Stocks

[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.