Terror in the SPX Pit

I am going to follow the trend of bloggers commenting on the "911 trade."

This was in regards to the open interest on the Sept 700 SPX calls. A lot of traders are looking at this as a large bet on a predicted directional movement in the market. "A prediction of a terrorist attack." Niner.

The headlines won't tell you this, but notice how the Sept 1700's have the same open interest. It's a box spread (I checked). It's commonly used for short term financing. The trader picks strikes that are unlikely to get hit and at expiration it will unwind, hence trading the "tips" of the option chain.

Don't bet on another 911, unless you see huge lots firing off in stocks like RICK, SWHC, HAL and PYX.

It brings up a good question though... How should I protect myself from this event?
You can't. Don't let it hinder what you have going. Continue to position size, diversify, and manage your portfolio by risk first, and you'll do fine.

My scrapbook is running behind... here are a few more contributions.

Here is a pic of Jamie on a kayak trip in Jersey. This was taken at an event he helps organize and manage to raise money for the Special Olympics. Jamie, I told you before, but you are a hero in my book.

Here is a pic of Kim and Dan (aka "VA beach girl") at the 3 day live class last week. We got to visit for a few of the days that they were here... thanks for keeping me company!

Next you'll see Tim on his Option Addict water sled. He bought the one and only limited OA edition. Nice call.

Finally the Marketcast posed for a few shots with Danny and his mom at Investools headquarters.

Well, I think I will crawl back into my hole. I might post a watchlist this evening, if the mood catches me right.

Recommendation: If you happened to be on any side of the box trade, exercise your option just to piss off some hedge fund/corporation.

Long: 911 (the Porsche kind)

Short: 911 (the terrorist kind)


I am with you on that one Jeff (the 911 Porsche side)!

Great pics too.

Thanks for the reminder on GMCR, I was watching on the close and somebody took some profits or someone thinks it is unwinding the wrong way.

Thanks for looking into the SPX for us!


Raimo...drinks on you, buddy! I had some drink called Cactus Juice while I was in Salt Lake at Iggy's watching my Tommy (that would be Tom Brady, the fourth man in my life after my husband and my two boys) and the NE Patriots on Friday. Needless to say it was some awful glow-in-the-dark green color that knocked me for a loop. I'll take one of those on you compliments of LFC. Thanks in advance, btw. Haha.

Jeff...just took my first trade since learning my new rules last week. It was GMCR but was already on my radar from Friday. I feel like a new woman (or trader).



REE stands for Raimo's Entry/Exit. It is a way on this blog of saying that you want to enter your trade close to your exit for loss so that you can minimize risk.

Would you please e-mail me?



Dr Tony....email me at tuck121@msn.com....i trade mostly vertical credit (put)spreads


Is all the conversation moving outside the blog? Where did everyone go?

Did we lose a lot of readers recently?


You're right. The blog was as boring as the market activity today. Maybe I'm getting used to and liking the wild swings. Did I just say that? I'm taking it back.

Okay everybody. Pipe up and let Jeff know you're here.



I can only speak for myself. I have 2 kids starting high school today, one that I am getting ready to move into her first apartment for college and my oldest who just had surgery. This is a busy time of year for any of us that have school age children and with the market being so crazy, I am guessing there are a lot of us mostly cash. It is hard to be away from the computer when the market is so volatile. That doesn't mean we are all not watching the blog but perhaps not participating as much.


I am here. But since the market just closed. Now I can concentrate on my day job ;-)

Just reading the comments and working a plan for tommorrow. It was sort of nowhere day in the market. But my gut feel is that we go down and retest the previous lows and hence just sort of sideways.

China was a surprise today and it kept the market stable for the day.

I am here. I'm always here. Even when I am out playing Realtor or artist or drummer girl, I am here.

Nice pics! I like putting faces with the names.

Re Chinese stocks today - any explanation as to why everyone suddenly decided to throw their money that way? Also, I noticed that TSL, a Chinese solar stock, did not participate but was down with the rest of the solars and the market. And it is tempting me as it is sitting right at support. This is either a double top or a great entry. Thoughts?

