2500-to-1 Odds for This Bearish Bet

I’m tracking a position consisting of eight Oct 21 200 – 195 puts spreads with a credit basis of 0.37, as well as 12 naked Oct 21 200 puts purchased last week for 0.25. The entire position nets out to a debit of $4, which is as much as we can lose — the cost of an ice cream cone. The maximum potential gain would be $10,000 if SPY were to fall below 195 from a current 215 before the options expire in two weeks. This is a longshot bet, but the effective, 2500-to-1 odds we are getting were too tempting to pass up. Also, SPY need fall only to 199, a 7.5% drop, for our position to start paying off at $2000 per point. Win, lose or draw, we will continue to make bets like this one, since all bull markets must end, and in particular because this one’s death is long overdue. Visit our 24/7 chat room and share timely ideas and real-time results with great traders from around the world.

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