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I think when the CEO of NFLX said his stock was overvalued, and it went from up 56 to down 17, it took many overvalued stocks down also.
wild day all around
At the price options were trading, I could never bring my self to buy either calls or puts.
So NFLX up $$56 so far.
I wouldn't want to short this market overnight. Calls yes, put no.
Seems like a bubble market though analyst say it's fairly valued. However bubble markets often go on for months longer than many think.
PCLN is the big gainer today, calls are up 800% from the bottom.
I will be very curious about NFLX, it should decline since it is up 20 today, but that's only a theory. Seems like when they go up like this on anticipation, they drop.
But not enough for me to want to buy NFLX puts, which are also expensive.
Vix is up 4%, not sure why.
Market is pretty overbought short term. Prices on options with earnings are very high. AMZN and NFLX I am thinking of.
Now sure how much we decline from here, not much but some.
TSLA has been outside of the BB since the price was 80.
Yes, I can see as well as everyone in the whole market can see, on a monthly chart nearly everything is very overbought.
I like month charts for the big picture, but they make it look like it was obvious to pick the day a decline started. It could be weeks away.
It looks like someone sold 2000 174 Oct put contracts at 0.04. I guess better 0.04 than nothing, but it is interesting. And someone did buy them, maybe they were actually short the contracts, who knows
Possible to drop back to 174 on the SPY, but I wouldn't want to bet on it. I can't trade big positions after this time anyway.
Playing the upside takes greater faith that the market will do what it looks like it might do.
And I am pretty convinced stocks are overvalued, so it makes if difficult for me to buy AMZN or NFLX, or TSLA.
But not anywhere near overvalued as they were in late 1999. So it's hard to tell how much more overvalued they will get.
Playing the down side in a bull market is very difficult, and really not so easy in a bear market.
Because in a bear market you often get short, very sharp rallies and the drops happen overnight with a gap down.
Like in a bull market you get short, very sharp drops, then gap ups happen often.
amzn looks likely to come down a bit more from 330, maybe 328 ?
Too late in the day for me to trade.
Profit taking, why should they?
Us normal people take profits, but it looks more like to me the big hedge funds have free rein for a couple of weeks to push their favorites as high as possible.
I understand the urge to buy a put thinking a small amount of profit taking might pay off. And it might happen like that, but it becomes a gamble with small payoff if you are right and a large loss if you are wrong.
I have done this all too often and it can drive you crazy. And if you do give up, that is all too often max pain for traders, then there is a little profit taking and the index does drop a little. Just enough of a drop to kick yourself for not waiting.
But either way, not a gamble that iMO is worth taking in the first place.
Of course, once you buy higher and are trying to average out, you get committed to a course of action that is actually fighting the market hoping for a little does side movement.
Better by far to never try this counter type of trade IMO.
Just my opinion.
If that is right about the taper, then not likely till after FEB.
Because there is another budget deal and debt limit coming.
So iMO the two windows are Nov and March.
They have to do it sooner or later. unless we really do want to become the banana republic.
It appears that keeping morg interest rates low and boosting the stock market is the main effect of taper.
Sold EBAY 51 puts at 46 from 18 yesterday. Nice percentage. I think from 50.50 ebay makes it back to 51.
It makes sense the FED starts to taper this year. I think in Nov makes the most sense.
Could be Dec
They likely kept the taper in effect because of the Gov shutdown. If they leave it in, they will have to leave it in till past Feb, since we will have another debt ceiling. More effective if they stop soon, see how it goes. They can always start it back up again.
IMO the market will drop quite a bit when taper stops.
It makes sense the FED starts to taper this year. I think in Nov makes the most sense.
Could be Dec
They likely kept the taper in effect because of the Gov shutdown. If they leave it in, they will have to leave it in till past Feb, since we will have another debt ceiling. More effective if they stop soon, see how it goes. They can always start it back up again.
IMP the market will drop quite a bit when taper stops.
Not me, but some huge gains in calls today, the 173 call bottomed at 0.07 and is now 0.60.
still hard to believe this type of trading.
BTW, CMG up 12.00 It might sell off mid Friday, but not much.
there isn't anything magical about my target of 173, For sure IMO we go over it but now so sure we sell off yet on the index.
I think we need more negative earnings results come. So maybe we do keep the bull longer.
I dislike CNBC. Now they say IBM is solely responsible for the loss in the dow while ignoring GS, unh
On the small selloff in the SPY, I saw 10,000 call position trade at 0.90 on the SPY 172 Oct call, also a large positions on the SPY 173 call at 0.29.
So I think we spike up today past 173, or at least Friday.
Bot EBAY Oct 51 puts at 0.18, I think EBAY will sell off again Friday to below 50.50. But not a lot of money if I am wrong.
I doubt EBAY will get to below 51 today.
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SPY, I would like to see SPY hit at least 173 or exceed the old high before putting it.
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CMG earnings play at 385 strike.
I used to play options on stocks before earnings.
I wouldn't buy either puts or calls on CMG, they are too expensive.
I expect CMG will drop, but I have no confidence it will drop to below 385. Based on past history it's possible, but this still being a bull market it isn't as likely.
IMO all these options are too expensive on this stock. With only one day left, you need to full drop to occur on Friday.
You could try and play the stock after the expected drop however big that is. Heck, maybe it will go up or stay even.
For instance, we see the SPY 166 put trade down to 0.06 today, right now it is 0.07 x 0.08. Why is someone bidding 0.07, IMO they sold those puts short when they were as high as 2.00 - 2.50.
These puts could trade up to 0.10 and still be worthless eventually.
