Dump AGU Puts, Hold Calls
Plus, RIMM Looking Weak
PLAY: Sell your AGU February 55 Puts (O:AGU 10N55.00) at market, good for the day. Hold your AGU March 60 Calls (O:AGU 10C60.00).
Dear Bottarelli Research Member,
Based on this morning’s trading, I feel very comfortable with our current positions. Despite a 100-point up-day, shares of Research in Motion (RIMM – NASDAQ) and Apollo Group (APOL – NASDAQ) continue to display weakness, which supports our downside bias. Hold.
At the same time, shares of Agrium (AGU – NYSE) are using their earnings this morning as a catalyst to rally. If history holds true, then AGU could be setting up for an $8.00 to $10.00 up-move over the next two weeks. This is just what we wanted to see. Therefore, hold your AGU March 60 Calls (O:AGU 10C60.00) for more upside. But at the same time, let’s go ahead and sell our AGU February 55 Puts (O:AGU 10N55.00).With February expiration, these puts were added solely to offer us a safety net in case AGU dropped sharply due to earnings. Since this is not happening, we no longer need their protective services. Let’s sell these puts now and capture as much value as we can. Then, we’ll let our calls pull our position into profitability.
PLAY: Sell your AGU February 55 Puts (O:AGU 10N55.00) at market, good for the day. Hold your AGU March 60 Calls (O:AGU 10C60.00).
And as always…
Lock and load!
Sincerely,
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