As the year 2011 draws to a close, I wanted to briefly reflect on the past year and share some thoughts going into 2012.

Twenty-eleven was an eventful year for investors, as we witnessed everything from the Arab Spring uprisings, to a tumultuous summer of debt ceiling debates and credit downgrades, to the continuation of the euro crisis and deterioration of several European countries' finances.  All of these significant, large-scale crises/events should serve to remind us that black swan-style events are more common, and even less predictable, than we may allow ourselves to think, as we seek and crave stability for our financial portfolios.  At the risk of sounding clichéd, we must expect the unexpected.

Twenty-twelve will be no less eventful, considering that the following lies ahead:

1) Presidential election (remember what happened in the 2 months prior to the last one?)

2) Increasing waves of foreclosures in the housing market as Option ARM and Alt-A mortgage rates reset to higher levels

3) Unsettled financial outlook for more European countries that have yet to come into the spotlight (i.e., Spain, France)

4) Congress' continued ineffectiveness at reducing the national debt, cutting spending, or even just passing a budget

5) Possibility of further downgrades to the US credit rating (largely due to item #4 above)

I hesitated to even list these things, as it may come across as forecasting, and we know that doing so is too often a fool's errand -- but I put the list there to simply remind you of the very tip of the iceberg that we can even BEGIN to try to anticipate, all the while knowing that none of these things is guaranteed to come to pass (except #1 and probably #4) and could easily be replaced by other bad news.

While I don't tend to make New Year's resolutions, I do have every intention of maturing and refining my black swan protection protocols for 2012.  I think the stakes for having them in place will be higher than ever, and I'd like to create opportunities to generate some profits as market turbulence occurs.  (Notably, 2011 was the fourth-highest year for 100-point swings [plus or minus] in the market, behind 2000, 2002, and 2008.  I see no reason why 2012 won't compete with these other years.)  I'll be focusing a bit more here on the blog on options strategies and combinations that I plan to experiment with or at least consider in 2012.

Along those lines, I encourage you as the individual investor to commit to a regular schedule or routine of reviewing and closely scrutinizing your portfolios amidst the uncertainty that we're facing.  Set aside some time as frequently as monthly, for example, to check the kinds of holdings you have and what their exposures are to which kinds of risks.  Compare this to what you see and hear in the news regarding government inaction and recklessness, global/market instability, geopolitical pressures, and so forth, and make the best attempt to align yourself defensively towards these risks, while looking for opportunities to benefit where possible and generate profits.  Of course, if you utilize a financial advisor, communicate these objectives and concerns to him or her and ensure they are being addressed.  (While none of what I write is intended as investment advice, I consider the above a common sense approach to investing that any of us could stand to employ.)

Lastly, I want to issue a simple "thank you" to all of the readers and contributors to this site, as I greatly appreciate your interest and passion for this subject.  I wish all of you a safe and prosperous 2012.

Another month, another one of the PIIGS makes headlines for its impending financial meltdown.  (PIIGS stands for: Portugal, Italy, Ireland, Greece, Spain.)  This time it’s Italy, bumping Greece out of the news for the meantime.  The problem is, Italy’s situation is far more dire when viewed through the lens of the global economy.  The fact that Italy is Europe’s third largest economy alone would account for that fact, without even factoring in the growing strain all of these recent bailouts have placed on the EU.

Let’s back up for a second and see how we got here.

In general, the entire PIIGS crisis can be summed up with the following statement: the countries in question borrowed more money than they were making.  In slightly more technical terms, they borrowed too much relative to their Gross Domestic Product (GDP), to the extent that they are now unable (or having serious difficulty) meeting their fiscal obligations.

How did Italy get into this mess, specifically?  This article, titled “Italy’s Debt Crisis: Doomed by Corruption, Bloated Bureaucracy and Poor Productivity,” is a good primer on the basic reasons, and I’ll attempt to sum them up here:

1) First and foremost, perhaps as the general and foundational reason behind Italy’s woes, is the fact that it’s overspent by 1.9 trillion euro, or 120% of GDP.  

2) Corruption is widespread, with Italy’s Mafia accounting for nearly 16% of GDP.  (Obviously, this economic output isn’t necessarily optimized to aid the country’s growth.)  Tax evasion isn’t just limited to the criminals, as ordinary citizens have seemingly embraced it as a national pastime.

