This morning's 43 dollar drop in GOOG's price is an object lesson in how relatively volatile stocks have expensive premiums. The July put holders (and with today as expiration, that was a very risky bet!) were rewarded by the stock's drop, true:

But look how much more severely the call holders were punished.

There's nothing shocking here, of course. Option buyers are buying a premium based on the uncertainty of the future. Once that uncertainty is past, those premiums collapse, and only the greatly improved intrinsic value (that is, GOOG's $43 plunge) shores things up for the put holders.

I see it's dropped another $5 just in the couple of minutes it took me to type this. What a day………

Well, this is the day we've all been waiting for – – and what terrific results were offered after hours! There are an avalanche of earnings out there – – IBM, Merrill Lynch, Microsoft – – the list is very long, and the vast majority of stocks I follow were either (a) getting hit; or (b) getting destroyed. I was watching Google most carefully after the close, which had closed around 533. I was watching the bid/ask like a hawk. For a moment I saw a bid of 550, but maybe some joker thought it was funny, because a moment later the bids below $500 starting falling in. As of this writing, the bid/ask for GOOG is around $490, which is indicated below with the purple tinted area. It will be interesting to see if we "fill the gap" (marked in green tint) any time soon, given this smack-down.

So yesterday the Dow was up about 270, and today it was up over 200 again. Fantastic! I love it! It has provided me so many wonderful shorting opportunities. In fact, at this point, I have 100 positions. There are simply so many fantastic stocks out there. My energy shorts have been doing sensationally well, and I loaded up on some issues today that had been hoisted higher by the huge two-day rally in the financials.

I took some more energy profits off the table today, since I think some of the selling has finished for a little while. But don't get me wrong – – I still have a huge quantity of bearish energy positions. I just got out of simple stuff, like OIH. Here is the Dow Jones index on which DUG is based:

Mentioning the $UTIL is getting to be a daily habit, but I just love this pattern. If the neckline is broken, I think we're heading for the purple zone below.

I have amassed two very large positions on the $RUT (puts) based on the robust retracement to the retracement line you see below. This is the IWM (obviously).

I was also pleased to see the NASDAQ push its way back to almost precisely the underbelly of the fan line.

I mentioned closing my OIH puts at excellent profits. You can plainly see why here.

I mentioned 1270 being an important level of resistance for the S&P today. It got close enough to this line today for my satisfaction.

As for DUG, set aside your knowledge that this is based on energy. Just pretend the chart below is a regular company stock. Don't you think this looks terribly bullish? Look at the surge in volume and the wonderful trendline breakout. Isn't this a gorgeous graph? That's why I own a ton of this (remember, I put 100% of my IRA into this thing when it was about $29, and the gains have been handsome in the short amount of time since then).

Fashion provider to the younger set ANF has a sensational topping pattern. I have taken advantage of the retracement by buying puts.

XEC has great profits, but I'm hanging on for more.

CRK is one of the many momentum-driven "hockey stick" graphs whose puts I bought a week or so ago. Again, fantastic profits, but I am holding out for more.

I bought puts on BTU yesterday based on its failed bullish breakout. This is a favorite technique of mine.

POT was finally smoked today, as was MOS. I think there is still plenty of downside here.

I re-entered my SOHU short (which I had closed a couple of days ago) since the retracement finished. The neckline isn't as clean as I'd like, but I'm willing to take a chance.

I've got a straight equity short on HK with marvelous results. What will be hard for me – – VERY hard – – is to know the right time to exit plays like this.

It was mentioned in the comments how instructive Friday's action will be, and I agree. If we somehow end with a positive market on the day, that will be a very, very bullish sign, because these earnings are very plainly disappointing. On the other hand, if the market gets smacked down hard, maybe we're in a new era of having to face the reality of weak earnings, which will thus push down valuations farther. We'll know soon! Good luck, stay humble, and stay nimble.

It's not a wall of stone, but it's OK. And it's precisely the point I anticipated in last night's posting.

I hardly ever trade Microsoft (MSFT) – – I can't even remember the last time I did. It may have been years. It's a really, really boring stock, and the price is too low to give the options much choose. But this chart is mildly compelling. It's not a perfect pattern, but it's pretty darned good and worth a look.