Thursday, September 11, 2014

We made a game effort to bottom-fish on Tuesday, and although the trade wasn't a home run, it produced a profit of as much a $1000 per contract for subscribers who'd used my 1249.20 target to get long. The position was stopped out Wednesday morning when the futures relapsed to new lows, and it would now appear that a further fall to 1234.20 (see inset) is in the cards. This Hidden Pivot can be bottom-fished with a stop-loss as tight as three ticks (!), but I'd recommend this trade only to those who have gotten short from current levels and who are reversing the position. Alternatively, the December contract would become an enticing bull trade on a bc-type pullback from just above the 1253.80 'external' peak shown. -

In today's touts, I've posted explicit guidelines for initiating a new bull spread in TLT, a vehicle that tracks T-Bond prices. We've waited to augment existing positions as TLT has corrected to a target that's close to being achieved. If you have any questions or concerns about how to do the trade, ask them in the chat room, since quite a few subscribers appear to have gotten the hang of the strategy.  Concerning the Friday Jackpot Bet, subscribers will be on their own this week, since I will be out of cellphone/device range from late-morning Thursday until Sunday evening.  The idea remains the same: Buy expiring puts or calls for significantly less than a dollar in 'lunatic stocks' that appear likely to reverse in the first 15-30 minutes from Hidden Pivot targets on the 15-minute charts or less.

We've been using a 114.28 correction target before staking out a new, bullish position using out-of-the-money calendar spreads.  Accordingly, I'll recommend buying the November 22 117 / September 20 117 calendar spread 16 times if and when the target is closely approached. The spread settled around 1.04 on Wednesday, but it will sell for significantly less if TLT falls by the implied 70 cents. Your bid should be about midway between the spread bid and offer, and you should start to monitor the spread when the stock (ETF) has fallen into the range 114.38-114.18. We'll have perhaps six opportunities to roll the spread forward by shorting successive weekly expirations against Nov 22 calls, and even if TLT goes nowhere, that should reduce our exposure by about 0.12-0.20 per week. Of course, if TLT resumes its upward trek from the targeted low, the premium we'll receive for the weekly roll could exceed 0.20. Ultimately, that would give us 16 Nov 22s for an effective credit over and above what the option is selling for when it expires. _______ UPDATE (Sep 15, 12:26 a.m. EDT):  I see that the ETF opened on a huge gap beneath my target -- did so when I was in a mountainous area of Colorado for a long weekend, far from computers, cell phones and a broadband network.  The spread opened at 0.89 and settled at 0.78, and it could easily have been bought intraday for around 0.84, but I'll wait to I hear from subscribers before I establish tracking guidance. Given the wild-and-whacky opening, it's possible none of you did the trade.  Regardless, it would be a good buy this morning for around 0.78., subject to a 'delta adjustment' of one cent for each 5-cent move up or down in the underlying. _______ UPDATE (Sep 16,