Sell Into Strength

UPDATE 10:00am EST: I think the title is pretty clear. We’ve got ourselves a nice open and your mission, should you choose to accept it, is to sell into strength – in terms of options that of course means buying long term options. You know the drill – use this rally.

UPDATE 10:20am EST: So here I am at 944 shopping for puts –  while Berk and I were arguing about which month to pick we drop to 937 – grrr. Anyway, I was filled with SPY June 70 Puts and I intend to grab March 85s if we somehow manage to reach 954 (the new 957). In case you want to know – I will hold the Junes if we rally up to 954 or higher. This is a long term investment – you buy and forget – unless of course it reaches a treshold which is price/time related. If this statement confuses you please go back and read my Sunday post and look at the chart.

UPDATE 11:00am EST: Berk and I just grabbed Feb CCJ Puts:

UPDATE 12:21pm EST: I just had an Internet outage which has been resolved. My apologies for any Zero watchers for the inconvenience. I actually have a wireless backup but for some reason it wasn’t able to make it work from the system I serving the feed from. I can however serve it from a different system if an outage persists, so no worries.

UPDATE 1:53pm EST: Site was down for like 10 minutes – not my day today I guess. My apologies but I’m on a shared server – don’t want to plunk down the monthly fee for a co-hosted box.

UPDATE 2:35pm EST: I’m happy to see the SPX back at 937 – since most of you leeches froze like a deer in headlights – here is your 2nd chance. Maybe we’ll even see 944 or 954 – I’ll just keep adding puts going forward.

UPDATE 3:00pm EST: Mr. VIX now at 37.8 – are you kidding me? Loving it and I just added some March puts to my Junes.

UPDATE 3:28pm EST: So, I could call you guys a bunch of girls for not grabbing puts the first time (or even 2nd time?? ;-)) around, but I know how it feels to freeze in the headlights and not make a move:

While I debated with myself on whether or not TLT would bust just a little bit higher it peeled its tires and left me with dust in my face. Not sure what I was thinking – maybe it was a mixture of greed and fear. It all gets us – the ones who survive in this business are the ones who learn their lesson and make a move the next time an opportunity represents itself. We might see 117 or so in the coming days – if we’re lucky – especially if equities start descending as we are anticipating. That’s when I plan to scale into some nice short positions.

The tape in the past two days has been extremely flat, which tells me that a big move is developing. The odds increasingly point to the downside, although I do hope we see 954 before it happens. I gladly take a bit of a loss and load up on even more as the triangle would look best at that level.