Like any other day, I stumbled across some "reader mail" out of my overflowing mailbag yesterday. Now this particular note wasn't like most notes I get. It was kind, to the point, and pointed out an issue of interest. It is an issue I take seriously and want to discuss briefly.

First, read the note. The submission will remain "anonymous" as I respect this persons opinions and do not want to offend said person.

Yesterday you jokingly made a recommendation for PSS.

Today you made it clear that you didn't really mean to recommend the trade, just having fun with the PSS symbol.

While I enjoyed the joke and even played along, on further thought I felt I should drop you a note to remind you that as the "guru" to all the Option Addict's out there, you swing a big bat.

This note is certainly not a suggestion to take the fun out of your blog, but just a reminder that in cyber space there are Option Addicts at all levels of talent, who hang on every word you issue.  Like children, you can remind them not to touch the stove again and again, but at sometime they'll just have to test you.  Trust is a very important attribute for you and your future.

I am aware that the subject matter that I discuss is interpreted in so many different ways. Some people understand my sense of humor, some detest it. Some understand my alter-ego as "Option Addict" is a fun way in which I cope with trading, others think I am an egotistical jack-ass who finds great enjoyment in his sarcasm and harassment of those that criticize. However, the majority know that in the end I take my role here very seriously, and that I do care about the success of these people. Most of them anyway.

Anonymous also brought up the particular stock in question, which was PSS. This idea all started with a comment from a reader about a "Piece of Shit" stock they were trading at the time. I chimed in to the tune of "Why not short PSS here" or something to that effect. Get it? P.S.S?

Anyway, this stock had been on my radar anyway, hence the nice price pattern that I typically spend hours looking for. I had imagined that some might take my comment as a recommendation, but knowing that up front, I said it anyway. It wasn't and still isn't a bad trade.

Where am I going with this?

Hell if I know. Maybe a discussion about the trade?

First, if you don't know already...I am not crazy on buying options on cheap stocks. For put options, $25 is the lowest price in which I would buy puts. I'd rather short the stock at prices lower than that, such as PSS.

Secondly, I made the reference that this stock should be shorted because the stock is right upon a breaking point within this good-looking triangle pattern. In the context of this trend, it should act as a continuation pattern, especially given the recent market climate. In short; if someone took this trade, I think it is a great trade.

Now we are into the topic of trading patterns in a anticipatory fashion, or waiting for confirmation. Traditionally, I have always used the latter. In retrospect, my win/loss ratio has always been higher waiting for the breakout, and entering at the close of business. Lately, with an uncertain market, I have been trading half of my position in anticipation and adding on the breakout. If you decide to do this, or for anyone who shorted PSS because of my comments, understand what your risk is. In my opinion, the risk is that the stock breaks higher. A stop (mental/mechanical) should be placed roughly 1 ATR, or a few percentage points above the resistance line of this triangle. For example, if you placed a stop near $12 you'd risk less than a buck, for what appears to be the chance of a $4 reward.

If you are short PSS, consider yourself lucky. You were the smart ones.