5 www.taipanonline.com MARCH 2004 How to capitalize on
another 200 points by Bryan Bottarelli        The best way to profit off this continued upside is
to do exactly what we’re doing right now. That is,
holding our position in the SPX June 1175 Calls (SPT FO).        As Taipan  readers will recall, we originally rec-
ommended buying these calls on February 4, 2004.
On that day, I pointed out that implied volatility on
SPX call contracts was at a historic low—  which
meant we had the opportunity to enter this trade at
a super-attractive entry price. For the purposes of
our track record, we bought in at US$23.50 per con-
tract, targeting an easy 100% gain if the SPX contin-
ued its march up to 1,300. As I write, the SPX June
1175 calls trade for US$29.10 per contract, giving
you a solid 24% gain.        Armed with Adam’s fresh forecast, let’s revisit
this gains estimate to see how we can maximize our
profits. Specifically, I’d like to calculate what the
positions will be worth at SPX 1,215 and SPX 1,455. • If we see SPX 1,215 in the next 20 days, your March 1175 Calls will be worth US$57.75 per
contract. That’s 98% higher than current levels. •If we see SPX 1,455 in the next 20 days, your March 1175 Calls will be worth US$237.25 per
contract. That’s 715% higher than current levels.        OK, maybe that’s a little too much, too quickly.
Let’s stretch the time scale out to 60 days and see
where we stand. •If we see SPX 1,215 In the next 60 days, your March 1175 Calls will be worth US$51.35 per
contract. That’s still 76% higher than current
levels. • If we see SPX 1,415 in the next 60 days, your March 1175 Calls will be worth US$238.15 per
contract. That’s 718% higher than current levels.        Realistically speaking, I’m shooting for the 76%
gain offered by the “SPX 1,215 in 60 days”  scenario.
But there’s always the chance for the higher gain!        Either way, the recommendation is simple.
Continue to hold your SPX June 1,175 Calls (SPT
FO) for more gains. If you’re not currently holding
these calls, I recommend buying them anywhere
under US$30.00 per contract.        As always, look for updates on this play via your
daily 247profits e-Dispatch.        P.S. Our basket of “Spiders and Diamonds” 
continues to perform well. As you recall, we bought
the S&P Spiders (SPY) on September 8, 2003, for
US$100.50 a share. At this writing they are trading
for US$116.09 per share—  a 15.5% gain.
Additionally, we bought the Diamonds (DIA) on
November 10, 2003, for US$98.00 a share. They are
now trading for US$107.36 per share—  a 9.5% gain.
Continue to hold both positions for more gains. n        “…in a finance-based econo-
my that depends on more and
more low cost money in order to
thrive, the game ends when
either the ‘more and more’ or
the ‘low cost’ modifiers are
replaced with ‘less’ or ‘higher
cost.’” –Bill Gross, PIMCO Bonds, February 2004        It’s been a great race. And for their efforts, the
ponies—  Weak Dollar, Refi-Rama and Deficit
Schmeficit—  should be given a three-way split of the
Economic Recovery Cup. Right before they get put
out to pasture.        If you bet these horses to win last year, you hit a
heck of a trifecta. In my opinion, it’s now time to
cash in that ticket. Because these horses are played
out. Done. They’ve been run for all they’re worth.        Now granted, I’m sure another lap or two could
be squeezed out of them. But we’d probably have to
shoot them afterward. Sprint or marathon? The fundamentals of this economic recovery are more akin to a sprint than a marathon. A weak cur-
rency, low interest rates and a refi boom cannot be
permanent features of an economy. Alan Greenspan
knows this. But he’s playing for the history books.
And President Bush has been playing for re-election. Briton L. Ryle Next, please… Stocks are in the home stretch: Are you
ready for the race to end?