Stocks

[Rupert Pupkin]

I couldn't take it any more. I finally bought some puts. This is a sure sign of a short-term bottom.

[MaTH716]

Originally Posted by Rupert Pupkin

I couldn't take it any more. I finally bought some puts. This is a sure sign of a short-term bottom.

Which ones and what line?

[Rupert Pupkin]

Originally Posted by MaTH716

Which ones and what line?

I bought some Spyder puts. I bought the SPY December 75 puts for $2.16. If the Dow goes down to 5,000 by December, which I think it may, these puts will be around $25.00.

I also bought a few July SPY puts. I bought the 99 puts for $1.28. Even though we could have a rally right now, there is also a chance that we could go into a sure-term free-fall. There are some technical indicators that show the Dow could drop to as low as 8200 short-term. If that happens, those puts will go to about $11 or $12.

I'm sure we will get a rally. I haven't been able to do anything right in the market the last couple of years. Whatever I do, you should do the opposite.

[MaTH716]

Originally Posted by Rupert Pupkin

I bought some Spyder puts. I bought the SPY December 75 puts for $2.16. If the Dow goes down to 5,000 by December, which I think it may, these puts will be around $25.00.

I also bought a few July SPY puts. I bought the 99 puts for $1.28. Even though we could have a rally right now, there is also a chance that we could go into a sure-term free-fall. There are some technical indicators that show the Dow could drop to as low as 8200 short-term. If that happens, those puts will go to about $11 or $12.

I'm sure we will get a rally. I haven't been able to do anything right in the market the last couple of years. Whatever I do, you should do the opposite.

Rupert, Do you know that they now offer weekly contracts as well?

The problem with the Dec puts are that they are 27 pts out of the money. So you are going to need another major sell off for these things to go up. Volitility most likely exploded this week with the market getting creamed, so the puts are skewed to the high side causing you to pay up. But that goes for any kind of strategy you would have put on (spreads, straddles, combos etc....)
I like the July's better. Only a couple of points out of the money and could become good with another dip.
I always hear that you should never buy out of the money options. But reguardless and good luck with your positions. I also think we are going lower, but unfortunately I am also a conspiricy theorist and think Washington will just cook up some good numbers to stop any kind of temporary spirals.

[Rupert Pupkin]

Originally Posted by MaTH716

Rupert, Do you know that they now offer weekly contracts as well?

The problem with the Dec puts are that they are 27 pts out of the money. So you are going to need another major sell off for these things to go up. Volitility most likely exploded this week with the market getting creamed, so the puts are skewed to the high side causing you to pay up. But that goes for any kind of strategy you would have put on (spreads, straddles, combos etc....)
I like the July's better. Only a couple of points out of the money and could become good with another dip.
I always hear that you should never buy out of the money options. But reguardless and good luck with your positions. I also think we are going lower, but unfortunately I am also a conspiricy theorist and think Washington will just cook up some good numbers to stop any kind of temporary spirals.

I practically never buy options that are way out of the money. The only reason I'm doing it in this case is because Harry Dent is predicting a huge crash between now and December. So I'm taking a shot. I could just short some Spyders but then I would have unlimited downside risk. I'd rather just buy these puts.

[MaTH716]

Originally Posted by Rupert Pupkin

I practically never buy options that are way out of the money. The only reason I'm doing it in this case is because Harry Dent is predicting a huge crash between now and December. So I'm taking a shot. I could just short some Spyders but then I would have unlimited downside risk. I'd rather just buy these puts.

Obviously you mean upside risk.
But I should have mentioned it before while the market was still open. Maybe you should have considered rolling those July puts into August. Because now you are going to have those July options decay for 3 days. It is a very short month expiration wise and you only have another 9 trading days for your puts. So if you have a chance maybe consider rolling them into August, even if you have to go down a strike to make it a little less expensive.

[Rupert Pupkin]

Originally Posted by MaTH716

Obviously you mean upside risk.
But I should have mentioned it before while the market was still open. Maybe you should have considered rolling those July puts into August. Because now you are going to have those July options decay for 3 days. It is a very short month expiration wise and you only have another 9 trading days for your puts. So if you have a chance maybe consider rolling them into August, even if you have to go down a strike to make it a little less expensive.

