This flying pig is finally starting to move our way. We hold four December 19 34 puts @ 0.40 and have an open order to short four 32-strike puts against them for the same price. Because the puts we are long are perking up slightly, it could encourage a bid in those that we have sought to sell. An honest bid could materialize if the underlying falls to the 37.47 target shown. In any case, continue to offer the 32 puts short. You can also bid 0.10 for the spread, good-till-canceled, or try to leg it on at that price, since that would be like getting 20-to-1 odds against the possible crash of junk bonds between now and the end of 2015. Junk paper would have to fall hard for our gambit to pay off, but a lot can happen between now and 2016. Sooner or later, though, I am certain investors will be reminded yet again of why they call it “junk”. ______ UPDATE (August 9, 1:32 p.m.): Monitoring this trade has been like watching paint dry, but my confidence that it will work, and work very nicely, is undiminished. The movement has been steadily in our direction, and although the 32 strike may seem remote, a lot can happen between now and December. My expectation is that the water-torture decline at some point will become precipitous, at least for a short while, and it is then that we can expect to receive exorbitant prices for the short side of our partial position.
