NEW DIRECTIONAL PUT PLAYS

SPDR S&P 500 ETF - SPY - close: 124.99 change: +4.94

Stop Loss: 127.55
Target(s): 120.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The stock market is moving way too fast. In the last three days the S&P 500 has rallied +7.6%, the NASDAQ composite +7.3%, and the small cap Russell 2000 index +10.6%. There is a good chance this rally continues tomorrow but the S&P 500 has significant resistance overhead near 1265 and its simple 200-dma. We are suggesting a short-term put play on the SPY to capture any pull back in the market after such a big move but we want to wait for the index to near the next level of resistance.

I am suggesting a trigger to open small bearish put positions at $126.00 on the SPY with a stop loss at $127.55. Our target is $120.50. We want to keep our position size small to limit our risk.

Trigger @ 126.00

- Suggested Positions -

buy the 2012Jan $120 PUT (SPY1221M120) current ask $3.19

S&P 500 index Chart:

S&P 500 ETF (SPY) Chart:

Entry on December xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 224 million
Listed on November 30, 2011