I’ve tossed out the nasty-looking green bar from Tuesday to produce a serviceable rally target at 181.29. However, p2=180.94 (i.e., the pink line) more closely coincides with a target for the cash DJIA that I disseminated earlier. To leverage this information, I’ll recommend shorting at or very near 180.94 using put options that expire on July 24. Specifically, you should bid for four 180-strike puts, which I estimate will be trading for 0.88-0.96. You can hone your bid closer to fair value by simply observing bid/asked for this series if and when 180.94 is closely approached. As is my custom, if subscribers report fills in the chat room, I will establish a tracking position based on the worst price paid. Whatever you pay, use a stop-loss on the puts that is 0.25 below the best fill reported by a subscriber. If the stop is hit, leave enough appetite to try again on Friday if DIA is hovering near D=181.29 at the closing bell. _______ UPDATE (9:30 a.m. EDT): The stock blew past p2 overnight, topping at 181.34 — three cents above a target I have adjusted slightly to correct a Tradestation glitch. Let’s hold off buying the puts for the moment, but check in the chat room for timely guidance.
