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For: Tuesday 07-27-2010

Sweet Retreat

We have seen a quick burst higher as the market blew through the stops from the April reactionary highs. The market had been grinding higher and this quick burst has expanded the option premium. Looking at the daily chart, this low close doji has me looking for a setback in the market. We see support near the 1700 level on both charts. We will look to sell a call as theta should now start to work on the October options.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: Sell an October 2250 call for a credit of 37 points on a limit. Risk to the option doubling in value. (>$420 not including commissions and fees), Look to take profits if the option trades to two ticks.