3) Bloated bureaucracy is an enormous cost unto itself.  Italy’s politicians earn 140,000 euro a year on average, and are driven around in executive cars (Audis, Maseratis, etc.) that cost the country 2 billion euro a year.

4) Italy’s education system is extremely poor, with only one of the world’s top 200 universities located in Italy (University of Bologna).  To underscore this, Italy’s unemployment rate for youth between the ages of 15 and 24 is a staggering 30%.

As you can see, many of Italy’s problems are systemic, and have gradually led the country into a worsening position financially.  The irresponsible government spending is really only the tip of the iceberg.

So where do things stand as of today?  Italy’s borrowing costs have rapidly increased over the last several weeks, hovering around 7% as of the writing of this article.  These government bond yields are a good yardstick for determining how unstable things have become, and it’s interesting to note that the other three EU nations that required bailouts (Greece, Portugal, Ireland) had also reached the pivotal 7% mark when they received emergency assistance.  These higher yields reflect investors' declining confidence that Italy can and will repay the debt.  Thus, they are seeking a higher premium for taking the risk of buying these bonds.

The outlook for Italian citizens is grim.  This past weekend, austerity measures were proposed that would result in a familiar combination of remedies -- spending cuts and tax increases – with the goal of balancing the budget by 2014.  Expect Italians to vehemently protest these measures.

External to Italy, I expect things to worsen significantly as we head into 2012.  The previous bailouts of EU nations have cost billions, and ultimately have done little to stem this contagion.  How much more money will the EU have to conjure up (read: print) in order to save Italy?  Not to mention the possibility of Spain and other countries requiring similar assistance in the near term.  

I cannot understate the severity of the aftershocks the collapse of Italy would cause for both the global economy and the US in particular.

Let’s walk through a possible vignette on how things could get ugly quickly if Italy goes down (keep in mind, this is a highly simplified example, and only one of many possibilities that could arise):  Italian bonds are bought and held by a wide variety of institutions around the world.  Let’s assume a host of Italian banks hold these bonds, and are informed by the Italian government that many of them will either only be paid back to a partial extent, or perhaps not paid back at all.  Several of these Italian banks would then presumably go insolvent, especially if they have high exposure to the bonds.  The same goes for other EU banks holding those bonds, as well as EU banks that had other types of holdings with the Italian banks that are suddenly failing.  Several of these EU banks would then go under, as well.  Here in the US, banks holding Italian debt, and/or invested in any way in the Italian and/or EU banks that are going insolvent, would also be subjected to potential insolvency.  As the EU collectively attempted to inject monetary assistance into the system, the very stress that cost would create would likely exacerbate the matter and trigger even more bank failures, insolvencies, and related bankruptcies. 

In other words, an enormous chain reaction would be set off.  If you think of the global economy as a massive series of interconnected/interdependent nodes, then you can begin to envision how the failure of several of those nodes begins to propagate negative consequences across the entire network.

This scenario would not be pretty for your investment portfolio.  Recent market perturbations and EU/PIIGS anxiety have already spooked the average investor, and this is just a taste of what’s to come.  Now is the time to review your portfolio and determine how much exposure you have to the kinds of systemic risks I’ve discussed here.  Gauge how high your risk tolerance is and then make defensive adjustments as necessary.  If you have extra cash, you might also consider betting that a collapse will occur, and invest in options or other high leverage instruments.  

I thought that title might get your attention.  Sounds pretty outlandish doesn’t it?  Well, this post is about the individual who experienced a 67,000% gain in a matter of days back during the 1987 stock market crash.

His name is Nassim Taleb, and I’ve written about him and his philosophies extensively on this blog.  I’ve read quite a bit of material by Taleb, in particular his best selling books like The Black Swan: The Impact of the Highly Improbable and Fooled by Randomness, but not until recently had I come across Taleb speaking in depth on his actual options trading strategies.  This article from The Forex Village contains some rare insight by Taleb on how he approached options trading.

Of all the information in the article, I think one of the biggest takeaways is Taleb’s point about how far out-of-the-money (OTM) options are likely not to be priced accurately.  Human beings created the option pricing formula.  Human beings have a very difficult time perceiving the likelihood of rare (and often catastrophic) events.  Thus, the option pricing formula does not perform so well when assigning values to far OTM options, since these options are attempting to capture the possibility of extremely rare events.  Ultimately, this undervaluing creates the potential for massive gains, like the one Taleb had in 1987.  

