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| User Info | BREAKING: Someone Knows Something? (Broader Market) in forum [NotSoBreaking] | |||
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Genesis Posts: 71403 Incept: 2007-06-26 
KD^2 
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Looking at the Indices today, there was a lot of very interesting activity in front-dated options today. VIX - almost 86,000 CALLs on the 20 strike traded - these expire in SIX DAYS. Qs - 66,000 48 PUTs traded today. SPY - 53,000 151 PUTS traded There was also a very high amount of activity on the 1450 SPX strike. In addition there were a number of odd individual stock bets, including CFC (Countrywide) that had a huge number of July $30 PUTs purchased - these were so far out of the money on short time that they had no bid - they were DEFINITELY purchased. The VIX calls are EXTREMELY suspicious - those are only .15x.20 and about to expire. They're also WAY out of the money. They went in the spread so I can't tell if they were bought or sold, but someone selling those raw is taking a horrible risk - odds are they were BOUGHT. The others are all out of the money - but just barely. Again, they look to be purchased. That's a pretty interesting set of trades this close in. The other thing that's interesting is that the PUT/CALL ratio dropped today. All of these looked like raw trades - they may be closing transactions, but I wouldn't bet on it, just from the volume and proximity to the current price. Those VIX 20 calls in particular stick out like a sore thumb. For those to pay we'd need to have another February-style plunge - before the middle of next week. Definitely worth keeping an eye on...... ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2007-07-12 00:08:45 by genesis
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Bubble_watcher Posts: 215 Incept: 2007-06-26 San Diego
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Absolutely! Advance-Declines were very weak today, and I would not be surprised to see another impulsive plunge from today's high.
2007-07-12 00:08:58
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Ocbear Posts: 1684 Incept: 2007-06-29 
OC, CA Online
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What's the expiration on the Qs and the SPYs?
2007-07-12 00:27:16
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Uncleoxidant Posts: 1704 Incept: 2007-07-10 Stumptown
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Time to pick up some SDS?
---------- I am NOT a consumer, I am a Citizen!
2007-07-12 00:29:27
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Vegasradar Posts: 3955 Incept: 2007-07-11
CA
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Karl, Since I've only been reading your blog for a few months, I wanted to know if you knew the market drop in Feb. was comming ahead of time? ---------- Remember, all Bennie has is dollars. He destroys the currency, he destroys himself. —Karl Filling in the Pieces- an economic overview: http://storage.denninger.net/ppt/teapart....
2007-07-12 00:30:52
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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I was not paying attention to the internals prior to February and got caught more flat-footed than I'd have liked. While I knew housing was declining I had absolutely no clue about the widespread fraud and stupidity in the lending space. It simply wasn't on my radar. The good news was that I had huge gains from back to '03 and in addition had lightened up on most of my individual picks as they'd hit their targets. That selloff sucked and I have no intention of making that mistake again, especially given that the next one is likely to be WORSE. I started the blog after the Feb plunge. I have another, primary blog and have commented on the markets from time to time in it, but more in a macro-economic way. All the above options are JULY expirations - that is, they go out NEXT WEEK. The VIX goes out in six days; the others at the end of the week like usual. There is usually quite a bit of activity around OpEx so I don't usually read TOO much into the SPY and Q bets. But the VIX is another matter, and when you couple that with the oddity seen in CFC today - 12,000 PUTs on the $30 strike, $6 out of the money with a week and change to go - something smells. Now it may be that its pure speculation and turns out to be a bad bet. If so the people buying these are going to find their wallets a LOT lighter come next weekend. Maybe. But this is odd enough to be worth a mention; for those VIX calls to be worth anything at all we need a selloff that will raise the hair on the back of your neck. If you look at February the VIX just barely cleared 20. This implies that we'd need to see either one day or consecutive days that reach into the 3-5% down range in order for those to be worth anything. Otherwise, they're kindling. That's a serious plunge and would take us right into the vicinity of the 200DMA on the SPX - around 1435. More seriously, if the 200 was to fracture the selling might not stop until we got back into the mid 1200s - last summer's lows! ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2007-07-12 00:43:40 by genesis
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Matt Posts: 3820 Incept: 2007-06-26 
Bothell, WA
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There also appears to be some a large amount of activity on the XLF ETF today. July - $38's - 25,245 Aug - $36's - 14,853 Sept - $35's - 22,933 ---------- "Market players should be buying things even though they are overvalued, Cramer advised. Although this may seem irresponsible, traditional market thinking is not going to get people anywhere right now."
2007-07-12 00:54:59
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Ocbear Posts: 1684 Incept: 2007-06-29
OC, CA Online
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If there are 6 days remaining 'til expiration and it would (likely) take a multi-day plunge for the VIX calls to be worth something, then the buyer is basically postulating a continuous drop starting tomorrow and not ending until after OpEx. That's hardcore.
2007-07-12 00:55:12
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Stormsailor1981 Posts: 8449 Incept: 2007-06-26
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how much money are we talking being wagered here?
