Apparently someone sold 65,000 contracts on the SPX Sept 700. Quite a large bet that the S&P will tank 700 points in the next 4 weeks.
http://mparent7777-2.blogspot.com/20...n-4-weeks.html





Apparently someone sold 65,000 contracts on the SPX Sept 700. Quite a large bet that the S&P will tank 700 points in the next 4 weeks.
http://mparent7777-2.blogspot.com/20...n-4-weeks.html
Rebecca Avalon





^^^ I felt that this was serious enough to start a more general thread about it in the member boards area ...
This is a 4.5 BILLION dollar gamble on somebody's part, versus an easy 1 billion dollar loss if the market doesn't tank before September options expiry !





but if you want economic conspiracy theories that are TRULY scary, check out on the Fed's recent bailouts and temporary easing of banking >==> brokerage money transfers
also check out , on the 'Long Emergency', which is scarier still
Last edited by Melonie; 08-27-2007 at 04:48 PM.




I've been thinking about this since Thursday.
First, the comments about the COG are dumb and unfounded, this has been an open meeting for 15 some odd years.
My theory: someone is pretty sure that Ben isn't going to cut rates. The market is going to tank once they finally clue in on the fact that Ben is a Volcker, not a street hack like Greenspan.





Here's a snip from an options blog I follow: notice the mention of my darling RICK
Terror in the SPX Pit
I am going to follow the trend of bloggers commenting on the "911 trade."
This was in regards to the open interest on the Sept 700 SPX calls. A lot of traders are looking at this as a large bet on a predicted directional movement in the market. "A prediction of a terrorist attack." Niner.
The headlines won't tell you this, but notice how the Sept 1700's have the same open interest. It's a box spread (I checked). It's commonly used for short term financing. The trader picks strikes that are unlikely to get hit and at expiration it will unwind, hence trading the "tips" of the option chain.
Don't bet on another 911, unless you see huge lots firing off in stocks like RICK, SWHC, HAL and PYX.
It brings up a good question though... How should I protect myself from this event?
You can't. Don't let it hinder what you have going. Continue to position size, diversify, and manage your portfolio by risk first, and you'll do fine
Rebecca Avalon




Take a look at SPY as well.
I don't know how to get the options quotes, for the exchange, but I heard that similar bets were made on the DJ STOXX 50 as well (European).
By its very nature, a buyer of 65,000 contracts who thought the market will tank, bought from a seller who believed it would not. Does that make the buyer smart and the seller dumb? Just proves difference of thought and opinion.





Options quotes for the exchange may be listed under either SPX.X or $SPX on your brokerage.
No transaction that large is "dumb" It's just a strategy that you may not be familiar with. Although in theory there is a buyer and a seller for every transaction, in reality the market makers accept trades and find other ways to profit from them.
In the case of the box spread, the 700 and 1700 strikes were SOLD not bought by one individual (or more likely one hedge fund) By being an option seller, and not having the options exercised against you, you can profit from time decay, and the market doesn't have to move at all. In this case the option seller made money as long as the SPX stayed between 700 and 1700
Rebecca Avalon



http://www.thestreet.com/_htmlbtb/ne.../10377063.html
This morning's info which adds a bit of "validity" to the buzz...
As an avid investor,I appreciate the insight y'all have to add and SW is a really good sorce for info on so many things!
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