QQQQ

A Hidden Pivot target at 68.65 is roughly equivalent (though hardly equal) to the rally target in the June E-Mini S&P that I've suggested shorting. Let's try it in this vehicle by buying four May 68 (monthly) puts if and when DaCubes get within 0.07 points of the target. A price of 1.70 would be about right if implied volatilities don't change much during the ascent.  In practice, however, in order to get a fair price, I'll suggest monitoring the bid/asked for the puts once QQQ gets above 68.40.  A final note: Stop yourself out of the position if the puts trade  for 0.20 less than you've paid for them. _____ UPDATE: We'll put this one aside for now, since the wait has grown boring and distracting.

No change. We hold two January 54-51 puts spreads for a debit of 0.07 and two January 53-50 puts spreads for a debit of 0.03.  We’re using a 52.13 downside target for now, but the Cubes would need to go lower before we think about taking off the position for a quick profit.  As noted here earlier, total risk is limited in theory to $20 plus commissions,  but we could make as much as $1200 if things go our way. Effectively, we have gotten 60-to-1 odds on the QQQs trading 50 or lower by January 20. ______ UPDATE:  The value of our position barely upticked over the five weeks we held it, since the Cubes, far from starting 2012 with a collapse years overdue, simply wafted higher. Our trading loss, not exactly staggering, was $20, but that shouldn't discourage us from making the same bet again and again and again, since one of these days stocks are going to fall and keep on going.

We hold two January 54-51 puts spreads for a debit of 0.07 and two January 53-50 puts spreads for a debit of 0.03.  We're using a 52.13 downside target for now, but the Cubes would need to go lower before we think about taking off the position for a quick profit.  As noted here earlier, total risk is limited in theory to $20 plus commissions,  but we could make as much as $1200 if things go our way. Effectively, we have gotten 60-to-1 odds on the QQQs trading 50 or lower by January 20.

Near yesterday's lows, we locked in some bearish puts spreads that carry almost no theoretical risk but which coud produce substantial gains if stocks stay weak into 2012. Specifically, we now hold two January 54-51 puts spreads for a debit of 0.07 and two January 53-50 puts spreads for a debit of 0.03.  Both positions together cost us a total of $20, but they could produce a maximum profit of $1200 if things go our way. Effectively, we have gotten 60-to-1 odds on the QQQs trading 50 or lower by January 20. We'll do nothing further for now, but I'll send out an alert if a sharp downdraft in the broad averages should make it advantageous to cash out before expiration. Regarding the Cubes, yesterday's plunge exceeded a 54.87 midpoint support by a decisive 29 cents, implying that weakness will continue down to at least 52.13, its 'D' sibling.  Click here if you’d like to learn more about the Hidden Pivot Method, including how to identify and trade targets such as the ones used above, and to forecast trends with bold confidence.

We hold two Jan 54 puts and two Jan 53 puts with a profit-adjusted cost basis of,  respectively, 0.76 and 0.57. I’d suggested shorting December 54 and 53 monthly puts against them for the same price, but I'll now recommend instead that you short January calls three strikes below what you own for the same price or higher.  Thus, if you hold eight January 54 puts for 0.76, you should try to short eight January 51 puts against them for at least 0.76.  I estimate that the Cubes would need to fall to around 54.80 (Note: I've raised this number) within the next week or so to get the offer filled.  Our current, minimum downside objective is 54.87, a Hidden Pivot midpoint.  _______ UPDATE (10:42 a.m. EST):  I am recommending that you complete the spread immediately by hitting the 0.69 bid or the 0.54 bid in, respectively, Jan 51 puts or Jan 50 puts. Once you've completed the spread(s) as suggested, this reverse-Santa Rally position will offer great odds, since, although either spread will produce a profit of $300 if Santa drops dead (so to speak), the most we can lose in theory, commissions aside, is $7 on each Jan 54-51 put spread and $3 on each Jan 53-50 put spread. _______ FURTHER UPDATE (1:24 p.m. EST):  The Cubes fell a bit lower after the trading alert was disseminated above and in the chat room, and it would therefore have been possible to short either the Jan 51 puts or the Jan 50 puts for somewhat more than we paid for the long side of our position.  Officially, however, I will record a short sale at the prices suggested above.  That will give a cost basis of 0.07 ($7) for the Jan 54-51 puts spread, and 0.03 $3.00) for the

