Subscribers appear to be diligently working the Sep 140-135 put spread I’d recommended, so I’ll establish a tracking position of 32 of them for an 0.11 debit. That’s in the middle of the 0.10-0.12 range where I’d said the spread would become an attractive buy. At that price, our theoretical risk will be about $350 — but with a potential payoff of as much as $16,000.

Since the trade thumbs its nose at a bull market that has been going strong for more than four years, we should have no illusions about a big score. In fact, to accept the probability that the trade will be a loser like perhaps 99% of all puts purchased since 2009, you should kiss the $350 good-bye at the outset, then forget about the position.  That said, I really like the 45-to-1 odds we’ll be getting on this bet. ______ UPDATE (August 7): Someone asked in the forum about those 45-to-1 odds. Herewith, my response, since some of you who did the trade may not fully understand what it implies:  “DIA would need to fall below 135 by September 20, Cam. That’s equivalent to a 2000-point drop in the Dow — a longshot bet, as I’ve noted. In practice, however, we could easily triple or quadruple our money or better if the Dow were to drop just 400-500 points over the next 2-3 weeks.”  _______ UPDATE (August 15, 1:24 p.m. EDT): Since things are starting to go our way, let me suggest offering half (16) of our spreads to close for 0.33. If this order fills we’ll have a shot at an $8000 profit with no loss possible, even after commissions.