Marketwatch announced yesterday that this was the biggest September move in over 70 years going back to 1939! I am cautious against irrational exuberance at this market level (which translates "greed" if you are not Alan Greenspan!) It is tempting to go into some new covered calls, but I'm going to hedge a bit instead. I would go for some overbought stocks like MOS, BIDU and TLT. Give these some time because it may take us a couple weeks for the bulls to shake out. I am going into the following puts:
MOS Nov. $52.50 puts at $1.10
BIDU Nov. $95 puts at $5.70
TLT Dec. $102 puts at $2.55
I am not taking large positions here. I just want to make some money on the downside pullback to hedge the rest of my portfolio. If you read this a few days later, don't chase these trades and pay too much for the puts.
Disclosure: Short BIDU, TLT, MOS - Long GMCR