Hedging your betsA couple weeks ago, BNN showed VRX as a short play. The $120 put expiring here on Friday was trading between five and $15 at that time. One of the few times I paid attention to them and it has paid off big time. Yesterday the bid on the $120 put was $74.10 and since this will expire in a couple days I am going to let half position go this morning.
I am not really sure where this will end up, but I have a feeling the market has placed a value where this was trading in 2011 and 2012 before it broke out of resistance and crossed the 200 day moving average. If I was going to go long I certainly would be hedging with the cheap July or October put. On the other hand, straddling with a July or October 90.00 call just might be the best three or $4000 one could ever gamble. Big volatility, like we had yesterday, can make some options pretty attractive.