I forgot I posted this. It hit 67.00 in January and then 55.00 in March, bottoming shortly thereafter at 50.00 or so. BNI has since rebounded 50%. Not bad for swing traders, except the higher price of the stock ties up a lot of capital.

That's why I like BNI options.....leverage and lower out-of-pocket capital commitment.

Personally, I think the markets are going to rally into the late fall, perhaps until the New Year. After that I expect new lows. That’s just my opinion, so sink me if I’m wrong. It certainly could happen……me being wrong, that is. Anyway, how can you do a trade with options that can benefit from a short term rally and long term decline?

BNI is hovering at and above its 38% retracement line. I’d like/expect it to pull back to 67.00 or so from here. When that happens I’d like to buy January 2010 call options with 75 strikes for no more than 6.00 each. Then when BNI advances in price I’d like to sell January 95 calls to pay for the January 2010 calls, perhaps even put a jingle in my pocket.

This is a tricky trade and you shouldn’t undertake it unless you have experience trading options. If I get filled on the January 75 calls I’ll post details of the trading plan.