We've been waiting for a rally to get short, and this could be it. I'll suggest bidding 0.28 for a dozen December 20 39 puts, contingent on the stock (ETF) trading 40.84 or lower. The price is based on the 0.35 bid shown for the puts at yesterday's close, then factoring in a 38-cent rally with the puts at 28 deltas. My goal is to leg into a vertical put spread at no cost. ______ UPDATE (10:14 a.m.): Lower the bid to 0.24 with JNK trading near the target, since the puts are only 0.30 bid at the moment with JNK trading 31 cents BELOW the target. _______ UPDATE (October 22, 1:30 a.m.): In the chat room yesterday morning, we settled on a 0.40 bid for six December 29 40 puts. Continue to bid them there, good till Wednesday's close, but cancel the order if JNK trades above 40.84. ______ UPDATE (October 22, 9:11 p.m.): I'd hate to come away empty-handed just because this flying garbage pail didn't quite reach its target. Let me suggest bidding 0.30 for eight December 39 puts, good for the first hour of the session only. _______ UPDATE (October 23, 10:40 a.m.): Someone bought eight of the puts for 0.35 on the opening, but that was as low as they've traded so far. Retain the 0.30 bid for now, but lower it to 0.25 if JNK is trading above 40.48. _______ UPDATE (October 27, 2:50 a.m.): We'll try again later, since no one reported a fill in the chat room. Any interest here?
Tuesday, October 21, 2014
DIA – Dow Industrials ETF (Last:163.65)
– Posted in: Current Touts Rick's PicksWith the 167.05 rally target in mind (see inset), let's see if we can make some money on the felicitous side of this short squeeze. I'll recommend buying the October 31/October 24 167 calendar spread 40 time for 0.20. Make the order contingent on DIA trading 163.40 or higher. The price I've suggested is pretty niggardly, but we can adjust it on-the-fly if necessary. Nimble pivoteers might want to attempt legging the position on by starting with the long side. If you can get the spread for less than 0.20 this way, you should do it up to 100 times. You can also try to leg on vertical spreads with Oct or Nov weekly calls as the long piece of it. Please let me know in the chat room if you fill the order, so that I can establish a tracking position. Also, be aware that this play is somewhat more speculative than my usual target play, since the midpoint resistance has yet to be exceeded.
The Overpowering Smell of a Bear Rally
– Posted in: Free Rick's PicksThe broad averages wrenched and spasmed their way higher yesterday, telling us that just about every trader on earth was trying to get short on each and every uptick. The move was more or less untradable, even though my E-Mini S&P tout got the trend right and nailed the intraday high to-the-exact-tick. My advice to bears is to sit back and relax while the uncool among them beat their brains in trying to pick a top. This is a bear market, remember, and its job is to make everyone think it's actually going to new record highs. I seriously doubt this will occur, and we'll try to short it somehow, but current price action does not smell like opportunity to me.
ESZ14 – Dec E-Mini S&P (Last:1897.50)
– Posted in: Current Touts Free Rick's PicksThe market has gone ornery and untradable on us, presumably because everyone and his mother is going at it with the same idea of getting short. Although yesterday's forecast here got the trend right and even nailed the intraday high, 1902.50, to the exact tick, the prediction was valueless for trading purposes. That's because the ratcheting, exceedingly tedious rally generated a string of minor corrections that were equal to or greater than each subsequent leg up. Not exactly the risk:reward proposition we are looking for. I proffered a still higher target at 1911.00 if 1902.50 was exceeded, which it has been in after-hours trading. Night owls can use their own judgment to determine how to catch the implied ride north, but I wouldn't look for easy pickings if there's still a few points left in the move at Tuesday's opening bell.
