Add PNRA Puts

Playing a Pull-back (and Then a Bounce)

PLAY: Buy the PNRA April 80 Puts (O:PNRA 10P80.00) at or under $3.70 (or best price), good for the day. Place a protective stop limit at $2.00 and a pre-determined sniper sell at $6.00.

PLAY: Buy the QID April 17 Calls (O:QID 10D17.00) at or under $1.15, good for the day. Place a protective stop limit at $0.70 and a pre-determined sniper sell at $2.30.

Dear Bottarelli Research Member,

First and foremost, congratulations on your Green Mountain (GMCR – NASDAQ) profits from earlier this morning. Since the beginning of 2010, we’ve hit 6 out of 7 winners playing GMCR, easily making it our favorite options trading vehicle. Going forward, my staff and I will continue to closely monitor the movement of GMCR, offering you the very best entry and exit signals in the entire marketplace.

For example, as GMCR popped first thing this morning, we sold our GMCR April 90 Calls (O:GMCR 10D90.00) pretty close to the high of the day – and locked in a 28% gainer. As you probably know, I love selling into strength, and this trade was a perfect example of this trading tactic. After using the morning pop to lock in our profits, GMCR has since dipped back down, which shows you why we must continue to be extremely nimble in this market. If the time comes to reload our GMCR calls, you’ll be the first to know.

In the meantime, we’re left holding the CF April 95 Calls (O:CF 10D95.00), GG April 39 Puts (O:GG 10P39.00), and SDS April 33 Calls (O:SDS 10D33.00). When it comes to CF, I truly think that we have a sleeping giant ready to awaken. When this happens, CF could pop up to $100.00 in the blink of an eye. From there, a move up to $105.00 wouldn’t be out of the question. Remain positioned.

We’re also looking for a pullback in Goldcorp, so maintain your GG puts. We’re closing in on a break-even on our earnings strangle, and one more downside push will move our puts into profitability. Hold.

Finally, also maintain your protective SDS calls just in case the market decides to ignite some new fear and aggressively sells off. Hold.

In terms of new plays, fast-casual restaurant chain Panera Bread (PNRA – NASDAQ) is currently giving an interesting signal. Originally, my staff and I were watching PNRA for a pullback so that we could add a new call position (similar to our trading tactic on GMCR). But the more we study the chart, the more we feel like the pullback could be $3.00 to $4.00, all coming rather quickly. Therefore, this means that we have a nice put-play opportunity. You see, we can play a quick April put, and when PNRA moves down to its support level, we’ll lock in our put profits and then flip over to PNRA calls. In a market like this, playing these ups and downs makes tactical sense. Therefore, let’s get positioned for the first downside move using PNRA April puts.

PLAY: Buy the PNRA April 80 Puts (O:PNRA 10P80.00) at or under $3.70 (or best price), good for the day. Place a protective stop limit at $2.00 and a pre-determined sniper sell at $6.00.

Plus, as one final trade, I’d like to add April calls on the UltraShort QQQ ProShares (QID – NYSE). As you probably know, the QID moves at a rate of twice the inverse of the NASDAQ 100. Given the recent upside surge in tech stocks, the QID has gotten clobbered. As you can see below, it currently trades for $17.00, and the way the options are priced, nobody fears a downside move in technology. Case in point, we can own the QID April 17 Calls (O:QID 10D17.00) for $1.10 per contract. Since they’re already $0.70 in the money, we’re paying only $0.40 to carry this position. That’s dirt cheap insurance. And if you look closely, now might be the time to get positioned.

For example, take a quick look at the Apple (AAPL – NASDAQ) chart today, and you’ll see that a tech sell-off could easily trigger at any time. If the selling pressure mounts, Apple could easily drop another $10.00, which could send the technology sector into a tailspin. For such a cheap cost, let’s add the QID April calls to our ledger to further protect ourselves against a technology pullback.

PLAY: Buy the QID April 17 Calls (O:QID 10D17.00) at or under $1.15, good for the day. Place a protective stop limit at $0.70 and a pre-determined sniper sell at $2.30.

And as always…

Lock and load!

Sincerely,