Bought +1 BC 100 OCT 09 12.5 PUT @1.95, mark 10.81
Here’s one last try in shorting Brunswick Corp. BC gapped open about 50 cents this morning on an analyst upgrade. It subsequently tested $11.00 with about 5 times first 30-minute volume. It has since been in a trading range.
Why is this significant? Observing Figure 1, we can see that $10.85 is the 62% Fibonacci level of the entire drop from Sept 19, 2008. Practically exactly a year ago. Secondly, this huge volume at open is good as it typically signal retail/pubic euphoria. Combining the two, huge volume retail push + test a long term resistance = shorting opportunity!
In the near term, BC is also testing a resitance as shown in Figure 2. Finally the stars may be aligned for a short in BC. I have tried many times and failed miserably in the past several weeks. But after analysing my trades and re-evaluating my method, this setup offers a very good chance. So let’s see how it goes.
Entry: $10.81
Stop: $11.00 by end of next week.
Target: $9.00, the next Fibonacci level.
Reward / Risk = $155 / $45 = 3.4. (These values are obtained by estimating the premium of this option at expiry using the Bjerksund-Stensland approximation.)
Brunswick Corp
Brunswick Corp (30-minute)
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