Turning the Tables on CF

Add April 95 Puts

PLAY: Buy the CF April 95 Puts (O:CF 10P95.00) at or under $4.00 (or best price), good for the day. Place a protective stop limit at $3.20 and a pre-determined sniper sell at $5.50.

Dear Bottarelli Research Member,

Here’s what I’m thinking on CF Industries (CF – NYSE)…

Since it’s clear that the stock cannot mount any sort of upside strength despite a rash of positive sector news, then it could be just a matter of time before the stock falls further. It seems clear that investors are worried about the threat of share price dilution, which could be the result of CF’s recent Terra acquisition. At the same time, it could be a while before the benefit of this takeover adds to CF’s bottom line. Therefore, while the future of CF remains strong, the near-term outlook remains uncertain. As you know, investors hate uncertainty, which is why CF has been unable to sustain any sort of upside momentum.

While monitoring the stock over the last few weeks, it was clear that the $95.00 level was a strong support point. But as you can see below, CF has now dipped below the $95.00 level. From a technical perspective, this indicates more weakness ahead. Therefore, let’s profit off this near-term uncertainty by adding April puts. But a word of caution: As you’ve seen, this stock is very jittery. Therefore, I want to play this one with a very tight stop. That way, if we get the downside move, we’ll be positioned for a very nice return. If not, we’ll get out for a small but manageable loss.

PLAY: Buy the CF April 95 Puts (O:CF 10P95.00) at or under $4.00 (or best price), good for the day. Place a protective stop limit at $3.20 and a pre-determined sniper sell at $5.50.

EDITOR’S NOTE: I will be on the road traveling over the next two days, so there will be no trading alerts on Thursday or Friday. If you subscribe to Bottarelli Research LEAPS or Blasters, your weekly alerts will be delivered on schedule. In terms of our daily trading, we’ll continue our assault of this crazy upside market first thing next Monday. In terms of our current positions, I’d like to maintain our two leveraged downside plays leading into next week. The way these plays move, it’ll only take one or two downside days to see our QID April 17 Calls (O:QID 10D17.00) and SDS April 33 Calls (O:SDS 10D33.00) come roaring back to life. With such cheap entry prices, it behooves us to remain protected against a sudden downside move.

We have two directional plays on Panera Bread and Netflix via the PNRA April 80 Puts (O:PNRA 10P80.00) and the NFLX April 70 Calls (O:NFLX 10D70.00).Since I’ll be on the road for the next two days, I’d like to manage these positions as follows…

PNRA April 80 Puts (O:PNRA 10P80.00): Entered on March 15^th for $3.73, let’s lock in profits if these puts move at or above $4.50 per contract. On the flip-side, if they move at or below $2.90, play it safe and close them out.

NFLX April 70 Calls (O:NFLX 10D70.00): Entered on March 16^th for $3.00, let’s lock in profits if these calls move at or above $3.90 per contract. On the flip-side, if they move at or below $2.10, play it safe and close them out.

Hopefully, this blueprint should help you mange these positions over the next two trading sessions. Also, be sure to adhere to the CF parameters that I outlined above.

If you’re still holding the second half of our two earnings strangles, maintain the GG April 39 Puts (O:GG 10P39.00) going into next week. But when it comes to the GRMN March 32 Puts (O:GRMN 10O32.00), this play is trading for nominal value. If you can sell it for anything, go ahead and take it. But most likely, this one will expire.

On that note, have a good remainder of the week, and we’ll talk again on Monday.

And as always…

Lock and load!

Sincerely,