Health Care News Muted

Limited Reaction on Wall Street

Dear Bottarelli Research Member,

Good morning. Now that the House has passed the health care bill by a narrow 219-212 vote, it’s pretty clear that taxes are set to move higher. After all, with a price tag of $940 billion over next ten years, increasing taxes is the only way to offset the new spending. As you can imagine, the threat of a tax increase does not sit well with Wall Street, but thus far the downside reaction has been extremely muted. Throw in increased concerns about Greece’s finances and India’s interest rates, and I continue to feel like this market is vulnerable to a downside move. Therefore, continue to hold your protective SDS April 33 Calls (O:SDS 10D33.00) and QID April 17 Calls (O:QID 10D17.00). If this market really starts to fall, you’ll be glad you own these two positions.

Also, our downside play on CF Industries (CF – NYSE) paid off last week. If you recall, I gave pre-set selling instructions on our CF April 95 Puts (O:CF 10P95.00), which have now triggered. If you haven’t already done so, sell these puts for a strong winner! Sell.

Also moving in our direction is the second half of our Goldcorp earnings strangle. If you recall, we’re holding the GG April 39 Puts (O:GG 10P39.00), which have a break-even price of $1.88. As I write, these puts have hit a high of $1.92, which moves us slightly into the black. Hold for more gains.

And finally, we’re also holding the NFLX April 70 Calls (O:NFLX 10D70.00) and the PNRA April 80 Puts (O:PNRA 10P80.00).I’d like to see how the market shakes out this morning before making any decisions on these two directional plays.

As always, I’ll keep you fully informed on any new trading activities. But until then…

Lock and load!

Sincerely,