With little anxiety, we hold four March 840-850-860 butterflies for a 0.20 debit each. This bull spread will work nicely with our short position in Goldman, since, although the March 145 GS puts we bought on Friday will subject us to no more than about $200 of theoretical risk if the stock continues to rise, we stand to make as much as $4000 if GOOG goes higher too. Moreover, the most we can lose on the GOOG position is about $80 plus commissions. Since GOOG and Goldman are both being driven by the same bunch of institutional lunatics and imbeciles, it seems well-nigh impossible that the two will go in opposite directions. I’ve reproduced a chart that shows how GOOG, driven nuts by Other People’s Money, is easily the equal of GS in terms of feistiness, exuberance and obliviousness to the real world.
