I suggested waiting for this flying sow to reach a D rally target before shorting it, but in retrospect it was a bad call; we should have shorted the bejeezus out of it at ‘p’, the 39.08 midpoint Hidden Pivot shown. The opportunity didn’t come into focus until I repositioned point ‘A’ as a one-off rather than at the visually obvious low at 37.26. The effect was to lower p so that it was no longer slightly out of reach, but rather, precisely in line with Monday’s high. That was the place to have bought puts, but we won’t chase the opportunity. If JNK pops slightly, however, although not necessarily all the way back up to p, I’ll recommend buying eight Feb 20 39 puts for 0.45 with 0.05 discretion, contingent on the stock trading 39.08 or lower. This is a day order, and if you don’t understand it perfectly, I’d suggest waiting for a trade that you do. ______ UPDATE (January 29, 9:36 p.m.): In the chat room yesterday, subscribers reported paying up to 0.43 for the puts, so I’ll use that price to establish an eight-contract position for tracking purposes. For now, plan on stopping yourself out if the puts trade for 0.30. That would limit position risk theoretically to about $100. Against that order you should enter another to short eight Feb 20 36 puts for 0.43, good till canceled. ______ UPDATE (Feb 3, 10:39 p.m. EST): When the position got stopped out yesterday, I posted the following in the chat room: “My JNK coordinates were wrong, and it turns out that the p midpoint of a rally pattern projecting to 39.96 lies at exactly 39.08. That means p is still unbreached. Accordingly, I will recommend establishing a new short position by putting up stingy bids for Feb 20 39 puts and/or Feb 20 38 puts. At the moment, you can bid 0.22 for the former and 0.07 for the latter — in size. With JNK trading where it is now, exiting the puts for 0.30 as I’d intended would not have been a bad ‘do’. However, a buy now [of the Feb 20 39 puts] for 0.22 with JNK trading below the 39.08 midpoint pivot would be a good bet.” Subsequently, a subscriber reported buying 20 Feb 38 puts for 0.07, so I’ll use this position for tracking guidance unless I hear from other subscribers who have done differently. For now, offer 20 Feb 37 puts short for 0.08 or better against the puts already held. If the order is rejected because it doesn’t fit the 0.05 increment used for this series, simply offer the puts for 0.10 and stay there. ________ UPDATE (Feb 5, 11;12 p.m.): Bring the offer for the short Feb 37 puts down to 0.05, since that’s where the pros are. _______ UPDATE (Feb 9 12:45 a.m.): There’s almost no chance of spreading off our premium risk, but with JNK now well above the midpoint resistance at 39.08 and climbing, I’ll suggest offering the 38-strike puts to close for 0.05, contingent on JNK trading 39.10 or higher. If lower, raise the offer on the puts to 0.10, good-till-canceled. _______ UPDATE (Feb 17, 12:28 a.m.): Although we took a $140 loss on the puts, we can look forward to shorting this swill again when it closely approaches the 39.96 D target associated with p=39.08. The odds will be better, so we can be more aggressive this time. Stay tuned! _______ UPDATE (February 26, 10:28 p.m.): JNK is closing on the 39.96 target and seems likely to reach it today. Accordingly, I’ll recommend buying eight March 20 40-strike puts with JNK trading within 0.05 (or so) of the target. They would be a pretty good buy for around 0.38, but you’ll need to refine that price based on how the bid/asked changes in real time with JNK very nearing the target. Be prepared for a move to as high as 40.11, but expect a top somewhere in that range. The turn is not likely to be dramatic because drama is not a feature of this vehicle’s personality. _______ UPDATE (March 3, 12:59 a.m): It would appear that we’ve been done out of a trade for which we’d been waiting more than a month. This little cinder block had climbed to within 17 cents of our rally target on Friday, and there was little reason to suspect it wouldn’t complete the final inch on Monday. Alas, JNK opened on a gap lower, on its way to the worst single-day loss since early February. Do nothing further for now.
