Buy SPY via selling the Jul 116 puts (ten points out)
The opening rally fails, and I get in at about break even for the index. We are at chart support. I think there is a 50/50 chance that support holds. However, for these puts to come into the money, the first half of July will have to be another record setting down month like June 2008 was. Odds of that are not so high. A minor decline, with some rallies along the way is what I see as the most likely outcome. The short puts will do fine in that scenario.
Elsewhere, steel and coal stocks saw a sharp decline yesterday. The percentage play might be to short them on the first rally. A couple of stocks did see an opening pop, but I wasn't nimble enough to get in. Spreads on options can be wide on most of these stocks, so that discourages me.
Positions: long SPY, short RIMM
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