"my open pit runeth over ..."

Finally, after about three days the penny seems to have dropped with the global markets that the floods in Australia will be very damaging to BHP and it various mining interests. Last week I looked to enter a long PUT one strike OTM. The actual trigger was to wait until BHP had broken below the support of $44.62. [A]

As the market began to consolidate at this point, which was also highlighted by the ellipse target, I decided to wait for a clearer signal. Luckily I stayed out, and the price of BHP went up based on the news of China's economic growth figures. This was short lived, as the market was reminded of the Australian flood damage, and as of Friday the price of BHP had gapped down materially, but not sufficient to pass the previous support level at $44.25 [B]

The plan now is to enter a $43.50 PUT once the the price had cut below the support at [B] $44.25 just in case the market decides to run back up and fill the recent gap before returning to the medium term wave 3 target low of $41.90 [C]. Prior to entering the $43.50 PUT I will also make sure the Delta is between 25 to 35 to get the maximum leverage in the growth of the OTM PUT price.

Cheers