scstocks: Well I finally started dipping my toe into the water on the extreme short side. I went ahead and picked up 30 LEAP Puts on the XLF, expiring in Jan 2019, with a strike price of $18.00. XLF is currently just under $24.00... I paid $70 a contract or a total of $2100 + commissions. If the XLF drops below $18.00 before Jan 2019 then I stand to gain almost $600 a contract. If we drop from here I will make some profit even between $24 and $18 as long as I sell before expiration. I did my analysis and the last pre run up low was close to $15. So in a a market downturn I can see the XLF dropping to at least the $18 level. I made the decision to start scaling in because by buying now, on an upturn in the market, I'm paying a very low price for the option. If I had waited until the XLF dropped 10% I'd be paying much more for the put option. My risk tolerance is such that I willingly put $2100 at risk with the hope of a $18,000 payday if we get the downturn I expect. Such risk taking is not for everyone. But there are just too many things going against a continuation of the Trump rally. And with Congress floating the idea of a FED audit...I can see Yellen and her co-criminals letting the market falter to scare Congress into backing off. And then there is the 3 raises and a drop rule. Now that the Fed had tightened 3 times history indicated that a market drop is eminent. I'm thinking by the end of April when the possibility of the government running out of money occupies the news 24/7....We shall see.
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