Take AMZN Profits!
Plus: Close ESI, Add GMCR
PLAY: Sell your AMZN April 130 Calls (O:AMZN 10D130.00) at market, good for the day.
PLAY: Buy the GMCR April 90 Calls (O:GMCR 10D90.00) at or under $5.30, good for the day. Place a protective stop limit at $2.90 and a pre-determined sniper sell at $7.80.
PLAY: Sell your ESI March 110 Puts (O:ESI 10O110.00) at market, good for the day.
Dear Bottarelli Research Member,
Good morning.When it comes to the daily movements of ESI, it sometimes appears like the stock is floating on pure helium. From a chart perspective, the double-top at $112.00 (which also qualifies as a lower high) are two equally strong bearish indicators. This is why we entered the ESI March 110 Puts (O:ESI 10O110.00) on March 8th for $3.80. But for whatever reason, every time the stock dips lower, buyers have stepped in and propped the stock up. This goes against every chart indication, which is making me leery of this position. Therefore, let’s take a minor loss and move on to more attractive opportunities. Sell!
PLAY: Sell your ESI March 110 Puts (O:ESI 10O110.00) at market, good for the day.
At the same time, our AMZN April 130 Calls (O:AMZN 10D130.00) are looking nice this morning. Entered yesterday for $5.45, these calls have already hit a high today of $6.35, good for a 16% gainer. Lock in these gains now!
PLAY: Sell your AMZN April 130 Calls (O:AMZN 10D130.00) at market, good for the day.
After selling AMZN, let’s reload our upside exposure using our good friend Green Mountain (GMCR – NASDAQ). The $91.00 level looks like solid support, so let’s use this slight dip to establish an April position now!
PLAY: Buy the GMCR April 90 Calls (O:GMCR 10D90.00) at or under $5.30, good for the day. Place a protective stop limit at $2.90 and a pre-determined sniper sell at $7.80.
And now, let’s take a moment to address our two protective hedges. As you know, we entered the SDS March 35 Calls (O:SDS 10C35.00) and the FAZ March 18 Calls (O:FAZ 10C18.00) on February 23rd as protection against a market breakdown. Right off the bat, the market dropped 170 points — and our hedges were profitable. But considering the market’s ability to fall further, we held each play. What happened next was quite peculiar.
By the close of trading, the market turned a 170-point loss into only a 50-point loss. The major reversal came on no news whatsoever. And from that point forward, the market has run straight up. Call this reaction whatever you want, but it’s clear to me that someone was pulling some major strings behind the scenes. Make no mistake! I continue to feel like this market can move sharply lower at any moment. It’s just a matter of time. When the magic helium cloud that’s holding this market up evaporates, we want to be sure that we’re holding downside protection.
Although the premiums on our current insurance plays have all but expired, it’s critical that we re-up our policy heading into April. It’s just smart tactical positioning. I consider it similar to paying car insurance premiums each month. Even though you don’t use your insurance each month, you’re sure glad you’re covered the moment you get into an accident. These protective plays, in my view, are no different. Later in the session, we’ll “roll” these plays into April. More to come.
Until then…
Lock and load!
Sincerely,
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