Zeev's Turnips Patch-No Politics (ZEEV)

[sberg]

Alohamart,
Thanks for the interesting options education. One missing piece of info is the stock holdings of whoever is doing the put ratio backspread. I was wondering if this approach could be used to hedge event risk. Lets say you are a large institution who expects a cyclical bull market after Zeevs current nassacre runs the predicted course. Many secular bear markets have cyclical bull runs of 50% so it would be reasonable at this point to begin positioning for a cyclical bull run. The last bear market rally ended almost to the day with the congressional election. So by that precedent it would not be unreasonable for an institution to try to position itself for a cyclical bull presidential cycle run by accumulating stock at Zeev's next major bottom. Yet, I think most here would agree that even if Zeev one day puts the bull suit back on event risk will be at unprecedented levels post Iraq. If I understand correctly, the P R backspread would give one almost total protection at little cost against a sharp downward move if one had an overall upward bias.

Just a thought. Can the PR backspread be used to cheaply hedge event risk.