2007-07-12 00:57:07
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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Oh no, one day when everything goes to hell in a handbasket - trips on the circuit breakers, etc - would do it. The problem with the VIX is that you can't exercise early and a one-day spike in it won't pay because you won't be able to sell at that price - the price will be the EXPECTED VIX at expiration. So unless you time it EXACTLY right you have to overshoot considerably to get anything. As an example right now I have 13 June CALLs open. They're worth $3.25. That's 16.25, but the VIX is at 16.64! Heh, whazzat? How come the discount? Because traders don't believe the VIX will be at 16.64 NEXT WEEK, that's why. This is the pitfall with European-style options and why for these to pay you either have to have the plunge early next week going right into expiration or it has to be a HUGE downstroke sometime in the next couple of days so the fear doesn't dissipate much at all. Those calls definitely got my attention. Oh, there were 80,000 AUGUST 20s on the VIX bought today too, more than the OI. Pretty wild. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 01:01:20
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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The CFC position was cheap $65k or so. The VIX July position was pretty cheap too - 85k contracts, but only 20 cents each. Not a lot, assuming they were bought. The August4s (40 days left) were 35 cents, and there were 80,000 of THOSE. Figure $4.4m for the whole shooting match on the VIX. The Q 48s are 22 cents, 66k of those; the 151 SPYs (53,000 of them) were a buck. This is real money being played with here..... ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 01:10:34
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Rmonical Posts: 2155 Incept: 2007-07-04
Omaha
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Anyone know what is the underlying symbol on the VIX on Ameritrade? They show symbols for: VIX BID INDEX $VWB.X CBOE VIX OFFER INDEX $VWA.X CBOE VIX Options Settlement Index $VRO.X NASDAQ ---------- The truth is out there
2007-07-12 01:26:32
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Shado Posts: 197 Incept: 2007-07-08
Idaho
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Use $VIX.X
2007-07-12 01:27:27
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Rmonical Posts: 2155 Incept: 2007-07-04
Omaha
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Ameritrade shows $VIX.X as a standard option. $30 has 194K open, 22.50 has 137K open and $25 has 132K open. Wow! ---------- The truth is out there
2007-07-12 01:33:30
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Synthetik Posts: 4359 Incept: 2007-06-26
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Etrade doesn't appear to have options on the VIX.
2007-07-12 01:35:28
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Sg Posts: 132 Incept: 2007-06-29
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The Bear Stearns hedge fund has to confess by Monday what the assets are worth. My bet is that the investors in the funds and the brokers that lent money to the fund are both screwed. This could be what triggers a massive unwind in the CDO,MBS, Housing market
2007-07-12 06:03:39
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Sg Posts: 132 Incept: 2007-06-29
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The Wall Street Journal reports turmoil in the subprime-mortgage market fanned out yesterday, hitting CDOs that are exposed to this struggling class of home loans. Moody's Investors Service said yesterday it may cut its credit ratings on slices of 91 CDOs, or about $5 bln of securities. It is a small percentage of the overall CDO market, but still an important development, because it is a signal that subprime fallout is rippling through financial markets to an important class of investments. In another sign of these ripple effects, Fitch Ratings released a report yesterday raising cautionary flags about the commercial real-estate market. It projected rising defaults in this sector after years of increasingly lax lending standards, which could hit bonds backed by commercial real-estate loans.
2007-07-12 06:04:44
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Sg Posts: 132 Incept: 2007-06-29
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The yen also rose as Bank of Japan Governor Toshihiko Fukui told reporters today weak economic growth won't determine the outcome of a rate-setting meeting next month. He also said Japanese companies are worried about excessive declines in the yen. Fukui spoke after the bank's policy board voted 8-1 to keep the overnight lending rate at 0.5 percent.
2007-07-12 06:07:57
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Yal Posts: 3544 Incept: 2007-06-27
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Karl, this is a very good catch. Now let's say mothing happend and all those expire worthless - who would be doing such a trade ?
2007-07-12 06:49:19
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Gatearrayed Posts: 594 Incept: 2007-06-27
Morristown, NJ
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"Time to pick up some SDS?" SKF may out perform, considering the nature of the fundamentals. Karl, curious if you've looked at the proshares ultra etf's. apparently they use derivatives trading to model the underlying sectors/indexes(?) and don't always track exactly.
2007-07-12 08:15:12
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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Yep; I have some SDS.....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 08:32:46
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Ruffcut Posts: 2187 Incept: 2007-07-07 Mushagain Online
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These CFC puts dropped in open interest from 28,000 to 17,000. Is it the original writer who bought them back???
---------- Support locally, and **** off globally!
2007-07-12 09:51:19
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Genesis Posts: 71403 Incept: 2007-06-26
KD^2
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Maybe, but it makes no sense to do it unless you fear that they'll go into the money. The VIX OI came off mildly but again - doesn't make sense to buy them back unless you fear that'll suddenly nail you. Anyone who wrote them and is this close to expiration would be an idiot to do that unless they think they're going to get reamed in another week. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-12 09:53:26
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Dashingdwl Posts: 4564 Incept: 2007-06-26
los angeles
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The sheeple are piling in the market. Look at this from Yahoo. All on the same opening page Yahoo Finance. Is it good “Retail Reposts Send…” market higher or “Lackluster Sales in June”? Which is it? Retail Reports Send Stocks Into Record Territory AP - Stocks surged Thursday, carrying the Dow Jones industrials into record territory as investors gleaned some positive consumer spending trends from retailers' generally sluggish June sales reports. · Alcan Finds a $38B White Knight AP · Stores Post Lackluster Sales in June AP · Trade Deficit Up Significantly AP · Wal-Mart June Same-Store Sales Climb AP · Market Overview: Thu 12:00 PM ET Briefing.com » More Top Stories... ---------- Think Green Tip.
2007-07-12 12:18:52
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Nasdevelopment Posts: 198 Incept: 2007-06-27 Nashville
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What about Middle East? Everybody's been predicting a war starting in Syria for next week. Syria has been massing at the border and warned its citizens overseas to be prepared for an eruption. Source: Debka.com Debka crashes my laptop's browser so I can't provide a link right now but it's on the front page. Syria is just one problem over there. I believe if Iran is bombed and the strait gets shut down VIX will break 45-50, 44 being the all time record since 1990. The theory is that if they do a surprise attack it will occur on a Friday night so the markets will be closed in the initial confusion. The USS Enterprise has transited the Suez canal yet so Iran is probably not going to happen before Op-Ex.
2007-07-12 14:09:29
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