I am sure glad I poked my head in to say hi before Jeff asked where is everyone.

As I mentioned above school starts today and while I never really participated in this in my corporate life I started a tradition to go at least on the first day and then hang a bit to see how things went on the first day of school. Now that the kids are back home I have to catch up on work and my watch lists.

Oh and yes I am mainly in cash just LEN and SHV. Really boring!


That green stuff you sucked down, that they told you was cactus juice...really leftover water from the 3 mile island nuclear incident here in PA years ago. Yeah, it throw people for a loop. Wait till you pee.

LFC...excellent...sure, I owe you a cactus drink..done.

Good for you, Raimo.

If Kim pointed out that baby, she might need a whole cactus. Good play, you guys.


I'm here too. Almost all in cash, so just checking in for a couple of days and then entertaining friends for about a week.
Really looking forward to getting back into a routine and digging into this market.

I have been a bit of a lurker today as I have some other projects I am working on. However I do not have any real good excuses like kids starting school, vacation or anything like that.

I am still net short waiting around for the Market to make its mind up. And yes the BPHX led the charge long for me today.

Hey I was in SLC this weekend and didn't get a Cactus drink, but I think I have a new submission for the Marketcast cookbook! Stayed tuned.

I think the OA bloggers are out doing their homework that is why traffic has been light.



We are def still reading - hehe im slightly steeping away from the market to re-arrange my mental model before continuing. Reading trading in the zone (which is a big eye opener, just got to chapter 8! Im a sales rep so working in probabilities if perfect for me)

Ohh and thanks for the Fosters comment on the market cast friday! Heheh great aussie beer, however I like Bee's Knees better - Honey Wheat beer from Western Australia! Its 100% awesome! hehhe

Well, here I sit mostly in cash not daring to make an entry, watching in bewilderment as anything Chinese explodes upward.

Some obvious observations from today...

Financials, most notably BSC seem to finally be weakening enough to start heading down again and homebuilders broke down through the support they were attempting to establish. LEN looks the best for a bear play in that group if you need a re-entry.



The blog is quiet and Jeff is concerned,
the prior 3 weeks have left us all burned,
on the thought of trading for a living,
how could we disappoint one who is so giving,
So, Jeff, we are here, but we are cautious,
because the last 3 weeks have left us nauscious,
we have seen our accounts oscillate like a fairy,
a lot like Raimo after his morning Bloody Mary,
or not unlike his buddy Arty,
after an Option Addict party,
so don't be discouraged, we are still here,
and soon your mailbox will be full I fear,
about the future market trend,
then you will be sick of us, my friend,
enjoy your down time and court your bride,
she needs your free time, if she said otherwise,she lied,
we are still here, we could not leave,
because without you we could not achieve,
the financial independence that we all desire,
and soon we will all be able to retire,
with Brett, Liz, Chris, you and VA Beach Girl,
but not with Raimo, that makes me HURL!


Signed PP

Whew . .thanks, PP, I was beginning to worry.

You are welcome Lori.



nice to see you back,,,now we can also look forward to Raimo's reply,,,I am in Utah for the 4 day live this week,,,and who did i meet but none other than the trading Gods themselves,,,Jeff and Eric,,,it was the highlight of my day! Hey Arty,,,aren't you supposed to be here later this week? I'm still waiting for that email so we can meet,,,SPGRLG@YAHOO.COM



Hahahahahaha! That was funny. If I had to choose between the cactus drink or asparagus to achieve the desired color I'll stick with the drink.

When you look off to the horizon to what you think is the city lights glowing it's really me.


Hi Jeff,
I'm here.

Sorry, I wanted to ask Kim a question and I wasn't sure if it would put her on the spot to answer me in a public forum.

Sorry for my inactivity today, I have been sitting is a conference on consumerism in healthcare and how to build a destination hospital. Did I mention that I have NOT quit my day job?

Kim said:
Strat - are you really shorting KLAC? Just wondering why you're going against such a strong long term trend. Respectfully asked, of course.

