Sell BRCM Puts
Close Earnings Position
PLAY: Sell your BRCM February 27 Puts (O:BRCM 10N27.00) at or above $0.50, good for the day.
Dear Bottarelli Research Member,
As I warned this morning, it’s a bloody day on Wall Street. Gold, oil, and the major market averages are all taking a bath today which could very well push the Dow Jones Industrial Average underneath the 10,000 level. The troubling chart below tells you everything you need to know. This does not look good.
Scale back to a weekly Dow chart, and you can get a clear understanding of just how far the Blue Chips could fall before hitting the next support level. As I mentioned before, a quick move from 10,000 down to 9,000 is not out of the question.
So, as we continue to convert our ledger to a bearish bias, our decision to sell our BRCM February 28 Calls (O:BRCM 10B28.00) this morning for $1.30 was well-timed. As I write, BRCM has completely reversed direction, and now trades in the red. As a result, our BRCM February 27 Puts (O:BRCM 10N27.00) have now ticked up to a high of $0.53, which puts us right at break even on the entire earnings strangle position. Let’s go ahead and exit our puts for the best available price for the remainder of the day. That way, we’ve once again escaped a non-earnings event without suffering any losses.
That, my friends, is the beauty of these earnings plays. If they move in our direction, we’re positioned to hit a 25% to 50% return. Or, in the case of NFLX, the gains can get as high as 322%. But ff they do not move in our direction, we can trade out of them for basically a break-even cost.
PLAY: Sell your BRCM February 27 Puts (O:BRCM 10N27.00) at or above $0.50, good for the day.
In other news, the EOG March 95 Puts (O:EOG 10O95.00) that we entered earlier today for $5.30 have just hit a high of $5.80. Plus, the protective DXD March 30 Calls (O:DXD 10C30.00) that we entered for $2.15 have also just hit a high of $2.35. Maintain both downside positions for more gains.
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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