Condor Options

Thesis: The Philadelphia Bank Index ($BKX) is up over 3% today, to $99.54.  As visible from the attached chart, the index is now pushing right against its 50DMA.  If it fails, this would form a double-top with the November 13/14 highs.  The index has a high-ish short term RSI reading of 86.76.  On a more fundamental note, there seems little reason to believe that all of our credit worries are behind us, and there are decent odds of some “sell the news” action tomorrow afternoon.

Trade: How to play it?  Well, Dec 97.5 puts on BKX are about $2.05 if you want to play a quick move down.  The spread is almost a dollar there, though, so be careful.  Alternatively, there is an ETF that tracks this index, KBE.  The open interest on the options here is really light, but you could take the Dec 49 puts for about $1.20.

Disclaimer: You know the drill.  Don’t ever, ever, for any reason enter anything remotely resembling this trade.  It will have you wearing sackcloth and ashes before the month is out.  It will bankrupt the accounts of you and everyone you know.  Etc.