Monday, July 20, 2009

Time To Go All In Short?

I'm strongly considering buying some more FAZ tomorrow.

But on second thought, perhaps I should just buy January puts on WFC, BAC, JPM, and GS????

The January 20 puts on Wells Fargo look ridiculously cheap to me at 1.65.

Remember that stock traded down to 7.80 merely four months ago. What exactly has changed since then?

One probably has a better chance of *making 5 times their money* on those puts than with FAZ....

Bank of America's January 10 puts also look enticing at 1.05.


Paul Mitchell said...

Dude, seriously is this happening just because folks are hoarding cash and putting it in savings?

Or is it just another crazy time?

OSR said...

The VIX and put/call ratios are way down. Q2 earnings are generally better than expected and the SP500 is up over 5% in the last week alone. CNBC, Bloomberg, and Forbes all run daily stories about the recession being over and a return to normalcy. Thus, as far as I can tell, it's time to short the world.

I've been buying Dec/Jan puts and put spreads at excellent prices. I won't touch the major banks because of more potential intervention, but there are a lot of stocks that have increased 25% solely on hype.

Taylor Conant said...


Do it... your foolish self-optimism is my only hope for recovering on my FAZed out account!

ps. If we think this crash is coming, should I liquidate my commodity-based overseas equities portfolio (secular peak within this bear market)?

CaptiousNut said...


I have no idea what is going on. The market rally is surreal.


I certainly respect the fear of trading the too-big-to-fail banks.

I just have a hard time not shorting thoroughly bankrupt institutions. Remember Fannie, Freddie, AIG all got bailed out and still went to zero.


I'm not sure about commodities. Will they crash? Have they already?

What about the dollar and its effect on grains, energy, and metals????

Too hard for me to decipher.