Kim, I went short and long on KLAC. I think they call that a straddle, no? Anyway, you are right that the trend does seem bullish, but with my overall market outlook being bearish, I played it both ways. Not recommending it to anyone, but it has worked in the past for me on these triangles that I expect a big move out of.

Good question. I should have listed it in both the short and long lines...

Did not trade anything else today, still waiting for something to develop in my existing positions.


Hope I got that spelling right. Just realized by accident that you asked me a question at the end of the last post. REE means Raimo entry/exit. It means finding a position and entering it right at where you'd exit it. Raimo is the one that has pounded that one home to us to help us become better traders. It helps limit your risk.


I was wondering the same thing.
thanks for clarifying.



TSL appears to have a double top w/ a 100% retracement back to 40 as support. Back away and you'll notice a lower trendline which makes this a rising wedge. That trendline was broken 8/16. Prophet is telling me the target is roughly between 21 and 37based on the rising wedge. I also see the strong support at 40 but some of my own short term indicators appear to be bottoming out. I've got no clue which way this one's going. This is not an endorsement for any action. Just what I'm seeing.

Still here, Jeff!
Sorry about the non-posting - *^%$) day jobs are interfering with the IMPORTANT stuff - like trading, blogging, sleeping...

:-) Pat

Amber......finally the BonJovi we were asking for !! only a week late and no theatrical stage performance either !! jeesh.....

DG....thanks for bringing TSL to the radar

RIMM...is flagging nicely

that's all, i have to go plan a birthday party (somebody is turning 1 on monday)

have a great night
bon soir


Diapers suck, midnight feedings suck, bottles suck, carrying a little one through the mall sucks.....

Two years later realizing that you had wished it all went faster sucks too. Our's our 21 and 11. It seems like only yesterday we were going through all of the little kid stuff. Plan the party and have a ball.

I will say that the Chuckie Cheese parties I could have done without.

Everyone---- Who is playing the retest on the ICE H&S ????

Hi Jeff (and everyone).

I am still here. Every day. Sorry for my lack of participation. I will try to kick myself back into gear here.

I'm mostly in cash but looking for the "best" trades to take. I do have puts on IYR which are working out nicely so far. Would love to see the market take another turn down right here.

Been here on and off today. Just didn't have anything to contribute. Been reading the threads and asked one question. And today's laundry day so that always keeps me busy. ;-) That and the usual mom stuff.


Is it possible to have a sideways H&S? Or I should say a trendline H&S... AMLN which is in an uptrend looks like it's making a trendline H&S. Or does it have to be more horizontal. I hope this makes sense.




Thanks for the REE explanation. I've followed that common theme in this blog, just never seen it explained as REE.


Yes. H&S can have a rising or falling neckline. I see what you've noticed in AMLN and it does appear to resemble an upsloping H&S. Volume looks good too as it's been declining ever since the left shoulder. Also, both MACD and Sto turning south. However, the H&S isn't confirmed until the neckline breaks, so I'd look for a fall through 48.50 or so before going short.

One could also argue that now's a good entry to go long as it retests support of an upward support trend which began in late June. In short, AMLN isn't real clear to me which way it wants to go yet.


Strat- Thanks for the explanation.

PP- Glad to have you back!

Laney- I'm working on a reply after Jeff's price patterns class.

All- take a look at NYX. I'm analyzing a 2 month formation of a descending triangle that is almost ready to break down. Any opinions?


Jeff, I'm seeing a lot of ascending triangles ready to break out, but I'm hearing a lot of bearish sediments with still high volatility in the market place. The question is do we still trust the charts in this environment? Also can you please tell me who the photo is in the upper right corner is ? I've seen that person before, but for the life of me I can't place it !

Thanks. I'm good at recognizing and playing H&S when they look semi normal but too much deviation from the semi norm and then I'm not so sure... And my little flash cards that I reference back to when I'm stuck didn't help me. So thanks ;-)


KBH which made a little pennant broke below that 30.50 resistance this morning.


