It Ain’t Braggin If You Can Back It Up
Well,
it was only a matter of time before the stock market
took a break and a multi-person outbreak of Bacillus Anthracis (Anthrax) seems
like as good a time as any for some old fashioned profit taking. The catalyst
was the report of 29 staffers in Senator Tom Daschle’s office testing positive
for anthrax, turning a 100-point gain for the Dow completely around and
66-points into negative territory.
While
we had no knowledge of that report, our Hot
Trade on BeyondtheBull.com,
spelled out pretty clearly what we were thinking just 15 minutes into the day
when the market was up over 80-points:
To
either lock in profits from the recent surge, or to position for a possible
downside pullback, we’re looking at:Buying
the QQQ December 35 puts for $2.80 and selling a like number of December 30
puts for $1.10.That’s a
net debit of just $1.70 for that $5 spread. On a 10 x 10 spread our total out
of pocket prior to option commissions would be $1,700, with a potential profit
of $3,300 if the QQQ’s were to finish at $30 or lower on December expiration.
Obviously,
we needn’t hold the position until then. In fact, if we got a correction, you
may be able to take some profits pretty quickly.
That
little beauty has already expanded to $2.10, a quick $.40 gain, or nearly 23% in
just over 3-hours. As Jay Hanna Dean, known by millions of baseball fans as
“Dizzy” Dean used to say, “It
ain’t braggin’ if you can back it up”. Â