IWM Put Trade Idea Update

Actually you could use quite a few different assets other than an IWM put such as SRTY or TWM (3x and 2x short IWM) ETFs, there are probably a number of other ETFs you could use as well along the same lines in the other averages, I'm considering the puts because it's this kind of move  (strong up) in to a negative divergence that I like to use to enter puts as they are discounted so you regain some of that edge that you automatically lose as soon as you buy a put in the form of the premium.

In any case, in yesterday's post, Market Update-Stall I had mentioned the attempts to move the market higher with the typical levers like HYG, toward the close the closing attempt which is usually a VIX slam, neither worked, the overnight Yen carry trade levitation worked, but all of that yesterday told us something about the market, they couldn't move it higher with the help of several different levers, in other words this is NOT the same strong market from last week.

I also included this chart and the following excerpt in the post yesterday....

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The normal reversal process, rounding top / Igloo with Chimney, however that too is just a guess at this point as it may be F_O_M_C related or any number of other things or just random, although the HYG intraday divergence doesn't seem random."

The above would be the "normal" reversal process, the Igloo with chimney... 

Typical reversal process, "Igloo with a Chimney", the chimney being a head fake bear or bull trap, bull trap in this instance).

The move is also too parabolic and parabolic moves have a nasty habit of failing just about as spectacularly as they rise.

 This is the IWM 5 min, like the Index futures it's clearly negative, I already have a SRTY short at full size position so I'm not interested in adding there, although if I didn't have that position, I would be very interested in opening or adding to it here.

This is the 1 min intraday chart, thus far it's in line with price, but eventually and likely today this is going to give out, that's ideally when I'd want to enter the IWM Puts position, although that has to be balanced against the advantage of the parabolic move, if the parabolic move starts to lose momentum the edge with the put's premium will also dissipate and I want to use that edge of the discounter premium to my advantage, the November 22nd IWM $112 put is down -28% right now, that's a nice discount/advantage.

This is the 3 min IWM chart so we don't have far to go until this turns south  and ...

Don't forget, the head fake move or the "Chimney" is usually one of the best reversal timing markers we have as can be seen on the base  from mid-Octover and its head fake move (upside down igloo/chimney as seen above).