Hey, I’ve got a hot tip:  Run the other way when some tipster wants to share a piece of juicy insider information with you.  What would you have done if he’d told you earlier in the week that the notoriously well-connected banking firm was about to report horrendous earnings for the fourth quarter? You’d have jumped on some put options, right? Maybe a dozen or two March 95s, which were selling for around 3.50 with the stock loitering suspiciously near $98 on Tuesday.  Guess what: The tipster got it exactly right. Goldman’s earnings could hardly have been much worse — down 58 percent for Q4.  As for the March 95 puts, does an instant double to $7.00 sound about right? In fact, they traded for as little as 92 cents yesterday, having shed three-quarters of their value in just a few short hours as the stock soared almost $10 from the previous day’s low.

This breathtakingly counterintuitive outcome is one of the sleaziest bear traps I’ve seen sprung, and although it’s ultimately going to undercut the stock’s credibility as it makes its way down to, oh, $10 a share years from now, for the time being, Tuesday’s short-squeeze will provide exactly the kind of buoyancy that its handlers — a bunch of goniffs that  I wouldn’t trust alone with my cat — had sought in order to unload shares on widows and pensioners.  Sometime before this swindle runs its course over the next couple of weeks, we’ll want to lay in an inventory of way-out-of-the-money puts so that we can later attempt to spread off their risk when the stock eventually plummets like a brick on ginned-up “good” news. Want to join us for the ride?  Click here for a free trial subscription to Rick’s Picks.