Remedy for a good weekend

by Raymond Chan

The XJO has fallen some 68 points this morning to 4190 due to the fear of the European contagion effect.

Is there further downside? Possible. Our chartist thinks the 4131 level as a key support level for the XJO, which if it does not hold, then we could be seeing 3850.

On the other hand, the US has been producing some progressively good economic numbers, which can see the market higher, once, the grey cloud from Europe clears somewhat.

What's the best way to play this market?

For today, get some short term protection in, so you could enjoy your weekend and not worry about the Europeans for a few days.

Buy the 19Jan11 XJO 4050 put for about $1 or $1000 per contract.

If you were to spend $5k on this trade and if XJO falls to 4075 (which is possible), then you would be gaining about $1800 from this trade.

Short term protection. Exit if that eventuate next week.


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