A rally target at 205.71 is equivalent to the one I’ve flagged in DIA to get short. Options on this vehicle are far more liquid, however, and so you might want to train your firepower on some Nov 22 204 puts, buying eight of them when SPY gets within 0.03 to 0.04 cents of the target. My (very) rough guess is that the puts will be trading for around 0.62 cents, but you should adjust your bid according to actual market conditions. Watch the bid/asked spread for the puts as SPY gets closer to 205.71, and try to position your bid in the middle of the spread when it comes time to act. If you’re filled, tie the puts to a stop-loss 0.12 below where you’ve bought them. As always, if you see a good opportunity to get long for the presumptive rally, any profits booked thereof can be used to increase the position size of your short, or to widen the stop-loss. ______ UPDATE (11:15 a.m. EST): We used a lesser target at 204.86 this morning to get short. (See my 10:00 a.m. post in the chat room, which aired as SPY was ascending toward the target. The actual high was 204.83, followed by a so-far drop of 77 cents! [ Further update: SPY dropped $1.12 before finally turning around.] Nov 14 204 puts that traded down to 0.22 have now doubled in price, and I’ve suggested taking a partial profit on half of any put positions to zero out our risk. _______ UPDATE (5:56 p.m.): After yesterday’s profitable digression, we’ll get back on track for the trade spelled out above, possibly adjusting the option price in real time in the chat room. We should also be on the alert for a possible downturn from 205.28 as well. That’s the target of a lesser pattern created by Thursday’s swoon: 60-minute, A=202.76 on 11/6. _______ UPDATE (November 15): A relapse to exactly 202.87 is possible if this vehicle takes out Friday’s 203.72 low. _______ UPDATE (November 17): Zzzzzzzzzzzzzzzzzzzzz.
