Thursday, December 26, 2013

I'm establishing a tracking position for 16 Jan 155 weekly puts dated Jan 24. Some subscribers evidently jumped the gun, paying a tad more for the puts than was necessary. Regardless, I'll use the worst fill reported, 0.30, for tracking purposes. Set a stop-loss at 0.15, meaning if the puts trade at that price you should exit the order on a sell-stop. If you react quickly, there may still be a 0.15 bid for you to hit, but you'll need to be paying close attention. This gambit is intended to leverage a 163.78 rally target (see inset) that was reached early in the session.  It has since been exceeded by a decisive 50 cents, implying that an 1841.00 rally target I'd given for the E-Mini S&Ps will be achieved.  I have lowered the stop-loss on our puts to 0.15 from an originally suggested 0.20 because I don't want to risk getting stopped out of them just as the S&Ps are making a potentially important top. _______ UPDATE (3:59 p.m. EST): Sell the DIA puts before the close. I think the odds of buying them back tomorrow for significantly less are good. If you are unable to do so, plan on doubling down tomorrow when the E-Mini S&Ps hit my 1841.00 target. _______ UPDATE (December 27, 12:27 a.m.):  Bid 0.21 for a dozen January 156 weekly puts (1/24 expiration) on the opening, contingent on DIA trading 164.75 or lower.  If DIA is above that price, lower the bid by 0.01 for every dime above it.  You can keep the bid open during the day if it goes unfilled early on, adjusting it up or down according to where the underlying stock is trading. Thus, if DIA is trading for 164.45, you can pay as much as 24 cents for the puts;