meanwhile....at the Oanda forum............
quote:Originally posted by gofiodetrigo:
k, what have u heard of the so called "bin laden options" ?
it seems like there's a huge position now open for the SP500 to make a big dip b4 september expires ( 3rd friday, and week b4 next FOMC )
the stake is big in the way of $1B worth loss in case SP500 does not fall between a 30 and a 50%
same for eurostoxx 50 wich would need a fall of 25% in order to get some profits in these positions
Gofio what do u mean here? That if those index puts expire without being exercised at a profit, these players stand to lose $1bn? Are these puts so big that their option premiums to Sept will be $1bn??
If your index put expires without u exercising it, your loss is the premiums you paid. For them to be $1bn your option (given that it is so deeply out of the money right now, with its strike price 30% below or more), must be absolutely H U G E
There might be something suspicious and cynical behind those puts, but in such volatile markets and so many investors caught long equities, I wouldn't rush to assume that anyone who places big, deeply out of the money index puts knows for sure something we don't, related to a huge market crash to take place within the next 2 weeks or a big terrorist attack.
As I said in another thread, deeply out of the money index puts would be a fairly cheap disaster hedge for long equity investors, particularly "real money" accounts like asset managers.
Makes you wonder...............