Simply put, the sizable gains that far OTM options can yield are staggering.  Going back to Taleb’s 67,000% gain (which resulted from him holding options on eurodollars and the deutschemark), it helps to put it in real terms:

Say you had a portfolio that totaled $1 million in value.  You decided to allocate 10% of that, or $100,000, to the kinds of far OTM options that Taleb held in 1987.  Where you began with $100,000, after the smoke cleared you’d be holding $67,000,000 ($100,000 * 670).  (Of course, this assumes you invest the entire amount at once and it hits that same month.)

That’s $67,000,000 -- off of a $100,000 investment.  This is far from typical in terms of the kind of result you can expect -- but that doesn’t matter.  It doesn’t have to be typical.  It only has to happen once.

It took a while to get around to writing this post.  I've been beating myself up, languishing in my recent error with respect to the stock market.  Simply put, I missed out on a gargantuan profit during the intense market volatility last week.  I missed a 1380% gain.

Yes, you read that right.  I could have multiplied my initial investment by 13.8.  Theoretically, I could have turned $1,000 into $13,800.

I’m repeating it this way more so for my own benefit, so I can stew in the knowledge that I abandoned the very system that I tout here on this blog in order to secure a short term gain instead.  Let me explain what I mean.

The week of July 25, I decided I wanted to buy the September puts on SPY in order to protect against the upcoming debt ceiling default that loomed over the US on or about August 2.  SPY was right around 130, and so I bought the Sep 119 puts against it.  When I bought them, the contract was selling for $0.65.

That Friday, July 29, those options had roughly doubled, and hence, I’d doubled my money.  I thought about whether I should keep the options in place despite this 200% move, since after all, black swan protection protocol dictates that I maintain my position throughout whatever black swan event might occur, and thus be able to capture the sizable move that would ensue.  After some contemplation, I decided 200% was enough -- I didn’t want to get greedy, and I figured the debt ceiling debate would be peaceably concluded over the weekend, in time to calm the markets the following week.

Just the opposite happened.  For whatever reason -- and it probably was a combination of poor US economic data, Europe’s financial unrest, and the threat (then reality) of the S&P credit downgrade -- the markets did the exact opposite.  Over the next two calendar weeks, we saw three large triple digit down days.  And that’s when my SPY puts went through the roof.

I remember looking on Monday, August 8, the first trading day after the credit downgrade, at the price of those options I’d held.  I honestly can’t recall the exact price at the time, nor do I know just how high it got that day, but suffice it to say that at some point I took the contract price and calculated how much I would have gained had I held on till that moment -- and it was 1380%.  The option I’d bought at $0.65/contract was now over $9 a contract.

What went wrong?  The bottom line is I didn’t implement a true black swan protection protocol.  I was simply trading options, nothing more than that.  In fact, I’d written here before about how I was going to start trying my hand at turning my options over for quick profits, rather than only maintaining the more defensive protocol of keeping them until expiration.  While it wasn’t wrong per se for me to choose this approach, it highlighted the benefits of always having that protocol in place for insurance purposes, regardless of what other trading strategies I might employ.

Truth be told, it’s difficult to employ the protocol month in and month out while losing money nearly every time, waiting for that one instance where the approach pays off.  And quite frankly, it may not make monetary sense either, when you look at all of the expired options you lost money on, versus the amount you make on one big move like last week.  In the end, you might still have a net loss for the year, even after catching a 1380% jump like I could have. 

In order to avoid that fate, you essentially have to go to the farther end of the “tail” so to speak -- the “tail” being the very far, flat end of the traditional bell curve, which represents the likelihood of a given event -- with your options purchases.  By this I mean, the further out of the money your options purchase is, the cheaper the contract will be, which equates to less money wagered and (most likely), lost.  However, when extreme volatility hits like it did earlier this month, even your far out of the money options will likely experience a significant bounce, absorbing your previous losses and netting you gains.  So what’s the downside to this approach?  Those far out of the money options won’t jump as much on smaller market movements, and so they’ll almost invariably expire worthless in every case.  Conversely, the closer in the money you are, the more chance you have of getting at least some kind of movement at some point in time...but you have to be willing to spend more for those options.

