The 8.08 rally target shown look sufficiently compelling to warrant the purchase of puts when the stock gets there. Camouflageurs can short the shares naked, risking no more than 6 cents per round lot, but for those who prefer the ease and leverage of options, I’ll recommend buying two March 9 puts (or multiple thereof) with the stock trading within 3 cents of the target. I’ll further recommend that you stop yourself out if the puts trade 15 cents below their purchase price, since it’s always possible B of A will fail to heed the Hidden Pivot resistance. If we do the trade, our goal will be to eventually short puts of a lower strike for the same amount we’ve paid for the 9s. That would give us some vertical bear spreads with no possibility of a loss. _______ UPDATE (9:58 a.m. EST): The stock has gotten no higher this morning than 7.98, but if it hits the 8.08 target today, expect to pay about 1.12 for the puts. _______ FURTHER UPDATE (10:34 a.m. EST): The stock popped to 8.09, pushing the puts as low as 1.06. Officially, I’ll record a purchase of two for 1.10. For now, if they trade down to 0.95, stop yourself out of the position.
