Don,
Another investment observation/question for you.

In my humble opinion, the Ag stocks have been severely overbought, and rather than use an outright short position and get killed as "irrational exuberence" continues ad infinitum, I thought I would look at what buying a PUT against the king of the irrational stocks would cost: POTash, Dec 2008 200 puts to be exact.

I have not looked at data from today's trades (just got home), but from Monday's action, the stock closed at 208.79 and the Dec 2008 200 puts were selling for about $31 a share. Using the calculators designed for options, the current pricing puts the volatility % to be about 75%!!!! Since the $VIX (or .vix, depending upon your data provider's preference--the CBOE volatility index) was listed as 20.50 on Monday night, the POT puts were selling at a 3.5x + multiple to the market.

What, if anything, can be said about this situation and what can be done to exploit this market disconnect from reality????? OR is it a disconnect at all? Obviously these stocks (and POT in particular) have gone parabolic/exponential, and someone that can "call the top" is going to make a fortune on the way back down!

Thanks in advance for pondering this novice's investment question. I look forward to your enlightening response.