Speculative contrarian investing

It's ironic. After explaining virtue of disciplined investing and portfolio diversification, I am doing an about turn.

I have not been tracking market actively since my May 21st posting. I would check my stocks once a week. As I already have my triggers set, I can be away and not worry about my stocks. On Friday the 14th July, I just checked the market and found that Dow was down from 11133 to 10750 in 3 days of trading because of Oil, Middle East and Alcoa . I checked the options prices and after doing some analysis, decided to invest in options expiring next friday July 21st.

This was very speculative bet. A safer option would have been Aug options as market would have come back by then for sure. What prompted me was that oil was temporary increase due to middle east. And I didn't see the conflict escalatiing to Iran and affecting world oil market.

1> Israel was already busy with it's operation in Palestine and Lebanon. So, there was no chance of Israel opening a third front. They have already spread thier air force and army thin due to this twin deployments.
2> Iran, needs oil due to the bad business climate and will not enter on it's own. Also, there was no need to get more attention of the world cummunity when they can persue their goals secretly through aiding south Lebanon fighters.
3> US was already taking the attack from international community for standing-by as Israel was bombarding Lebanon. They wouldn't want to get involved with Iran. If US was not involved in Afganistan and Iraq, they might be tempted to use this as an issue to tackle Iran.

So, I was expecting for things to normalized soon in less than a week. That means oil comes down and market booms. The other issues that had investors nervous like economy going in big thud are not a big concern for me. Though long term, I would be planning for a small recession this huge drop was an opportunity , at least to me, that I couldn't pass up.

Next issue what actually happened