From the Comments Section
Wondering what your opinion on today's light volume bear market rally? I'm losing big on puts on cof, hig, cat, spg, x, and spy.
Do you think this "rally" has any legs, or do you believe there will be a sell off starting friday?
I made the mistake of buying Jan puts and they are really dropping in value. I just can't understand how we rally with worst consumer confidence and worst home prices.
Good Luck and Happy New Year.
CP said...
I think the rally is a joke. Anytime a decent stock (BGC) vastly underperforms a garbage stock (MPG), to me it is another sign of our broken market. Result: bearish.
That being said, you need to have staying power. Buying front month puts is problematic. I own Jan puts that are deep in the money that I don't want to sell for tax reasons. But I would never buy OTM front month puts just to watch the premium evaporate.
I have no idea when the next selloff will commence. All I believe is that most of my shorts will be zeros a year from now. So I am patient.
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6 comments:
Thank you for the excellent response. I figured the Santa Claus rally was dead because of madoff. But you are very correct in that what I am doing is too risky.
Maybe because everyone fears a sell off in January, we'll get a rally instead. I don't see how the vix can't go back up again near term though. This was my thinking when it came to purchasing those Jan puts. I will roll them over for less risky puts. Lesson learned. Thanks again!
Oh, about shorting those treasuries. Talking heads over at cnbc are calling them a "bubble". Funny how they weren't calling oil a bubble a while back. Using cnbc as a contrarian indicator, I wouldn't short them just yet. There's still a lot fear out there, and well deserved for that matter. In my opinion I believe we are going to have a mini depression, and I don't believe the financial crisis is over just yet. I would say that we need to see some people go to jail, and then a bottom can be called as confidence returns back to the markets.
Happy New Year once again!!!
eh... thank you for this thread..
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