A moderately important rally target at 107.58 is not likely to produce the Mother of All Tops, but it does look like a high-odds shorting opportunity because of its subtlety and the single-bar delicacy of its ABC coordinates (180m, A=97.94, 11/04; B=103.62, 11/11). Accordingly, I’ll recommend buying two February 107 puts (DIANC) if and when the target is closely approached. A rough estimate of their value with the underlying at 107.58 is 1.80. I did not use a calculator to come up with that number, by the way; rather, I took the current, 1.93 bid for the February 106 puts and reduced it by 12 cents, based on delta value of 0.45 and a 30-cent rally to 106.58. _______ UPDATE: The Diamonds plunged at the opening bell, so our short went unfilled.
