In combination with Goldman July 195 calls we hold, the dozen June 130 DIA puts acquired for (effectively) 1.50 were to have given us an effective straddle on the market. We shorted March 130 puts against them to reduce their cost basis but have held off on shorting the Aprils in sequence because they are not worth selling. At this point it would take a very nasty swoon to roll into June 130-May 130 calendar spreads as we’d intended. Although the possibility of a market collapse cannot be ruled out, we should treat the existing position as a longshot bet on the unexpected — and as insurance against it. For now, though, please note that the Diamonds have precisely reached an important rally target aired here a while back. It seems unlikely to hold, but we’ll have a better idea of the buying power remaining to be spent when we’ve seen how the target fares against this bullish onslaught. ______ UPDATE (May 2, 1:54 a..m. EDT): With the market moving higher nearly every day, we had no chance to short April calls against our position, nor are we even remotely likely to get a shot at shorting some Mays. For that reason, I am booking an $1800 loss on the calls — the largest on any trade I’ve advised in several years — to put this tout out of mind. If the stock market dives unexpectedly, we’ll un-retire the tout if there’s a play. For now, though, consider it a total loss.
