Diamonds

We were looking to get short at 95.61, but let's lower our sights for now to a lesser Hidden Pivot at ____. Buy two September ____ puts, which should be trading for around _____. You can use a limit order at that price if you'd prefer to park the order with your broker, but be sure to stop yourself out if the underlying stock touches _____.

A Hidden Pivot resistance at _____ is equivalent to the target given for the cash Dow in today's Side Bets. I'll suggest buying two September 91 puts (DAVUM), good through Thursday, if and when the stock reaches the target.  The options would be attractively priced at around ____ if you want to park a limit order with your broker, but be prepared in any case to stop yourself out if DIA trades above _____. I've included a snapshot of my option calculator, into which I've plugged a 23 volatility that I interpolated from Tradestation.

The Diamonds looked bound for at least 93.65 over the very near term when the clock ran out yesterday, so this vehicle is probably best traded from the long side if it doesn't gap too ferociously above yesterday's highs near 93.  The benefit of camouflage seems unlikely, but my hunch is that a straight point 'X' entry on the very lesser charts will work if it is the first such opportunity of the day.

The Diamonds blew past a 91.96 Hidden Pivot target, stopping us out of some September 90 puts that we held very briefly for a small loss. The rally was just a run-of-the-mill short squeeze begun on garden-variety opening-bell gap, but notice in the accompanying chart how it managed to slightly exceed a very subtle look-to-the-left peak made back in January. This spells more trouble, as far as I'm concerned, for any bear who was counting on reality to reassert itself in the stock market.

The ____ rally target given here yesterday still looks like a good place to try shorting, so we'll use the same game plan, bidding for two September 90 puts (DAVUL), stop _____. They should be selling for around _____ if you want to use a limit order, but pull the bid if DIA exceeds the target.  I have also plotted a hypothetical buying strategy that would apply if the Diamonds zig-zag their way down to a midpoint support early in Wednesday's session.     

There's a Hidden Pivot at ____ we can short that is equivalent to the rally target given in today's forecast for the cash Dow. Its provenance is shown in the chart (inset), and I'd be surprised if we didn't get a tradable pullback.  Officially, we'll buy two September 90 puts (DAVUL), stop ____, but you can change the order in any way that suits your style.  I estimate that the puts will be trading for around ____, and you can use that number with a limit order  to simplify things.  If you do, however, you'll need to make sure that your bid is not executed with the underlying stock trading above _____.

The futures traded up to 89.23 on the opening bar yesterday, stopping out a Pick of the Day short at 89.21 for a tiny loss.  (If you were slow to react, or if you used a slightly wider stop, you could conceivably have come away with a profit, since the futures never traded above 89.27 and spent nearly the entire day below that number. The intraday low was 88.10.)  The fact that the upside target was exceeded, albeit only slightly, suggests still higher prices are coming. If so, look for a pop today to _____, a Hidden Pivot that you can try shorting with a stop-loss at _____.  You'll be on your own if the order fills, but don't hesitate to nail down a partial profit on a pullback of as little as 15 cents.

I'm not keen on chasing the puts, so let's move to the sidelines and wait for the minor downtrend play out.  If the Diamonds are going to provide us with another opportunity to get short on an upswing, they should put in a tradable bounce from either ____ or _____, or both. While we're waiting, you can bottom-fish the second number with a stop-loss as tight as 8 cents.   _______ UPDATE: Cancel the bid, since DIA has remained stubbornly buoyant

We'll stick our necks out an inch today, bidding 1.90 for two ____ puts.  We'd be looking to buy more of them if the futures were about to top at a Hidden Pivot resistance, but in this case they have already started lower, negating any edge we might hope to gain by shorting as Hidden Pivot swing point.