70 Puts (IOC NN), and HOG February 24 Puts. Looking at HOG, the continued downside move has inched our position right back to break-even. After selling our calls for $0.75, the puts just hit a high of $1.25, good for a total basket price of $2.00. Since we entered this group for $2.10, all we need is an extended downward move on HOG and we’ll be back in the money. Since it sure looks like HOG is headed for $21.00, this is great news for our puts. The same goes for WDC, as the stock has continued to remain weak all day long. So like I said, we’re not out of the game yet. Hold.
But just to protect our ledger against an upward move, let’s add calls on the Ultra S&P 500 ProShares (SSO – NYSE), which are the ultra-long equivalent of the SDS. If the market makes a quick pop, which could easily happen, we’ll want to protect our put-heavy ledger by locking in a quick upside winner. So as a protective play, add SSO calls now!
PLAY: Buy the SSO February 38 Calls (SUC BL) at or under $1.70, good for the day. Place a protective stop limit at $0.95 and a pre-determined sniper sell at $2.70.
And as always…
Lock and load!
Sincerely,
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