Isn't there some important data coming out today? I have Tues and Friday for economic data, but don't know what time or what it is. I can research it on Market Watch but thought somebody might already know. Anybody?



try DECK on for size. A perfectly 'weird' head and shoulders reversal setting up right now with a downward-sloping neckline. Throw in a strong trendline break to boot.

Tuesday: 2:00 PM FOMC Minutes
Wednesday: 10:30 AM Crude Inventories
Thursday: 8:30 AM GDP-Prel.
Friday: 9:45 AM Chicago PMI

Thank you, Lisa.


BA might be one to watch today. If I have support drawn right and if it holds, today could be a REE.


Thanks. I always feel like I should get on my head to see something like that. ;-)


Good Morning! Got into VMC this morning for the ride down. So far, so good. It looked like a nice REE to me. I'm also in BSC and it's finally moving down.


Anyone feeling bullish? I just got into calls on PAYX right at what I consider to be horizontal and diagonal support. Let's see if it holds.

LOL, Liz! I'm like that with bear flags. I fip the laptop over and keep repeating out loud to myself, "Is that a bear flag? That's a bear flag. Is that a bear flag?"

When it gets really bad, I ask my 7 year old! :-)


I sew VMC bouncing off short-term resistance but I also see it at long-term support on the 5 yr chart.
It will be interesting to see if it's a put play or a call play.

Here is my prediction..

The day the fed gave the discount (8/17), that is the markets new level of support, which would be a higher low.

Then we resume a bullish trend to close out the year.

Now time will tell, let's see if my crystal ball is still working..

I use the economic calendar on Bloomberg to see what economic info is coming out for the week. Here is the link:



X, RTI, ATI, allconfirming lower highs today.
ATI, I have bouncing lower off diagnal reistance.

Looking to enter CAT puts also, turning down from resistance which I see as the right shoulder.


Phantom Poet.....

prepare for a raimo classic...

It is coming...

FFH ... doth protest too much, methinks



VMC - What is your time frame on the trade? Unless you plan on holding this one for the long term it's a bearish trend. To me, in the intermediate term it is rolling over to continue its downward trend. A close today is an entry signal to get in and follow the trend down.

My .02 Kim

I am in ATI and CAT. I pulled my classic "anticipate the trade" bungle and so now I am finally in the positive. CAT has a long way to go and so does ATI.

If it helps you any, I scream "GO DOWN!!" at those two stocks everyday. Today seems to be the day that they listened. :-)


Point well taken. Thanks for reminding me about time frame when selecting an option.

Judy- No problem. I am now drawing a short, intermediate, and long term trend line on every play I'm considering as part of my evaluation. I leave the lines on the chart just as reminders for me as to what I'm thinking. All a part of trying to protect my trades from myself. LOL

Laney- I love yelling at the pc. It's very therapeutic.


I may be exiting all my calls at the close (4). Does anyone see an entry on a call today?

Laney, thanks for sending positive vibes to the trading universe.


It makes it easy to ask the kids their point of view with the cool office right? The multitasking center in the kitchen...



PAYX looks really good. I like that.


Another good way of looking at the charts... I ask my 4 year old to stand on his head and tell me what he sees. LOL

Clean Cups! with watch list :-)

Hi Everyone,
I am around too. I decided to take some time to clear up my option trading confusion by going step by step through it all again. I had to tie myself to the chair for 3 days, but it was very enlightening and I feel much clearer and much better. Hello volitility, I love you again.

I never realized how timing (not time decay) can ruin a perfectly good trade. And hesitation or procrasination can make you lose money, when you think you are using it to be safe. Also I found out how lazy I am. Getting in is like a cat and mouse game at times. New day, new chance to.....do better.

A ha ha ha! I love the poems. Thats what I was thinking too. I hope Raimo has got his motor running.

SFM SusanFromManhattan

PS Could someone remind me what clean cups means. I forget. SFM

SFM - Clean cups means Jeff has posted a new thread and we should move to the new thread to continue the conversation. It's an Alice In Wonderland reference.


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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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