We exited eight November 155 puts on a stop yesterday for a $200 loss. Assuming you’re game to try again, I’ll suggest doing so without the usual safety net of option spreads and stop-losses. Look at the chart (inset) and you can see why both risk and opportunity are at apogee right now. Here are just a few of the bets one could make:  1) DIA will collapse without having achieved a new record high, marginal or otherwise.  This would fake out bulls, but also quite a few bears; 2) spectacular new highs lie just ahead; 3) a timid poke above the mid-September high will be the bull market’s last gasp; 4) a tedious grind higher will sap bulls and bears alike in the months ahead; 5) new record highs will give way to a scary pullback, then one final, take-no-prisoners rally.

Outweighing all of these possibilities, in my opinion, is the economic black hole of Obamacare. So certain am I that all of the quantitative easing the Fed can muster will not even begin to alleviate its crushing weight that I’m going to suggest going deep on the next pass. Accordingly, I’ll recommend buying a dozen December 145 (monthly) puts when DIA hits the 156.86 midpoint pivot shown, and another twelve when it reaches the trendline at 157.92. (The puts closed Monday on a 0.47 offer. If we buy them at both levels, the intervening rally will likely cause the puts to drop in value by about 10-12 cents.) The orders are good through Wednesday. Any tracking position that I establish will be guided by reports of fills at specific prices in the chat room. _______ UPDATE (10:32 a.m. EST): Because a few subscribers reported in the chat room that they held onto their November puts, I’m going to provide tracking guidance. For now, offer half (4) of the puts to close for 2.25.  If successful, this would leave you with four contracts whose adjusted cost basis would be 0.43.  Most immediately, my downside target for this morning is 154.80, which has been approached so far by 7 cents.  If it does give way, 154.56 would be the next logical place for a temporary (and tradable) low to form. _______ UPDATE (12:15 p.m.):  This morning’s bear-trap squeeze has come from 31 cents above a clear target at 154.56. This is bullish, but it will be still moreso if the bounce continues, exceeding yesterday’s 156.36 peak without taking a ‘b-c’ breather. New record highs would become all but certain at that point. Those of you who are still long Nov 155 puts should at that time consider exiting the position for what would probably be a small loss. _______ UPDATE (November 6, 2:04 p.m.):  Subscribers have reported fills up to 0.37 for December 145 puts, so that’s the price we’ll use. The second dozen should come for around 0.22 [revised downward], assuming DIA moves up to the next target, 157.82; or if not there, 158.14. ______ UPDATE (2:07 p.m.): DIA head-faked its way on the opening bar to within two ticks of the 157.82 target given above.  The December 145 puts opened at 0.29, the low of the day, but because no subscribers reported buying, I’ll simply track the original position — 12 puts for 0.37. Stand pat for now.