The Volatility Trader
105 W. Monument Street
Baltimore, MD 21201
Wednesday, March 21, 2007
Email – #259
Volatility Trader Alert
Dear Subscribers,
If you haven’t noticed, the market is extremely choppy right now… and I expect it to continue for some time. However, many signs are pointing to continued weakness, especially with rising gasoline prices indicating additional inflation on the horizon.
With this in mind, I have a new trade for you that should absolve us from the broader market uncertainty.
The InterContinental Exchange (NYSE: ICE) recently posted an all-time high at $167, and has since fallen 22% to the present $130. After reviewing the company’s fundamentals, I don’t believe that the stock will hold present levels… but then again, there’s always that irrational side of the market that overlooks real valuations.
Given the present situation, we are going to straddle the stock.
Action to Take:
Buy the InterContinental Exchange (NYSE: ICE) June 2007 $100 puts (ICE-RT) for no more than $2.15…
Also, buy the June $155 calls (IHH-FK) for no more than $4.30…
I am not putting a stop on this trade right now, because as the stock begins to move one direction, or another, we will close the losing side. Thus, I will alert you to further action as the trade unfolds.
The point here is that with this trade, we stand to capitalize on whichever direction this stock finally starts to move. There’s a substantial tug-of-war going on with bulls and bears right now, and it’s yet to be seen who will win.
However, we stand to capitalize on either direction the stock moves.
Exit is everything,
Mark Whistler
Current Portfoli
InterContinental Exchange (NYSE: ICE)
Jun 07 $100 puts ICE-RT
Purchased: New
Current Price: Buy for no more than $2.15.
June 07 $155 calls IHH-FK
Purchased: New
Current Price: Buy for no more than $4.30.
Tyson Foods (NYSE:TSN)
Apr 07 $17.50 puts TSN-PW
Purchased: 12/18/2006
Current Price: $0.25
