Big Print In Russia ETF Puts
by Option Review - January 30th, 2014 4:15 pm
US markets might be reveling in a stronger growth story Thursday, but that hasn’t stopped emerging market bears from positioning in the options market.
Shares in the Market Vectors Russia ETF (Ticker: RSX) are higher by less than 1.0% on Thursday, rebounding somewhat after yesterday’s dropping to a six-month low of $25.16. The price of the underlying, currently up 0.65% on the session at $25.41 as of 11:30 a.m. EST, has lost more than 7.0% of its value since this time last week and more than 15% since this time last year.
A large trade in RSX put options this morning suggests one big options market participant may be bracing for shares in the ETF to extend losses during the next couple of months. The single-largest trade in RSX options this morning was the purchase of a block of 22,000 of the Mar $23 strike puts at a premium of $0.30 each.
Those March expiration puts had not traded until today; open interest was zero contracts heading into Thursday’s session. The IB Probability Lab illustrates the cumulative probability of just above a one-in-eight likelihood of the shares plunging below the strike price within the next six weeks — illustrating the cumulative probability of a below-$23.00 settlement price by March to be 15.05%.
Chart – IB Probability Lab shows likelihood of RSX trading below $23.00 by March expiration
The puts start making money if shares in the ETF decline another 10.5% from the current price to trade below the effective breakeven point on the downside at $22.70 by March expiration. Shares in the ETF last traded below $22.70 back in August of 2009.
Wednesday – Stimulus Rumors Trump the APPLocalypse – For Now
by phil - July 25th, 2012 7:55 am
AAPL missed!
Fortunately, we were well-prepared for this eventuality as I had said way back on July 10th, in Member Chat, that AAPL was "too big to succeed" (commentary also featured in Stock World Weekly on the 15th). I also said, at the time regarding AAPL: "Where was my buy point – $555? That's a long way down to support if they fail $600." We had called for taking the bullish AAPL money and running the previous Thursday (July 5th) in my morning Alert to Members, as they topped out that morning at about $610. We were a bit early with that call (AAPL hit $619.87 the next week) but, on the whole, our bearish flip on AAPL (and the broader market) has served us well.
In yesterday's Member Chat, we had one bearish earnings spread on AAPL as well as an aggressive play on SQQQ, the Nasdaq ultra-short, because we expected the Nasdaq to fail along with AAPL (and AMZN is next!) on their earnings. Our SQQQ trade grabbed the Sept $50/60 bull call spread, offset by short puts on some stocks we are accumulating for our Income Portfolio for a net free trade but our dreams of a big pay-off on the spread will be put on hold today as a sudden burst of stimulus talk has turned the indexes back up, with the Dow now 200 points off the bottom in the Futures (7:50) at 12,660.
I already sent out an Alert to our Members this morning, pointing out what manipulated BS this was as the WSJ's Jon Hilsenrath issued what amounted to nothing more than some well-timed speculation on imminent Fed action into yesterday's close that has been picked up by the MSM as a fact and popped the Dow a full 100 points into yesterday's close – erasing 1/2 of a disastrous day in minutes (see Dave Fry's SPY chart). At the moment (7:54), the Dow Futures (/YM) make an excellent short below the 12,650 line so excuse me while I hit "publish" on this partial post so our Members can see it.
Anyway, so where was I? Oh yes, market manipulation by Uncle Rupert and the WSJ is not unexpected with NWS reorganizing and looking for good valuations on the company split. I pointed out to Members seven other articles in which…
Weekend Wipe-Out, the Second Wave!
by phil - January 29th, 2010 5:57 pm
Another week another 100 points lower.
Yep, that's all it was, we lost all of 100 points more than last week, when we fell from 10,725 to 10,172 (553 points) and this week we dropped from Friday's Dow close of 10,172 all the way down to 10,067 yet you would think the world had come to an end to hear the media and the traders freaking out. I'm not going to try to explain it, I can't. Maybe it's because going into last week we were very bearish but, starting on the 22nd, we let ourselves finally get a little more bullish AND THE MARKET BETRAYED US!
How could the market not zoom right back up? It always zooms right back up, doesn't it? As I said a week ago Friday: "Boy, when sentiment shifts – it REALLY shifts!" My closing comment on Friday the 22nd was "Back to cash but leaving disaster hedges, which are looking great now as this is shaping up to be some disaster" and our weekend "Global Chart Review" showed us to be at some very key inflection points, letting us go well prepared into this week:
Manic Monday Market Movement
My Jets lost on Sunday so I was not in the best of moods on Monday. My outlook that morning was: "We still have our disaster hedges in case things get worse but, on the whole, we’re expecting a 1% bounce in the very least off our 5% lines (anything less will be a bad sign)." We were pretty much at the 5% rule on Friday's close so we focused on the bounce we wanted to achieve in order to get more bullish.
I noted that the levels we were looking for were not exactly 1% retraces (see post for reasons) and our target retraces were: Dow 10,300, S&P 1,105, Nasdaq 2,225, NYSE 7,100 and Russell 625. What were the highs for the week on those indexes? Dow 10,310 (+10), S&P 1,103 (-2), Nasdaq 2,227 (+2), NYSE 7,098 (-2) and Russell 621 (-4). So that's a net of +4 points out of 21,355 points worth of predictions on the retrace, accuracy to within .019% - not a bad showing for our patented 5% rule.
Please, under NO circumstances subscribe to our daily newsletter, where you would have this kind of information every morning and…
Global Chart Reveiw Shows Key Inflection Point
by phil - January 25th, 2010 3:00 am
Chart Review by Michael Clark
“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
-- John Maynard Keynes
SO, IS THIS FINALLY THE 'REAL' CORRECTION?
What a week it was. The Bears gave the Bulls some payback. Obama got a wake-up call. And the banks got a well-deserved scare (and we hope they will get a well-deserved hair cut).
The markets reacted, as one might expect, with selling. Actually, the selling began before the Massachusetts election and before Obama sent a shot across the Goldman Sach's bow. Last week Intel announced surprisingly strong earnings; and the stock started up and then sank. For the past half-year investor behavior had been the reverse: a buying spree for any stock that did not lose as much as it might have — beating 'Street expectations' that had been dumbed down over and over again during a quarter so that the company could report 'surprising' strength. Suddenly, now, even good earnings are being greeted with selling. Then came Massachusetts — wasn't that a Bee Gees' song?
All the lights went out in Massachusetts
Anyway, readers want to know where the markets stand today, after the sell-off this week. My view of it — my 'view', not my gut-feeling — is that we are, so far, merely correcting from an over-extended rally. This rally has been bizarre, to say the least. This has been a 'fear rally' — usually the 'fear' side of the equation is when selling comes in, 'greed' driving the expansion. But fear of systemic failure has driven this rally; and Ben Bernannke has been the captain sailing the 'Boat of Fear', Ben's logic — that more debt will solve the insolvency crisis — has a shadow side, the logic that a collapse in stock prices will result in systemic failure, international chaos, revolution, repression…made him believe that preservation of the status quo was requiired, at any price. A 'make-believe' recovery could be jump-started, perhaps, if the Fed could just stimulate (and simulate) another asset-bubble. After all – that is how his mentor and predecessor, Alan Greenspan, had become the darling of the coctail party crowd, leading member of Time Magazine's 'Committee to Save the World';…