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BoomBustBlog's Armageddon Puts Become Fashionable At Goldman

Reggie Middleton's picture




 

Goldman's strategy desk just came out with a recommendation that mirrors my guidance to subscribers, a 3 weeks later, reference Armageddon Puts Versus Truly Busted CRE REITS: Looking for that 5x-10x ROI 

Yesterday, I received a couple of emails along the lines of the one displayed below...

"Hi Reggie,

Can you please put out any guidance on your Armageddon Puts for your lowly retail subscribers?

Thanks"

Well, I would like all to know that I'm not a typical mo-mo type trader. I'm a strategist. With that being said, I'm also not the one to look a strong risk/reward proposition in the face and do nothing. Below is a set of charts that should drive the mindset home.

SPX_puts

The actual chart with the series and strike of the puts can be found in the retail investor's discussion forum. I will also be available to chat there as well.

If one would have averaged small OTM put purchases with with ample time value attached over the last week and a half, one would have amassed a neet little collection of Armageddon puts that will start popping into the money today. They were cheap enough to throw away in the rallying market, and if things go awry (quite likely) three digit returns are virtually guaranteed. The following is Goldman's note from this morning...

Published 10:46 AM Thu Jun 21 2012 ________________________________

Noah Weisberger

Aleksandar Timcenko

We are recommending a short position in the S&P 500 index with a target of 1285 (roughly 5% below current levels) and a stop on a close above 1390. This morning, the Philly Fed print of -16.6, down sequentially and worse than expected, provides further evidence that weakness has extended into June. Although yesterday's FOMC delivered easing as expected, with a dovish statement, positive risk sentiment ahead of the FOMC had already buoyed markets. And we now think, with incremental US monetary policy on hold, the market will need to confront a deteriorating growth picture near term. The risk to our recommendation is that the data soon reverts to the 2-percent growth path our economists expect, that China growth turns, or that European policy-makers' rhetoric buoys risk sentiment further from here, with the upcoming end-of-June summit a focal point on this count.

The MSM headline barrage continues to confirm my multiple warnings on the increasingly ugly macro situation both here and abroad...

This is how the European banks were killed in the first place -  Dead Bank Deja Vu? How The Sovereigns Killed Their Banks & Why Nobody Realizes They're Dead. The ECB will become the world's largest insolvent hedge fund (sans the hedges, of course) if it is not so already...  .

More MSM headlines to drive the point home

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Fri, 06/22/2012 - 15:53 | 2552233 jumbo maverick
jumbo maverick's picture

"Spanish banks need up to $79 billion in capital..."
I read that, glanced over it saying $79B that's not too bad then I said too myself what the fuck?!!!!
I'm not in finances banking etc. and I casually just dismissed the $79B. Not only have they been shaping and manipulating the money sector they have also been doing the same to our minds.
$79B and for just a second there I treated that figure just as I would the bill for one of my monthly utilities.
If anyone doubts that things will work out this to me is all the proof needed that it is all going to end BAD.

Fri, 06/22/2012 - 14:32 | 2551926 steelhead23
steelhead23's picture

I enjoy Reggie's posts, but wish to offer a bit of caution.  Beware of buying puts far away from current prices.  The risk is that by the time you're in the money, your counterparties may be broke.  Clean your marks out a little at a time.

Fri, 06/22/2012 - 15:28 | 2552139 Reggie Middleton
Reggie Middleton's picture

You dont need for pits to go into the money to profit, you simply need their price to go up. OTM puts are often underpriced due to inefficient risk/reward analysis so if you can buy them for less than their worth on an underlying whose price you are sure will plummet than you have a lot going for you.

Sat, 06/23/2012 - 02:22 | 2553226 shuckster
shuckster's picture

Indeed - I've noticed that OTM puts don't go up in value until they get much closer to the money, in which case their price shoots up rapidly. I don't have a program to graph the movements of options, so this is speculation. However, you can always sell the put instead of exercising it when it gets near the money

Fri, 06/22/2012 - 18:31 | 2552668 steelhead23
steelhead23's picture

Thanks for your reply.  I do not play options (should, but don't) so I don't truly understand the market.  I assumed they had to reach your strike price before they were valuable.  My bad.  Thanks Reggie.

Fri, 06/22/2012 - 12:02 | 2551374 malikai
malikai's picture

Always nice to know you're on the same side of the trade as Goldman, however fucked that may sound..

