So I bought S&P 500 2500 puts

Will the OP cash out now or ride it until the puts exercise/expire? The market timer's dilemma.
 
I don't know what expiry he bought, but the one 6 months out has moved up just a bit.

I doubt that the OP can ever have a net gain. All that could happen is that he reduces his loss.

To really gain in a declining market, one has to be net short, and the OP has not done that.
 
mmm.... and I had thought at 2200 in the S&P500 I might be ok.....................
but I do agree you are 95% likely to be right
 
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Actually Cater Worth has been spotted on, he’s on CNBC Fast money. No wonder he has been #1 technical analyst in the last 2 years.
 
gstillson said:
Ok, OP is looking relatively lucky today.
Click to expand...

How can we know that, w/o knowing what expiry he bought, and at what price?

If they are out several months, they won't move much with a small dip. And the value drops if they are out of the money and the time decay is ticking away.

Running_Man said:
mmm.... and I had thought at 2200 in the S&P500 I might be ok.....................
but I do agree you are 95% likely to be right
Click to expand...

? 2200 ? How does that number fit anything? You mentioned 2500 puts, and S&P is currently ~ 2835. Can you fill us in on expiry and price? Hard to make much of this w/o those details.

-ERD50
 
Running_Man said:
... I am putting out a feeler for a Taleb type of move, but this is more protective and conservative to my portfolio than any move to create wealth. ... I do believe these puts are under priced relative to the potential for a major event. But a 5 percent chance to make 40 times your money is still 95 percent likely to lose all my money even though the odds are in my favor. ...
Click to expand...
@Running_Man, I think people are not really "getting" the strategy here, so I have clipped it out of your longer post. This is exactly a Taleb type strategy. Keep taking advantage of underpriced risk until the event materializes and you win in a big way, in the mean time keep losing small amounts as far-out-of-the-money puts expire.

Not my cup of tea and it begs the question "How do you know the risk is underpriced and by how much?" But nevertheless an interesting strategy.
 
ERD50 said:
How can we know that, w/o knowing what expiry he bought, and at what price?

If they are out several months, they won't move much with a small dip. And the value drops if they are out of the money and the time decay is ticking away.



? 2200 ? How does that number fit anything? You mentioned 2500 puts, and S&P is currently ~ 2835. Can you fill us in on expiry and price? Hard to make much of this w/o those details.

-ERD50
Click to expand...

Yeah, he's not shared that, so just meaningless.
 
ERD50 said:
How can we know that, w/o knowing what expiry he bought, and at what price?

If they are out several months, they won't move much with a small dip. And the value drops if they are out of the money and the time decay is ticking away.



? 2200 ? How does that number fit anything? You mentioned 2500 puts, and S&P is currently ~ 2835. Can you fill us in on expiry and price? Hard to make much of this w/o those details.

-ERD50
Click to expand...

2200 is lower than 2500, I think a very reasonable expectation of a rapid decline, should one occur. I am sorry to have created such an indecipherable thread, I think it is fairly clear myself. I do not plan on providing any more clarity as I think results will pretty much speak for themselves, I grant the idea that I am 95% likely to lose the funds invested, on the other hand, if I do "win" on this investment, I think that will be equally obvious.
 
I am not one who criticizes the OP for taking this measure. But in reading his 1st post, I believe that he has not sold his stocks, and only bought the out-of-the-money put as insurance.

What I said was that the insurance was not sufficient to cover his potential loss, and at best will reduce the pain. I am trying to do the same, but in a different way.
 
Running_Man said:
2200 is lower than 2500, I think a very reasonable expectation of a rapid decline, should one occur. I am sorry to have created such an indecipherable thread, I think it is fairly clear myself. I do not plan on providing any more clarity as I think results will pretty much speak for themselves, I grant the idea that I am 95% likely to lose the funds invested, on the other hand, if I do "win" on this investment, I think that will be equally obvious.
Click to expand...

Buying puts as insurance is a valid strategy, and I'm not criticizing it, though I would only use it myself in some very specific situations, like maybe getting through an earnings report that I thought had a chance of turning out bad. But that's just me.

So I'm not criticizing, but I am curious. You have written some long posts, but w/o those specifics of expiry and price and exit strategy, it's tough to make anything out of it, other than an extremely general 'you think the market could go down'. Well, I always think that (but seldom act on it). I just don't know where you stand in any specific way.

Some people buy puts like that purely as speculation, and sell as soon as they see a rise in value (which would be a drop in the underlying stock for a put). That's where exit strategy comes in - will you sell if the value increases by X%, or will you hold to expiry as insurance, and are fine with losing the entire premium?

-ERD50
 
You bought puts a couple days ago? GENIUS!!!
 
gcgang said:
You bought puts a couple days ago? GENIUS!!!
Click to expand...

That depends what he does with them. If he holds, and they expire worthless, he would have been better off doing nothing, like most of us.

Considering that the people on the other side of the trade are unlikely to be idiots, I don't see how buying could be GENIUS. Unless you think buying a winning lottery ticket is GENIUS?

-ERD50
 
No, I think it's those threads about "blowing the dough". The market god decides to help us. He can blow away a lot more dough than any of us knows how to spend.
 
NW-Bound said:
No, I think it's those threads about "blowing the dough". The market god decides to help us. He can blow away a lot more dough than any of us knows how to spend.
Click to expand...
Haha, That’s why I’m always nervous about posting my current trades. The market god will prove me wrong. Superstitious.
 
What goes down the most today: Apple (-4.63%), Amazon (-6.15%), Facebook (-4.13%), Microsoft (-5.43%). Even Berkshire Hathaway is down -4.76%.

Year to date, these megacaps are still pretty good, such as Amazon at +60%, and Apple at +34%. Perhaps one should buy puts on them, more than the overall market. These big guys contribute the most to the rise of the S&P. The breadth of the market is not that good. Many stocks are never up for the year, and I am not talking about GE. :)
 
I don't care what anyone says - good job Running_Man.

Now, the big question is if this downward move continues? And do we have an even bigger plunge just around the corner?

If we begin to see net outflows from the index funds, they are going to be selling in to this and will exacerbate the move lower.
 
Hey, I know I have lost money, nearly daily, for the last 2 weeks.. :)
 
Almost 100 down from the SP500, running_man should make some money already.
 
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