I’m tracking a position consisting of eight Oct 21 200 – 195 puts spreads with a credit cost-basis of 0.37. Let’s try to augment the position with a 0.35 bid for four more Oct 21 200 puts, good on the opening only (i.e., fill-or-kill); and a 0.31 bid, day order, for eight more. Since the price of these calls is going to be wildly unpredictable at best on Friday, especially if stocks open significantly lower, you should check back for updates during the day. My goal is to leg into some more riskless vertical bear spreads if SPY falls after we have bought more Oct 21 200 puts. Usually I am ultra-cautious in bidding options, but in this case we shouldn’t hesitate to pay up a little — meaning 0.05 to 0.10 — if the puts can be bought for 0.40 or less. What I do not want you to experience is getting raped on a market order in the opening minutes of the session. SPY could be down by just 0.10-0.15, and the puts, which settled Thursday quoted at 0.28/0.30, might be trading for as much as 0.45. For that reason, I would recommend this gambit only to experienced option traders._______ UPDATE (Sep 30 11:05 a.m. EDT): The S&Ps opened significantly higher this morning, allowing subscribers to purchase puts below yesterday’s closing price. I’ll add 12 of them to the tracking position @0.25. Now we’ll be looking to short 12 Oct 21 195 puts against them for 0.25 or more if the opportunity arises. For the time being, offer them a .040, good-till canceled.
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