Subscribers still hold 16 Aug 16 1340/50/60 butterfly spreads with a cost basis of zero, since we were unable to unload them at our price when the stock took a maniacal leap to 1307 on Monday. Yesterday’s selloff was a setback for the spread, and the stock will need to rebound sharply this week to fatten our position for an easy sale at 2.00 or more. Even so, we can comfortably hold it till expiration, since no loss is possible. As you can see, the bounce off yesterday’s low occurred almost precisely at the midpoint pivot of the large, bullish pattern we are playing. This is an encouraging sign, but if the stock needs to test the low for a couple more days, it would greatly lengthen the odds of a payoff. _______ UPDATE (10:50 p.m.): Although price action has been distributive, I wouldn’t give up on the butterfly, since our bet is on the kind of wildly insane, out-of-the-blue behavior that energizes the stock so much of the time. _______ UPDATE (August 7, 9:01): The stock went nicely against the trend yesterday, but it won’t be able to buck a second consecutive down day in the broad averages. At this point, our butterfly is a market bet, so keep your fingers crossed for a big rally out-of-the-blue. ______ UPDATE (August 11, 12:01 a.m. ): There’ll be no problem holding the position down-to-the-wire if need be, since it was acquired by subscribers at zero cost. The intraday charts yield a rally target at 1338.62 most immediately, so it will take a very powerful burst — one capable of blowing past this Hidden Pivot — to give our spread a decent shot at finishing in-the-money. Stranger things have happened, so stick with it. _______ UPDATE (August 13, 2:32 a.m.): Exit the spread at will if you can do so for a small credit of perhaps 0.30-040, since odds that it will finish in-the-money are beyond remote at this point.