I’ll close by saying that if you want to institute a true black swan protocol, first make up your mind that the expense is just another line item in your budget -- call it “market insurance.”  Like all other insurances you pay for, consider it a sunk cost that buys you peace of mind.  Then select options as far out of the money as you can tolerate, and buy them robotically.  Then in the meantime, you can more actively trade options closer to the money if you’re so inclined.

If you’re currently using black swan protocols, I’d love to hear feedback from you on your approach and how it’s working out for you.

Before you read this post, read this article here.

So the question is, did you end up like the turkey over these last two weeks or so?

It's really incredible when you step back a moment and look at what the market has done since late July.  Consider the following:

-- Starting July 22 (a Friday) through today (August 11), the Dow Jones has gone down 11 of the 15 trading days in that time frame.

-- The Dow has declined 12.5% since July 21's point (12,724) to today (11,143).  Whether the market can hang on to today's sizable gains (+412) remains to be seen in this volatile environment, so we could easily head lower than 11,143.

-- In the last 15 trading days, we've seen three days of triple digit declines: Aug 4 (-513), Aug 8 (-635), and Aug 10 (-520).  Experiencing even one of these kinds of days would be considered a rare event, much less three in a span of five trading days.

Many people went into July 22 thinking they had a "conservative" or "moderate risk" portfolio.  After 12.5% (or higher) losses, many of those same individuals now realize they had high risk portfolios all along.  The problem is, no one told them that when their portfolios were constructed.

Worse yet, a good number of these individuals were planning on living off of these investments within the next couple years.  Undoubtedly, those plans have now been delayed, perhaps for some time as the economy and markets struggle to find their footing.

Isn't it funny how the market can take 12.5%+ from your portfolio in a matter of a few days, but it never seems to put 12.5% into your portfolio in a matter of a few days?  Of course, I'm sure you've heard it a million times before, but it bears repeating: once you lose 12.5% you have to make back an even greater percentage just to get back to even.  This often equates to needing a couple of years to earn back what's lost in a couple of days.  To me, that sounds like a very high risk proposition.

This is exactly why Nassim Taleb, author of the "The Black Swan: The Impact of the Highly Improbable" advocates a "barbell strategy" approach for the individual investor's portfolio.  In short, instead of trying to construct a medium risk or conservative portfolio, one should split their assets into an 80/20 allocation: 80% in extremely safe (relatively speaking) instruments like CDs, money markets, or cash; and 20% in very high risk investments such as options (or other securities that have a high payoff potential).  Of course, this 80/20 mix can be tailored for what fits you best, but the general principle remains the same.

Again, think of the markets the way the turkey should think of Thanksgiving.  Given that premise, if you have any flexibility at all, take a closer look at how you can construct a portfolio that is more robust to these market fluctuations and perhaps even benefits from them.  Click on the Black Swan or Nassim Taleb categories in the right hand column to read more about this subject.

It was a year ago today that we experienced what has come to be known as the “flash crash.”  On May 6, 2010, the Dow Jones Industrial Average plummeted nearly 1,000 points in a matter of 10 minutes or so.  The event was harrowing and left market participants, experts, and various pundits searching for answers: how could the impossible have occurred?

If you recall, accusations flew over the weeks after the crash.  Most pointed to electronic trading mechanisms that went haywire and simultaneously sold off billions of dollars worth of positions, thus fleetingly tanking the market.  Some said it was rigged by large institutions in order to see what would happen and thus prepare better for a repeat scenario.  Still others actually pointed to a single hedge fund, Universa (advised from a distance by The Black Swan author Nassim Taleb), as the reason for the crash, when it bought a sudden and massive position in deep out of the money options.  The hypothesis was that such a bearish position caused a psychological backlash in the market and induced a selling panic.  (Never mind that this accusation coincided with repeated critique on Taleb’s part of the US government’s and Federal Reserve’s economic and monetary policies.)

After all that hypothesizing, what did we learn about the causes?  Nothing.  Scarily, we are no smarter today about it than we were a year ago.

So today, we watch as the market continues to climb upward, in spite of a host of economic realities that suggest the market should be heading the other direction.  Consider the following:

-- The unemployment rate moves higher, even as jobs are added, because the job creation cannot keep up with the demand for work.  There simply aren’t enough jobs for all the people who want to work.

-- The European debt situation (the “PIIGS” crisis) festers, with little in the way of long term solutions firmly in place.  

-- The US credit rating is poised for a downgrade by S&P within the next couple of years.  A loss in confidence by our creditors will mean higher interest rates, shrinking loan access, and a sharp decline in our standard of living. 

