Billions in Put Options purchased betting that the market will crash (UPDATE: CALL MADE?)

This is out of topic question.

Since market is not steady and i don't own home, where do I invest money? I don't have lots of money but 10 - 15K .

Stock market?
I am not good at stock market but want to buy some good tech stocks if I get them at the price i want.

Gold?
Everyone is talking about buy gold.... buy gold... buy gold... $ is going to be collapse.... buy gold. While i agree that value of $ has been decreasing, I doubt it will collapse. I am not worried about $ because i have very small amount in savings as compare to others who have 100Ks in cash and stocks/bonds and properties.

House?
Is buying house is good idea at this point? I can buy house but with all uncertainity, i want to avoid till i get better job. I enjoyed my life when i wanted to and spent most of the money in enjoying, now I want to do some savings. is buying house in this market is good idea?

Cash?
shall I just keep cash or money in bank ?

bonds?
what about bonds?

Somehow I cant figure out how to quote. This for Netscape.

Netscape,you ask good questions. I invest money for people for a living. What I have found that unless you have a decided advantage, you are best off just buying the market as a whole. So unless you have inside information or enough money to move an individual stock, just build a core portfolio, rebalance it annually, and just keep adding to it whenever you can. Once in a while if a real promising technology comes along or a company you are well acquainted with gets real cheap, then you should consider an individual position.

As far as stocks, bonds, gold, cash, or real estate, I always choose stocks. Even in this period of uncertianity.

The way i look at it ,the biggest risk we have is the dollar contunuing to weaken. This saps your purchasing power. Even though your currency units stay fairly constant, you can buy less and less with them. Bonds tend to provide a bit more income, but you are generally locked into that income for a number of years, so again each year you can buy less and less with that income and when the bond comes due the principal buys you less as well.

Gold and silver is a different creature. It tends to rise with inflation, though not always. As fewer and fewer currencies have gold backing, that effect keeps getting more muted and muted. Still it is not a bad hedge. In a worse case scenario though, only physical gold and silver will be worth anything. Counting on others to deliver precious metals to you in end times, probably isn't a good bet. I still wouldn't put more than 10% in precious metals

Real estate is good if you want to live in it or if you can rent it out and cover all your expenses. If you are looking for a home to live in, then you should probably wait a bit longer. Depending on where you live prices could still fall another 10-20%. In th meantime keep your eyes open for foreclosures that could give you that opportunity now. Historically Real Estate only appreciates at about 4% a year. We have alot of flat years to go before we get back to that range.

Stocks, I think are the only way to go. Over the long term they will go up with inflation (companies charge more). Split your portfolio up in mutual funds(IRA's, 401'kS) and Etf's (Taxable accounts). I split mine up between international stocks, small cap stocks, and large cap stocks. Within that split you also want to be balanced evenly between growth and value oriented stocks. This type of allocation has a long term average annual return(50+ years) of about 11%(higher with continued contributions). Portfolio will drop 20% or so every 5 to 6 years on average. Don't sell but use those drops to invest heavily along with your regular investments. This methodology has always made those who stick with it wealthy. The more you feed it, the wealthier you will be. As much as I hate it, you stillnneed to have two years of cash equivelants upon retirement. Just in case.

Don't invest money that you are saving for goals less than 3 years out just because you never know when that 20% is going to hit.

If you like tech, buy the QQQQ's. It consists of what is regarded as the top 100 tech companies. I do have some favorite tech companies, but i hate to mention them on a public board. Could make someone do what is not right for them. Though i do like voice recognition industry quite a bit,especially the leader.

Caveat Emptor to anybody taking investment advice on an online discussion board. That said, there are many chat programs (including ATS chat) available if individual members want to have personal financial discussions.

Please, let's get back to the topic.
.

[edit on 9/11/2007 by Gools]

Sorry about that. Next time I will try not to post anything unrelated to thread.

reply to post by Gools


Edited to remove blast of moderator. Sorry
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[edit on 11-9-2007 by disgustedbyhumanity]

Following this thread and the news I am beginning to think that this hug doomsday market scenario looks more like a slow decline in the market with failure after failure. I don't so much believe in some huge event making everything tank at once.

Well, the consensus on the deep in the money Call/ PUT spread is that it was a loan taken on the market.

www.moneymorning.com...

In a nutshell, if this monster trade actually is a box trade, it suggests to me that an unknown major player is hurting for cash and couldn’t obtain it any other way.

