We hold two residual Nov 2 200 puts effectively for free, but let’s try to add to the short position on this rally. The bullish pattern I’ve used yields the most conservative big-picture target possible, but it comes with no guarantees that 222.18 will even be reached. Still, I’d rather miss buying puts than be sitting on them through an 800-point Dow rally. My gut feeling is that, in this case, getting short at p=216.70 is asking for trouble. For the time being, we’ll plan on shorting only if and when D is reached or closely approached. For now, let”s try to leg into a bullish calendar spread, starting with a 0.06 bid for 12 Nov 11 222 calls, day order. Make it contingent on the underlying trading 214.70 or higher. If SPY slips below that price, use a 0.04 bid for 24 calls and leave it in for the rest of the day. If we buy the calls, we’ll wait for the next rally so that we can offer an equal number of calls short at the same strike, but with a closer-in expiration. ______ UPDATE (Oct 26, 7:36 p.m. ET): Buyers having failed us, let’s turn our gaze lower, putting aside the rally we’d wanted to short. SPY now looks bound for the 209.83 target shown, a plunge that we will be confirmed if and when the downtrend smashes the 212.58 midpoint pivot shown (see inset, a new chart).______ UPDATE (Nov 1, 5:38 p.m.): Today’s plunge exceeded the 209.83 target by 0.20 points — not quite enough for us to infer that another dive is imminent and unavoidable. We’ll monitor the bounce closely for signs of fatigue, but if SPY should relapse, the next important stop below would be 207.31.