-- Charts depicting housing prices in the US clearly show a double dip forming, with waves of resetting mortgages coming due in the next three years.

-- Talk persists about changing the reserve currency from US dollars to something more viable, a nightmarish scenario that would send the value of the dollar plummeting and cause almost certain hyperinflation and destruction of our currency.

So the point of this post is to simply remind the reader that, no matter how outlandish or unbelievable any of the above items sound, anything is possible, as was demonstrated to us a year ago today.  No one would ever have thought the May 6, 2010 flash crash could have happened -- a scenario like that would have been labeled “impossible,” right before it actually happened.  And the conditions for a more virulent flash crash, or even a more protracted and sustained crash, are ripening.  There has never been a better time to scrutinize your portfolio, review your risk exposure, and make any necessary adjustments now before it’s too late.  I urge you to take the time to do this in the coming weeks.

So we were chugging along nicely, watching the Dow climb above 12,000, practically doubling in the last two years.  A recent headline on Yahoo.com declared the return of the average investor into the stock market with the following headline:

The Return of the Little Guy

Then, a few days after that proclamation, an 8.9 magnitude earthquake hit Japan and a tsunami resulted.  At one point on March 15, the Nikkei Japanese stock index had plunged nearly 13% during intraday trading.  Markets are still on edge as I write this due to the worsening nuclear plant situation at Fukushima.

Does that 13% number sound familiar?  Remember the May 6, 2010 “flash crash,” when the Dow plummeted 1,000 points intraday, losing a tenth or so of its value in a matter of minutes?  An intraday drop as large as the Nikkei experienced is incredible no matter how you look at it.  One way of doing so is to compare it to the October 1987 crash in the US stock market, which fell over 22% in one day.  The Nikkei was more than halfway there on March 15.  Incredible.

The moral?  Investors -- especially “the little guys” -- were caught off guard May 6, and most were caught off guard again on March 15.  

Both of these events fit the black swan conjecture.  They were surprises.  They were highly impactful.  After the fact, some felt the events were the kind that could have been anticipated or even predicted. 

But let’s look at things realistically.  A month ago, if someone had forecasted a 13% intraday drop in the Nikkei, or any stock index for that matter, the possibility would have been dismissed as highly unlikely if not impossible.  The individual would have been labeled “fatalistic” or a “doomsayer.”  But it is precisely this kind of hubris -- or the “it can never happen” mentality -- that leads the turkeys to slaughter.  

So of course there’s no way to predict such a thing as the Japan earthquake.  But one thing we can do is to be robust against such events -- to not have such a large percentage of our wealth tied up in volatile assets such as stocks that an earthquake on the other side of the world can knock our portfolio back by a few months (or even years depending on how badly you made out).

When I say “be robust” I’m referring to implementing an approach whereby a large percentage of assets are in conservative holdings that don’t respond so negatively (if at all) to black swan events.  At the same time, a small portion of the portfolio is set aside for extremely risky bets that  benefit highly from these kinds of events.  When you try to play the middle ground, you often end up losing the most, like many investors found out after the March 11 quake.

Personally, I plan to review my holdings and see if there are any vulnerabilities that need to be shored up.  In addition, I’ll be buying a new round of put options to protect against further declines in the market.  My concern now is what might happen if the Japan nuclear situation continues to deteriorate, and is combined with sustained bad news on the economic front, such a stall in the US recovery, more housing market troubles, worsening of the PIIGS crisis...you get the point.  There’s no way to tell what will come next, and so I simply want to prepare the portfolio as best I can.

The last three days have been murderous on global stock markets, seemingly due to the havoc wreaked by the earthquake and tsunami in Japan.  Specifically, US stock indexes have dropped precipitously, experiencing three straight days of triple digit losses -- nearly a 4% decline in a matter of 72 hours.

My put options on the S&P500 have responded well to the market’s drop, going up by around 100% each of the three days.  In fact, at one point the contract was up around 300% during one intraday period.  You’d think I’d be in the middle of a windfall with numbers like that...except I’m nowhere close to it.

The problem is that these options expire this week, and had already lost much of their value over the last few weeks while the market was still climbing.  I purchased them back in mid-February, when they cost $59 for one contract.  Right before the earthquake, the option price had bottomed out around the $5-10 range, since the market was doing well.  As you can see, I’d taken a pretty significant loss by the time last week rolled around.