We got short at the top on Friday, but how long will Mr. Market let us enjoy the ride? Our vehicle, QQQ put options, nearly ran off the road on Tuesday when the Dow began the day with a 125-point rally. A pullback in the early going shaved that gain by two-thirds, but by early afternoon bulls were beating on the highs, threatening to send bears into a new round of short-covering. The pessimists got a reprieve, however, when something spooked the market late in the session, sending the Industrial Average into a 225-point dive that left it 66 points lower on the day.  It was not a session for the faint-hearted. Still, the outcome boosted the value of our put position, leaving Rick’s Picks subscribers in good shape to try to lock in a profit no matter what the stock market does as 2011 draws to an unpredictable close. On Friday, we’d actually been bullish for most of the day in anticipation of a powerful rally in the E-Mini S&Ps to exactly 1259.25, a Hidden Pivot target. With ten minutes to go before the bell, the futures got as high as 1258.50, and so we sent a bulletin to subscribers telling them to get short by buying January 54 puts for 0.96 in QQQ. This equity-based vehicle corresponds to the S&P futures and was making its high at 57.17. Although we rarely advise opening a position on a Friday afternoon, the circumstances strongly warranted it. This time, taking a gamble paid off when the new week began. Monday’s gap-down opening caused our Jan 54 puts to spike to as high as 1.25, and so we told subscribers to take a profit on half the position. Now that the selling has resumed, our goal will be to spread off our

We hold two Jan 54 puts and two Jan 53 puts whose cost basis has been profit-adjusted downward to, respectively, 0.76 and 0.57. I've suggested shorting December 54 and 53 monthly puts against them for the same price, yielding risk-free calendar spreads, and that's what we will do officially. We may try something else if the selloff begun yesterday stalls, though, since it will take a pretty nasty downdraft to get our short offer filled. However, you might also consider emulating a chat-roomer who reported legging into $2 vertical bear spreads by shorting January 52 puts against the January 54 puts he already held. Because he did so for a net credit, the position will make money regardless of whether the QQQs rise or fall. However, it will also give him a risk-free bear play into the New Year, with a $200 profit assured if the Cubes fall below 52 by January expiration.  For now, my minimum downside target is the 54.87 midpoint of the pattern shown.  You can leverage this number as you see fit, but my hunch is that it will foster a tradable bounce from within no more than four ticks of 54.87. Click here if you’d like to learn more about the Hidden Pivot Method, including how to identify and trade targets such as the ones used above, and to forecast trends with bold confidence.

With the E-Mini S&P hitting our rally target in the final moments of Friday's session, we bought four QQQ Jan 54 puts or Jan 53 puts, respectively, for 0.96 or 0.74. These are keepers, since just about anything could happen between now and January 20 when the options expire. Do nothing further for now.  _______ UPDATE (11:02 a.m.EST):  In the chat room a moment ago, I suggested cashing out half of the puts at current prices: 1.16 for the Jan 54s, 0.91 for the Jan 53s.  That leaves us with two puts at either strike and a profit adjusted cost basis for each, respectively, of 0.76 and 0.57. Let's spread off the risk by turning the positions in calendar spreads, shorting a December put for each Jan 54 put or Jan 53 put you currently hold. Do so in a 1:1 ratio, and shoot for putting on the spread for "even" or better.  What this means is that you will short the puts for the cost basis of the puts you now hold, selling December 53 puts for 0.57 (currently trading for around 0.09) and December 54 puts for 0.76 (currently trading for around 0.18). Although the course of action suggested above may seem very conservative, it is essential that we nail down partial profits on option positions when possible, particularly on puts that have "come in."  In the several decades that exchange-listed puts have been offered, instances in which put holders enjoyed more than three consecutive pleasurable days have been non-existent. I would dare say that at least 95 percent of all puts ever purchased "naked" have lost money for the trader. Click here if you’d like to learn more about the Hidden Pivot Method, including how to identify and trade targets such as the ones used above, and

It is 20 minutes from Friday's close, and chat-roomers have reported buying QQQ Jan 54 puts and Jan 53 puts, respectively, for 0.74 and 0.96.  These buys came with the E-Mini futures trading within a hair of the rally targets I'd furnished for the December and March contracts.  I am establishing a tracking position for both of these options, but for now, just sit tight.