Fri, 06/22/2012 - 11:19 | 2551147 Spirit Of Truth
Spirit Of Truth's picture

Elliott Wave pattern indicates we just entered a historic down wave:

http://thespiritoftruth.blogspot.com/2012/06/elliott-wave-update.html

Fri, 06/22/2012 - 12:45 | 2551571 Jack Sheet
Jack Sheet's picture

when Elliott looks at Uranus things must be getting serious

Fri, 06/22/2012 - 15:21 | 2552104 lamont cranston
lamont cranston's picture

Yeah, and Pluto's involved too. Someone warn Mickey Mouse, quick, before his dog gets cornholed. 

Fri, 06/22/2012 - 10:51 | 2550986 q99x2
q99x2's picture

BTFD

Fri, 06/22/2012 - 10:48 | 2550967 diogeneslaertius
diogeneslaertius's picture

next they will pay a large sum to have articles written qabout how bad you are

 

you clearly Nailed the macro phenomenology and were even cool enough to spell it out for people

 

this broadside at the ECB is fkin awesome and you continue to win admirers here through such renegade, straight-up truth

 

thank you reggie for having huge balls and the courage to lay it on the line like this again and again

 

sadly my only cavaet is to assert, as I have elsewhere and numerous times, that the ECB is designed to create these problems, its a part of the NWO banking cartel's economic black-hole machine or Economic Deathstar

 

ORDO AB CHAO and all that jazz

Fri, 06/22/2012 - 10:43 | 2550945 Madcow
Madcow's picture

smart way to put a floor under market.  5% down is better than 50% down -

Fri, 06/22/2012 - 08:39 | 2550368 johnQpublic
johnQpublic's picture

why is there an add for that asshole jim cramer on this site?

and on a page for reggie of all people

Fri, 06/22/2012 - 09:15 | 2550480 Popo
Popo's picture

And why are there so many ads for Viagra and Russian escorts?
Oh... Wait.... Never mind.

Fri, 06/22/2012 - 12:46 | 2551581 Jack Sheet
Jack Sheet's picture

Just never write "fuck" in a ZH comment

Fri, 06/22/2012 - 11:34 | 2551242 PartysOver
PartysOver's picture

Big Brother Google has your number.  

Been doing any Google searches lately?  LOL

Funny how the other day I was doing a lot of Google searches for Gold Bullion dealers and the like.  Now every website I go to today has ads for Gold Billion dealers.  Primarily Merit Financial.   Big Brother has been peeking in my computer.

 

Fri, 06/22/2012 - 11:41 | 2551280 NotApplicable
NotApplicable's picture

Not your computer, but theirs. Google provides ads to you based on your searches on their site.

To avoid this, use a google proxy like this one.

www.startpage.com

Fri, 06/22/2012 - 18:59 | 2552736 Hannibal
Hannibal's picture

Yep, plus startpage and ixquick do not record ip addresses, also:

www.donottrackplus.com

www.adblockplus.org/eng

Fri, 06/22/2012 - 11:12 | 2551114 Jack Sheet
Jack Sheet's picture

Even worse - Warren Phuckett's disgustingly ugly mug, been here for months and won' t go away. No adblockers for iPad

Fri, 06/22/2012 - 10:49 | 2550973 diogeneslaertius
diogeneslaertius's picture

right?

 

i mean wtf i come here and the screen is literally plastered with ads for 40 year old scotch and ammunition

 

what is going on here

Fri, 06/22/2012 - 11:35 | 2551248 PartysOver
PartysOver's picture

Google peeking in your computer too.  LOL

Fri, 06/22/2012 - 17:15 | 2552512 Divine Wind
Divine Wind's picture

I keep getting those Microsoft ads with that braindead gal with a disappointed look on her face.

She creeps me out.

Fri, 06/22/2012 - 19:50 | 2552830 Manthong
Manthong's picture

Can’t imagine how these ads get here..

Fri, 06/22/2012 - 08:48 | 2550397 Robslob
Robslob's picture

Probably because you visit his site or others at the same entity...Sorry Q...

Fri, 06/22/2012 - 08:37 | 2550356 covert
covert's picture

goldman has no credibility.

http://covert.ias3.com/expose/

Fri, 06/22/2012 - 14:17 | 2551858 Diogenes
Diogenes's picture

You are supposed to fade Goldman's tips. If you did, you would be right about 19 times out of 20.

Like the NZ currency deal they bailed on yesterday (with a loss).

Do NOT follow this link or you will be banned from the site!