Deep In the Money

[prado]

BGZ Calls: On Friday I started building a bearish position on the market by buying Nov BGZ Calls. I personally believe that the Fed's proposed QE2 is already factored into the market and we are on the brink of seeing a major sell-off. Next week will be interesting as we are already seeing a sell-off in the financial sector as well as the semiconductor sector. I believe that these are catalysts that will ultimately bring down the market as a whole. On that note, I will be looking to place puts on both of those sectors on Monday.

I will also be closely following the dollar. There seems to be a consensus that the dollar will continue to fall against the Euro, but I disagree. I believe that he dollar is extremely oversold and will jump back against the Euro. This goes hand in hand with my belief that the market is on the verge of seeing a major sell-off, as an increasing dollar should also help bring the market down.

This is what I will be watching for Monday. If the market continues up for the near term contrary to my belief, I will use my BGZ calls as a hedge while I play the uptrend.

GLTA.