Google collapse begins

In this Jan 7 post I showed some models that suggested that GOOG shares were near a significant trend change downward.  Those models have been proven to be fairly accurate.  In that post I also suggested that my price target of $845 could come quickly and that Google puts were underpricing risk.  I wrote:

"I like the June 2014 $840 puts that are going for $4.20 at the ask.  The VIX is so low right now that these options are waaaay underpriced.  I expect those puts to become 7-10x more expensive before March.  Of course, options are for total gamblers and I would never recommend them to anyone.  I will buy some myself however.  A double whammy exists in that the shares are peaking while the VIX is too complacent.  That will goose the already high multiplier effect of this play."

In fact, I waited for the throw over to arrive and picked up a modest scoop of the 840s at $3.50 ($350 per contract).  Today someone looked at the GOOG shares in free fall and decided to buy some of that insurance.  At the very best, the recent collapse was A of C.  That is absolute best case according to my model.  C is never the smallest wave and is generally the strongest.  So at the very least I think the shares go down to $1015 very shortly.  When they do bounce it is likely a to be a 2nd wave vee so I will probably take the money (3x by then) and then wait for the vee recovery and then go back into Jan 2015 puts.  If the markets are down at the end of Jan then expect a recovery followed by a "walk away in May" 3rd wave down.  I mos def want to be in some out of the money puts for that event. 

I don't recommend the use of options to anyone.  IF you want some of this bear meat and you are not an experienced trader, look at VXX.   You can get in and out quickly and without high fees or the issues associated with illiquid options markets.