The puts i bought (1080 Aprils on the june s&p's) are bidding 3.5 asking 4. i bought at 3.5 just after 3 o'clock. At this point though, puts on nearly any index should work great. on the s&p and oex cash or futures, i believe the greater returns will come on the out of the money's 3 to 5 % out.
I plan to trade this move in 3 legs, exiting the first set of puts and short s&p and knife contracts in the 1085 June S&P area, then sit out for a day or so, then reenter a little closer to the money for the big wave 3 down, and step on the gas with full acceleration. I believe this wave will carry us from around 1100 to 1030, and occurring within days of option expiration, the returns will certainly be enormous.
I'll look for a bounce in the 1030 area, with the 5th wave down beginning early next week from the 1055 area, and potentially taking this market to just under 1000 on the june s&p's. Tremendous opportunity here too as it will be right before expiration. I'm sure i'll adjust this scenario as we go along, and will keep you all posted. This is only a preliminary sketch of wave size based upon current and previous S&R levels, and I can almost guarantee you will be modified as this thing progresses.
Best of Trading,
David |