I don't really know how put buying and subsequence selling affects trading.
Some might consider the puts insurance and let them expire
Some equity shorts short sell puts as "covered puts". I can see big buying of very cheap puts that have to expire worthless, IMO these are short puts.
Say I am short NFLX at 325, I could stay short and sell the 315 puts at 3.70 short against my short position. then buy them back ast some lower price, say right now at 176. Some might think the buying means more downside, but really it's profit taking. It might cause a small increase in the price puts, we often see this, then after the small rise they fall again to new lows. I often see this especially Thursday Friday.
Options are so complex it's hard to tell how they are hedged by big players.
I don't know, do you or anyone have an opinion of the effect of selling losing put or call positions on the market?
I was hoping for an all time high this week. Then a drop into Friday.
I looked into SWK declining 14%.
Problem is, AAP moved up 16% which is Advance Auto Parts.
So it's hard to call this a general earning problem. Though I think earnings are limited.
SCTY is up 12%, but I discount solar plays as often having large short positions, thin floats and not much stock available. So they tend to move on little real news.
Another sign of the top, these IPO coming out is normally a sign of a top coming. But in a week or several months, makes a big deal in options trading.
beer, pure shorts or buying some low level strike puts? It has a different affect, shorts have to cover driving the market up.
And todays rally, don't you think a lot of short covering protection stuff has been coming off?
I think it's likely the market breaks the old high of SPY 172.76.
That is another 1% rally from today. Do you see higher than 173 on a possible rally after a deal on debt is done? short term that is, like the first week.
I could see a spike up to 173, then a decline to 170 or whatever, then another move back up that could exceed 173 SPY. Hard to say if we get to GLD target, we could with beta stocks making the move while alpha stocks like NFLX lagging.
How do you see or others seeing this playing out?
I don't think there are many shorts in the market right now. No one was expecting a deal to fail, maybe a few shorts playing the possibility of more of a delay.
Fast money was discussing that the market would be a fade on the deal and rally. Likely the SPY makes a new high first.
Others thought maybe fade mid-November as earning got more obvious. Maybe a little of both, fade, rally again, fade again.
so maybe SPX 1730 - 1731 before a fade on the general market.
Earning aren't anything to get excited about, the future in 2014 looks to be negative with another debt ceiling and taper talk.
Question, when the FED did the surprise taper news, didn't we rally briefly then trade down? Not sure how much or if we did rally right after the news.
We could get another scare, but this deal will get done.
It could be a sell the news event.
we might gap up on Wed, futures turned around and are now up 11 on reports that the Senate is doing a last minute deal.
senator Reid had said during the day that a rating agency had told him that they were ready to downgrade the USA as early as tonight. Not sure if it was Fitch.
Fitch Puts U.S. On Credit Downgrade Watch
http://www.forbes.com/sites/maggiemcgrath/2013/10/15/fitch-puts-u-s-on-credit-downgrade-watch/
If nothing changes, maybe we are down 100 or 150 Dow points.
Crazy fast money time still thinks we get a 300 dow point rally on a budget deal.
We might, but from what level?
My normal problem is even if I take a lower strike, I take a very large position.
So the same risk if I do that.
I can buy only 10 contracts. But I think 70/30 we gap lower Wed and they buy the dip.
I hate using the market as any indication of what will happen in the future. Very very typical for a stock or a market to reach a new all time high right before tanking. Partly I think shorts are forced to cover by long holder so they can sell some part of it.
Any mutual funds only care about having a good Q, they don't care so much about what happens as long as they can capture customer funds.
Lets see how we open, my guess is about 1 handle down, maybe about 169.00.
But I am assuming the House passes another bill that they know the Senate will reject.
Really, depends on the Gov, but the current house bill as described won't fly in the Senate IMO.
So does it make sense to hold puts into Wed?
It seems to.
So they had the Senate podium on TV, but Reid just blew past it. Very funny, the market showing an empty podium.
well now we are close to breaking the low of the day.
I agree with this, the market has been dropping after it closes, dip buyers have been stepping in to bid it back up.
This got us up to our current recovery high.
But one day dip buyers won't buy.
Thanks, we might get that move up on the next Senate update. They are more likely to say something the market likes.
If most take their bids to buy out, it's hard to predict how far a market will drop.
vix futures are up 7% to 17.26.
Well, we broke down for a short time below that 170.41, how high do we need to go to break up?
DC wants Dow to drop 1,000: Dick Bove
(I was listing to this while he spoke, the CNBC analyst said he shouldn't be scaring people. It's plausible, it does seem that is what the Pres wanted.)
http://www.cnbc.com/id/101110588
Though on Aug 13, the same analyst said financial are the place to be.
Citigroup, Bank of America will rally 100%: Dick Bove
Dick Bove, the closely watched bank analyst and vice president of equity research at Rafferty Capital said that right now, investors should be buying financial stocks "very aggressively."
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=93023727
I don't know, it seems like we are due for another scary drop. 1000 points would be way beyond what I would expect. Unless we actually stopped paying anything that was noticeable. Like not paying interest on a short term 90 bill, that would likely get a 1000 point drop.
On the other hand, every other analyst says they are all in because the thought that Washington would let us get this close to default is unthinkable. Reminds of the Lehman days when Congress had a hard time deciding to bail out the market. They didn't act till we had a true panic.
I think it makes sense to buy some a small SPY put position to keep into the next day. Likely it will lose, but if this keeps up another day, we likely drop a couple of hundred Dow points.
Odds are still we get a deal in time to save the market. But the results of not doing this in time are dramatic.
BTW, we will break 170 in a gap down if Wall Street starts to panic.