Today, my options climbed into the $25-30 range, a pretty nice recovery given the fact that expiration is just days away.  But it’s too late for me to make any profits.  I should have been holding options at least as far out as the April time frame, so that there’d be enough breathing room until expiration to make the option more viable to prospective buyers.  Only the most fatalistic investors (speculators?) would buy a put option with a few days till expiration -- the chances it will end up in the money are minuscule at best.

If I could do it all over again, I’d have been more vigilant about purchasing my next round of options.  I’d have started looking at the April puts sometime around the beginning of March, to essentially replace the March options I was already holding.  Keep in mind I’d have kept the March options till expiration as insurance against some super-catastrophic collapse in the intervening time period, but I’d have already been looking ahead to April.  So in other words, I would have established overlapping (March/April) options positions.

I think the moral of the story here is, if you’re implementing the black swan protocol that I’ve described on this blog before, you have to be cautious about waiting too long to buy the next round of options for the next month forward.  It can be tempting to hang on as long as possible for them to get cheaper, but the beauty of the strategy is in its repeatability and lack of need for any sort of market timing or instinctual basis for your decision-making.  Buying the options on a rigid schedule removes the emotional aspect that can foul up the approach.

As a rule for me going forward, I have to look at the next round of options no later than six, but preferably eight weeks from that option contract’s expiration.  So in this particular case, while holding the March 19 options, I’d have begun looking at April options the week ending February 25, but no later than March 11.  Even if I’d bought on the 11th, the day of the earthquake, I’d have experienced a run-up well into the several hundred percent range.

In the meantime, I expect some sort of breather from this three-day free fall in which the market will bounce back up and I’ll be able to look at buying some of those April (or possibly even May) options.  Of course, they’re likely to be a lot more expensive now than they would have been and so I’ll be more limited in how many I can afford to purchase.  But as long as their price movement is favorable in a relative sense and I see gains, my black swan approach will still work out for me.

You can keep track of the options (and other securities for that matter) I’m purchasing on my Portfolio page, which is updated after every transaction I make.  Send me a comment or direct feedback on the comment form to share your thoughts on the above.

So the market has continued shooting to the moon, devastating my monthly options purchases and rendering them nearly worthless well before expiration.  Most people would be discouraged by this result; however, I continue to remind myself of Nassim Taleb's analogy of the two traders in "Fooled by Randomness," and this helps me get through the mounting losses.

I wanted to use this post to provide a quick update on my tactical approach to buying the monthly put options against the S&P 500 index.  Recall that late last year I wrote about hedging the hedge by taking a portion of the options purchased and using those to try and flip a quick profit, which could then be pocketed or reinvested into more options purchases.  I plan on employing that approach as more of a routine aspect of my current options-buying methodology.  I see the advantage in potentially allowing me to accumulate more options over time through the reinvestment of any short term profits.

My lone hesitation for using this approach stems almost entirely from the emotional component -- or more simply, knowing when to sell.  Anyone who has traded in the markets knows that knowing when to sell is 1,000 times harder than knowing when (or what) to buy.  I've been in situations in the past several months where I witnessed my options positions jump by 50, 75, or even 100+% in a single day...and froze, holding the position under the assumption that it had more room to run.

And don't get me wrong -- it's okay to hold fast in that situation, since the whole point of these options is to have insurance for the fat-tail events, the catastrophic market plunges that are sure to occur again.  But if part of the trading approach is intended to incorporate short-term profits, as I plan to endeavor upon, then knowing when to sell -- and having the fortitude to actually do so -- is important as well.

So here's how I envision this working: say I purchase 10 Mar SPY 120 puts in the next couple weeks.  Of these 10, I'd allocate five of them toward pure insurance (for a potential market plunge) and the other five would be used to trade on a short term basis.  Assuming I buy the 10 on Tuesday, March 1, and they appreciate 125% on Wednesday, I'd sell the five options and keep the remaining ones.  Then, on an up day in the market, if these options (or those with a more aggressive/higher strike price) depreciated to an attractive level I'd buy more of them and repeat the process.  On the other hand, if the market rose consistently day-to-day after buying all 10 options, I'd likely just hold them through expiration and treat all 10 as insurance against a black swan event.

I'll post an occasional significant update on my trading activities like this one here on the blog, but check my Portfolio page for more frequent and concise updates.