Friday, September 4, 2009

Stink Puts Example

Executed Stinks Put. I also picked up some IWM puts. Seems like QQQQ and IWM will lead a downturn. These filled nicely as the exuberance proceeded.

The buy the dip and buy and hold crowd are probably giddy, thinking how resilient this market is. But seriously, we do have to consider that after the biggest mania of many centuries, that a spectacular "recovery" from the first crash is possible--more upside is possible. I hope you took note of the volume of the early sell-off this week. The big boys were panicking also. This tilts evidence towards a real correction.

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Example of stink puts, staggered purchase price.

On a big market pop upwards, puts will drop in price. The game is to lay in wait for this to happen, and pick up puts at good prices.

You can also sell some high priced stink calls. I have never done this, naked calls are risky in this stock environment.

Maybe on Tuesday I can sell for a profit. See below, orders are ready.

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Insightful and Useful Comment!