Here Is The Stealthy Way Some Are Betting On A Market Crash
Credit markets have been warning of a looming crisis for months...
And as the cost of protecting against credit collapse has soared so the cost of protecting against equity downside (VIX) has started to awaken:
However, as we detailed previously, more than a few market participants have turned to deep out-of-the-money options to protect themselves against drastic downside (pushing the skew - the relative cost of crisis protection over 'normal' protection - to record highs).
And so, with the cost of protection so high, traders are looking for cheaper alternatives.
Since the Fed folded in September (under the same conditions that are playing out now), basically admitting it is terrified to raise rates and willing to backtrack due to market fragility, IceFarm Capital's Michael Green explains, it appears many market participants are piling into par Eurodollar calls:
[the chart shows the cumulative open interest in par calls on eurodollar futures contracts that expire in 2016 and 2017 - basically options on short-term interest rates with a strike price of zero, such that they pay out if the Fed takes rates negative]
When queried whether this is indeed a trade to bet on a market drop, Michael Green responded as follows:
[A reader] thought this might be an attempt by hedge funds to hedge out their exposure to rising interest rates very cheaply.
My initial idea was that it actually could be a bet on negative rates (if for some reason the Fed had to come back into the picture with QE4).
The bottom line: "Deep OTM puts on the S&P are very expensive while par ED calls are relatively cheap. In my view, we are that inflection point where the Fed is going to start to waffle…the bear market beckons and they will not be able to stick with their interest rate guidance. Of course, markets tend to frown on Central Bankers revealed as less than omniscient..."
And the market is already shifting to that opinion - as CME shows, no one trusts The Fed's dot-plots anymore:
Thus, the ED Par Calls are a direct proxy for The Fed's "Dow-Data-Dependent" policy (and given the surge in Open Interest, it seems more than a few agree).
h/t IceFarm Capital's Michael Green
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Lookin like a good bet.
Nikkei down 333.01!
http://www.allstocks.com/markets/World_Charts/Asian_Stock_Markets/asian_...
Yaddi-yadda, yankee!
https://www.youtube.com/watch?v=u06DpcFXc4U
What if the FED hiked rates because they expect a dollar collapse? Because why otherwise would the FED hike rates when the dollar is already strong because of global unwinding trades? That doesn’t make any sense at all. And I find the ‘FED wanting to keep credibility’ meme too thin.
Never ever want to love a woman ever again fuck the world! mgtow
This guy is just "talking his book".
Sum Ting Wong...Wi Tu Lo...Ho Lee Fuk...Bang Ding Ow...
https://www.youtube.com/watch?v=AmclgO6w0C0
This sounds like how the Democrats are televising there debates. You can't make this shit up people.
Still Report #531 Tonight's Dem Debate NOT on TV!
I rebuilt a cheap Chinese space heater earlier. Does that count? I even used cheap Chinese packing tape to re -seal the copper coil after I removed that resistor.
Well, it might be a good indication of where the fire actually started.
lol. The thing just quit. I just did some magic, and it's better then new. I outsmarted the product cycle?
Now just remember to superglue the main breaker in the on position...
The city's lights go out after someone trips over the electric tape mended outlet cord plugged into wallsocket
Simply Shock, I say. Simply Shocking!
The market crash will only be available on pay per view.
EBN - Channel Zero
Deep out-of-the-money options are the best way since the likelihood of the plunge protection team double crossing everyone is high.
They are not the same bet,
The NIRP is now correlated with a rising SPX. If the Fed ISN'T corrupt (fat chance), rates will rise AND the SPX will fall. The Fed is not "responding" to anything- the bet is simply how coirrupt they are.
But never forget that in 1987, the index and option market was closed 'by order'. Hedgers could not access their hedges, which took much insurance way. ask EF Hutton!
And, in dire circumstances, I'm not sure I'd trust OTC alternatives...
The simple truth is that the Chinese do not understand markets (pure and simple);
"China's head stock regulator Xiao Gang has offered to resign according to sources."
And those who call for free markets, are now hoping and praying that said Chinese will rig their market.
I found this. I guess she said NO.
"Interested in guy stuff that go bang, has a motor, fishing stuff, car stuff. Or cash 600obo". Then the following. "Two small diamonds missing on one side and can be easily replaced", "Only contact me if serious about buying. No low ball offers I'm already taking a loss."
Bad news son, you are stuck and you will never see $600. I have been there and done that in a previous century. I will be kind and offer $150 and you can keep the diamonds. It is worth it to ask how two diamonds went missing. I have a jeweler who can repair such things. Still, I do not like jewelry that has no function. I do like wristwatches and the wife has a few nice ones. I have kind of been dragging my feet for twelve years or so on an engagement ring for my wife.
All that ring is is scrap. Sorry buddy.
Preposterous! When I rob graves I call it a ring, and the best money can fetch.
One mans junket is another mans bling, so upgrade to antenna t.v. and save even more...
The Fed will go 3 times this year because of the coming pick-up into Q1.The CPI reading is going to gradually rebound which will back Yellon with her readjustment on gradually bringing interest rates upwards.I believe her premise is to attract investment into America as " the safe haven" in order to take money out of China,Europe and emerging markets.She understands the worry that investors have right now with those markets so she's taking advantage of this.Yes,Q4 was bad,but I think everything is becoming oversold,just like the USD/JPY cross.The world is very slowly getting used to the strong Dollar and will get used to a Dollar which will stay strong and gain strength at a slower rate from here.More stimulas from the ECB in different forms and the futher decline in oil with Iran coming on will continue to back Yellon on her interest rate program.I don't believe that the comparisons going back to while the U.S. was on the gold standard are accurate because of gold itself being to restrictive on the money supply during that time.The theme is to createinflation now at any cost but in away that attempts to control it agead of time which I believe will fail.
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