How do you set jade basedir option in an express app? (the "basedir" option is required to use "extends" with "absolute" paths)

Going through the peepcode nodejs video and recreating the app on the current express/node versions I've ran into a small issue.

file structure

site
 - apps
 - - authentication
 - - - views
 - - - - login.jade
 - - - routes.js
 - node_modules
 - public
 - - images
 - - javascripts
 - - stylesheets
 - routes
 - views
 app.js

login.jade:

extends /views/layout
block content
  form(action='/sessions', method='post')
    label
      | Username
      input(type='text', name='user')
    label
      | Password
      input(type='password', name='password')
    input(type='submit', name='submit')

app.js

var express = require('express')
  , user = require('./routes/user')
  , http = require('http')
  , path = require('path');

var app = express();

// all environments
app.set('port', process.env.PORT || 3000);
app.set('views', __dirname + '/views');
app.set('view engine', 'jade');
app.set('view options', { basedir: process.env.__dirname})
app.use(express.favicon());
app.use(express.logger('dev'));
app.use(express.bodyParser());
app.use(express.methodOverride());
app.use(app.router);
app.use(express.static(path.join(__dirname, 'public')));

require('./apps/authentication/routes')(app)

http.createServer(app).listen(app.get('port'), function(){
  console.log('Express server listening on port ' + app.get('port'));
});

When I navigate to localhost:3000/login I receive the following error:

Error: /Users/bob/code/site/apps/authentication/views/login.jade:1 
  > 1| extends /views/layout 
    2| block content
    3| form(action='/sessions', method='post')
    4| label

the "basedir" option is required to use "extends" with "absolute" paths

I can update the extends line to: extends ../../../views/layout and make it work, but I'd prefer to know how to set the basedir option.