Buying more puts on two names

Today’s action is very much a reverse correlation of the recent action’s directions for most of the markets stocks. That is, the stocks that have run the most of late, like Sandisk and Goldman, both of which we were selling late last week, are down bigger than the broader markets, which are down where they were up last week.  Anyway, I’m not fighting anything right now, as you guys know, we’ve had a heckuva a run in the portfolios of late and it’s probably best to let the markets and many of these stocks settle down a little bit before making too many drastic moves.

I am, however, buying a few puts in Bank of New York today.  You know my bear thesis there — that company’s got a lot more litigation and other potential legal problems already hitting it than it is admitting.  We’ve just barely got a starter position in there because it tanked right after we’d bought the original put position, so now I’m just using the present rally as an opportunity to scale into some more puts.  I’m looking out into March or later next year on these puts and using strike prices that are slightly out of the money — around the $20 range mostly.

And I’m also buying a few more puts in my single “favorite” short, what I think will be one of the primary scapegoats of the entire mortgage-economy-crash, LPS.  I’m buying puts also out from March or later into next year but am buying mostly in-the-money puts in this one because the out-of-the-money puts in LPS have too much premium built into them for my liking. So I’m buying $20s and $19s or so expiring in March or June 2012.  Just bidding gently on them for now, as they are now very liquid and I don’t want to overpay where I don’t have to.