The only question that truly remains in my mind – again, assuming that this is a box trade – is who’s hurting so much that they needed more than $900 million badly enough and immediately enough to utilize such a trade structure. And, in a related question – so there are two actually – is who couldn’t get traditional financing even with the Fed offering liquidity as a last resort?

I'm pretty sure that is what's going on with the SPY options that started this. There are still the other puts on the SPX, Eurostoxx 50, and Nikkie though. The only thing we will know for sure is that we'll know for sure by next week if those other puts were a good bet or not.

[edit on 13-9-2007 by jefwane]

There should be a law against profiting from death and destruction.

Countrywide Caught in Mortgage Spiral

Check this out... brand new news this evening.

Rather interesting considering the talk that's been bouncing around about Countrywide... I recall someone making a post about some strange guy who murdered a couple and who worked for that company.

[edit on 14-9-2007 by Zaargg]

reply to post by Zaargg


Anyone seen this yet?

Just wanted to add this:

www.northernrock.co.uk...

Its a brittish bank (5th on the national market concerning mortgages) wich has ran into some major liquidity problems. Maybe this is just what a bank would do if they foresaw this and wanted to get "some cash".

[edit on 18-9-2007 by sn00daard]

Well, today is the 20th of Sept. When is the market supposed to crash? SInce the FED dropped the interest rate .5% the market seems to have rallied. Even if it is a "knee-jerk" reaction, it has still introduced a little stability and short-term assurance that there will be no drastic drops.

It looks like those who initally made those puts will be losing their money.

Any thoughts from those with more financial knowledge than me?

Originally posted by scooler1
Well, today is the 20th of Sept. When is the market supposed to crash? SInce the FED dropped the interest rate .5% the market seems to have rallied. Even if it is a "knee-jerk" reaction, it has still introduced a little stability and short-term assurance that there will be no drastic drops.

It looks like those who initally made those puts will be losing their money.

Any thoughts from those with more financial knowledge than me?

Perhaps the put options were just hedges against existing positions after all. Maybe something disrupted the timing of their anticipated event. The Japanese options are now worthless and by tomorrow, Fri Sept. 21 the American options will expire. Ramadan ends on Oct. 13 this year, which is well after the expiration of these options. It would be interesting to see if they attempt to roll over the options for another month or so.

Where are you guys?? My calander says that today is the 19th.

....indeed, i'm only -5 gmt and it's 9/19 here

We still have a couple days. Regardless, i am relived that nothing big has happened yet... and it seems unlikely that 2 days will make a difference. However the 'run-on-the-bank" phenomena appears to have some legs, whether that will crash the market tomorrow seems unlikely.

The financial future is still very uncertain. When the Fed dropped interest rates, the dollar tanked and gold and oil rallied to some very significant highs. I think this is the death knell of the dollar. We even have "doublespeak" greenspan going around on 60minutes and every other show telling everybody the dollar is essentially dead.

My bad, for some reason I thought today was the 20th.

Yeah, I saw Greenspan on The Daily Show being interviewed by Jon Stewart, kinda wierd.

If it doesnt crash by close of business friday, i think they lose...
correct me if im wrong.

as for the kneejerk reaction I totally agree, although short-term stability is not whats needed here.

a couple of months back the economy started showing signs of strain,
the feds decided to inject money and this momentarily improved the situation.

but then, a week or so later, it started dropping agian, this time by bigger amounts.

so they slashed interest rates, in a very rare move, and as expected the market immediately shot up and gained ground.

But thats where its going to end, If the market starts declining again, i feel confident in saying this crash is unavoidable.

once it starts decreasing also, confidence in the economy will plummet, because the average consumer will realise, '' hey, somethings up, and we're about to feel it ''

so they are going to get there money, and sell there stocks...

we've just given the economy a injection of adrenalin.. Its going to boucne of walls for a few days, but when it wares off, and the reality hits that underlying issues are still there.. its gunna hurt again.

once it starts hurting, its going to turn into agony, almost over night.


Id be keen to know where the oil magnates, government officials and co have decided to place there portfolios, money.



[edit on 20-9-2007 by Agit8dChop]

HAHAHAHAHAHA

Another blow to the doomsdayers! Its 10:22 EDT and....Guess what?

THE MARKET IS ACTUALLY UP 0.6%!!!!!!!!!!!! Oh no...say its not true!

Another doom and gloom prediction is down the tubes!

Sorry folks!

reply to post by KnowItAll


The day isn't over yet. Lets hope the market stays up not saying it will the market could plummit before or after lunch.