Stocks

[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.

[MaTH716]

Originally Posted by Rupert Pupkin

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.

If you short the SPY stock/ETF (which is what I thought you were talking about) you're risk is to the upside.

In reguard to the August puts, all I was saying is that if you act quick enough you might be able to roll the position for a more limited cost than if you should just let the July expire and then eventually buy August or even Sept. puts.

And like I mentioned, for some reason you think a selloff/mini crash is coming look into those weekly options. They offer them in a number of products (including SPY). Those things are usually cheap because of the limited time value of the option and makes them a good gamble.

[clyde]

This stuff is even worse than your Thanksgiving day yuk 'em up story.

[MaTH716]

Originally Posted by clyde

This stuff is even worse than your Thanksgiving day yuk 'em up story.

Coming from the guy who likes soup..............

[clyde]

I did not say I liked soup.

I said there was one certain soup at a certain time that was the best ah ever et.




Don't you have a nice Friday Aft. at the Meth's House story to pound out?

[MaTH716]

Originally Posted by clyde

I did not say I liked soup.

I said there was one certain soup at a certain time that was the best ah ever et.




Don't you have a nice Friday Aft. at the Meth's House story to pound out?

Originally Posted by Mortimer

Matty...don't write about tomorrow.





Thaaanks.

Originally Posted by Mortimer

So,Matty.

How was yer weekend?






WHOA!! What am I saying!?





Matty....forget it.

[clyde]

!!




Gosh that was good stuff!


Nightypookins,Methy.

[MaTH716]

Originally Posted by clyde

!!




Gosh that was good stuff!


Nightypookins,Methy.

G'd nite Morty........

[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.

[stonegossard]

Originally Posted by 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…

Personally I hope the Dow goes to 25k and the U.S. gets back on it's feet. But as a trader/realist I see some very tough times coming up. The job picture is horrendous and not getting any better. The housing market is still in free fall, if this FINREG passes a ton of smaller banks will go under and bigger ones will take a beating. Then you have a good part of Europe going to hell. I just can't see the stock market overlooking all of this and going back into rally mode. If you are accumulating a position in an SP Fund, you better have the longevity needed to deal with the volatility the next few quarters.

I also wouldn't be cheering Buffet so much. The guy has gotten decimated recently in some of his market calls (see his Euro vs Dollar trade). He really isnt that bright a guy. He made his money during a huge bull run....when a lot of others did as well. He also got a sweet deal in GS stock which was a gift initially when it flew, but isnt looking so good with GS falling apart again. He basically was at the right place at the right time over the years.

[stonegossard]

Originally Posted by 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.

I am suprised you still post out here so much considering Nomad's big hairy toe is still looking for you. It's been years since that started and would imagine the toe is getting more pissed each day. There comes a time Morty when we have to meet our maker and face the consequences.

[clyde]

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

Translation:


They're dead.

[clyde]

Originally Posted by stonegossard

I am suprised you still post out here so much considering Nomad's big hairy toe is still looking for you. It's been years since that started and would imagine the toe is getting more pissed each day. There comes a time Morty when we have to meet our maker and face the consequences.

!!



Dew is looking for yo behind.

[stonegossard]

Most long term investors are ones who started out as short term investors only to see their holdings go into free fall and are now waiting for the investments to comeback. They like to say I am in it for the long run. They don't care about short term flucuations....until they get one that brings their holdings back to scratch. They then bail and say they were short term investors.

[stonegossard]

Originally Posted by clyde

!!



Dew is looking for yo behind.

Dew is still here? Doesn't he have some cute little blog on a horsey site? I miss him never admitting he is wrong. He is like a poor man's Dow Morris.