No, I meant unlimited downside risk. You don't limit your upside risk by buying options. You only limit your dowside risk. Let's say I would have shorted 1,000 Spyders. I would have unlimited downside risk. If the market went straight up, you could lose tens of thousands of dollars if you were short Spyders. I don't think it's going to happen but let's just say that the Dow went up to 14,000. If you were short 1,000 Spyders, you would lose over $40,000. If you buy 20 puts instead for $2.00, the market can go straight up and the most you lose is $4k. Yet you still have the big upside with the puts. If the Dow goes to 5,000, you would make around $40k with the puts.

The one big negative with buying the out-of-the-money puts is that you need a big move down. If you just get a small move down, you will lose money.

With regard to the July puts, they are obviously more of a gamble than the August puts. You don't have as much time but you pay less premium. I figured that if we are in a free-fall right now that I wouldn't need the extra time. If we get a bounce and the big drop doesn't start until August, I still have my December puts.

[stonegossard]

Originally Posted by Rupert Pupkin

I bought some Spyder puts. I bought the SPY December 75 puts for $2.16. If the Dow goes down to 5,000 by December, which I think it may, these puts will be around $25.00.

I also bought a few July SPY puts. I bought the 99 puts for $1.28. Even though we could have a rally right now, there is also a chance that we could go into a sure-term free-fall. There are some technical indicators that show the Dow could drop to as low as 8200 short-term. If that happens, those puts will go to about $11 or $12.

I'm sure we will get a rally. I haven't been able to do anything right in the market the last couple of years. Whatever I do, you should do the opposite.

Smart buy in the SPY puts. Friday's close was real bad. A lot of technical levels have been cracked at the end of the quarter. A lot of people thought that 1040 in the SP cash was big support. Smashed right through it. I think it comes down to what the bank stocks do, and they all seem to be ready to go into freefall. GS,BAC, and JPM are all breaking key support which could lead to disaster for the market. You also have Smooth Operator extremely bullish which should keep this sell off going strong. I think Morty is bearish as well which has to be good for the bears.

[clyde]

The Bears suck, Petey.

[stonegossard]

Originally Posted by clyde

The Bears suck, Petey.

They do......but what about The Browns? Rumor is they are transferring to The Arena League.

[Smooth Operator]

Morty's bearish, eh.

Not sure what's gunna happen short-term, stone … nor do I care all that much.

Odds favor a rebound, tho, following that brutal second quarter.

At any rate, Warren and I are lookin' 10, 15 years down the road.

Can't wait to pick up some more shares later in the week…

[clyde]

They do......but what about The Browns? Rumor is they are transferring to The Arena League.

Rumor?

I thought they did.



I guess there's still hope..which is frightening.

You keep the smart thread denizens in line....putting a tack on Rolla Tomato's chair wouldn't be a bad idea.

[dalakhani]

Originally Posted by stonegossard

Smart buy in the SPY puts. Friday's close was real bad. A lot of technical levels have been cracked at the end of the quarter. A lot of people thought that 1040 in the SP cash was big support. Smashed right through it. I think it comes down to what the bank stocks do, and they all seem to be ready to go into freefall. GS,BAC, and JPM are all breaking key support which could lead to disaster for the market. You also have Smooth Operator extremely bullish which should keep this sell off going strong. I think Morty is bearish as well which has to be good for the bears.

The thing about the bank stocks is that there is money to be made with the yield curve the way it is. You have rates at ridiculous levels right now and you still don't have to write down all of the commercial losses...yet. Its pretty hard for a bank NOT to make money right now at least the ones that are capitalized sufficiently and have their contingent liabilities under control.

I am with the bears and have been but I think that this is going to be a lot more drawn out with a few more pops along the way.

[stonegossard]

Originally Posted by dalakhani

The thing about the bank stocks is that there is money to be made with the yield curve the way it is. You have rates at ridiculous levels right now and you still don't have to write down all of the commercial losses...yet. Its pretty hard for a bank NOT to make money right now at least the ones that are capitalized sufficiently and have their contingent liabilities under control.

I am with the bears and have been but I think that this is going to be a lot more drawn out with a few more pops along the way.

I wonder when the banks will have to face the music and face up to the commercial real estate losses. They have to be huge. The gov't will probably let them hold off until 2080 to deal with that disaster. If they do it now some of these bank stocks will be trading at 50% of the value they are at now.

You are right about the banks and making money though. They can borrow billions for free and buy treasuries (instead of lending to businesses to help the economy) and make a few percent risk free/doing nothing.

[clyde]

What!?

I have 10 large in margin calls?



Well sell something then..the other stuff.

To who? What's BoothOperator buying? ABC Co. and Widget Corp? Good---seell him 10 large worth of those.




Gosh, this is really so easy.