We picked up some put options in Agnico Eagle Mines and IBM, although an attempt to get short in D.R. Horton as well proved a tad too ambitious. The homebuilder’s shares opened at their best levels of the day, but that was still 62 cents shy of our short offer. Concerning Agnico, it is not often that I recommend shorting the shares of a mining stock, but it has had quite a run-up and was looking especially vulnerable. We bought April 25 puts for 1.15, a dime off the intraday low, and they closed on a 1.45 bid. (an

annualized profit of “10,000 percent!!!!”, in the parlance of those who hype stock-market letters). Although we typically try to spread off option positions by short-selling other options against our position, in this case we may simply cash out our chips if AEM continues over the next couple of session to sink as rapidly as it did yesterday.

In any event, my expectation is that we’ll get more bang for the buck than we did with the QQQs, which constitute a rigged game similar to pari-mutuel betting. The relatively small short position we have assumed in IBM is slightly more speculative, since, to reward us, the stock would have to break beneath a shelf of support that has vexed put-premium buyers for more than two weeks. Stochastic signs suggest distribution rather than accumulation has been occurring, but Big Blue nonetheless looks like it could dart in either direction with just a little nudge. If lower, especially over the next few days, my downside target would be a hidden-pivot support at 78.60. That’s a fall of nearly 2%, and it would probably at least double the value of the dozen April 75 puts we bought for 0.35.