Ordinarily I tie options recommendations to targeted highs and lows in the underlying stock. We’ll try something new this time, buying put options based on a price pattern in the put option itself. I’ve demonstrated this tactic during recent weekly tutorial sessions, but this is the first time I’ve suggested it in a tout. Specifically, I’m recommending that you bid 0.28 for four November 21 165 puts, and 0.21 for four more, day order. These prices are just above the p2 support and D target (see inset) of a downtrend in an option whose price has already been cut in half in the last two trading sessions. _______ UPDATE (9:30 p.m.): The order will remain valid as long as the puts don’t exceed 0.52. _______ UPDATE (October 28, 7:07 p.m. ET): We bought four puts for 0.28 and are bidding four more at 0.21. Considering the manic spirit of buyers lately and the stock market’s take-no-prisoners rally, our puts should be treated as a gamble. I have replaced the old chart of the Nov 21 165 puts with a new one that shows a bigger picture — one that projects a possible fall to 0.04 if the puts breach p=0.20 by more than 3-4 cents or close beneath that price. _______ UPDATE (12:56 p.m.): WordPress is particularly recalcitrant this morning, and so this is the third time I’ve tried to publish this update (it did post properly and in timely fashion in the chat room at 10:44 a.m., however): Cancel the 0.21 bid for more DIA puts. We’ll stand pat for now. I don’t want to be buying more puts if this market turns around today. _______ UPDATE (November 3, 8:45 p.m.): Which it did. We’ve risked a little more than $100 on this trade — a 20-to-1 horse at this point — satisfying the urge to try to pick a top.
