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SKEWered

Tyler Durden's picture




 

While stocks are surging in nominal terms, the options markets are increasingly pricing in greater and greater downside risk concerns. Currently, we are at record levels for this so-called Skew (meaning the price of downside protection outweighs the cost of upside protection by the most ever). Trade accordingly.

 

and if you are looking for 'cheap' hedges, here is Goldman's ranking of global across asset class hedge relative costs:

Chart: Bloomberg

 

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Mon, 03/19/2012 - 14:07 | 2270352 Gubbmint Cheese
Gubbmint Cheese's picture

downside? I read a book about that - I guess in the old days the stock market actually used to go down.. thank god we fixed that!

 

Mon, 03/19/2012 - 14:12 | 2270370 Marge N. Callz
Marge N. Callz's picture

I remember from economics something called a business cycle too where there were actually periods of contraction and expansion.  Can you imagine, contraction?  I'm sure in economics now when talking about periods of contraction, the books just say "print more money."

Mon, 03/19/2012 - 14:41 | 2270468 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

That thing called "contraction" is happening. Back in the day a spade was a spade. Now it is propaganda. That unemployment check is really payment for unemployment work not obviously seen.

Mon, 03/19/2012 - 15:15 | 2270587 UBIGDummy
UBIGDummy's picture

So this is VERY Bullish,    

 

For FAZ?

Mon, 03/19/2012 - 14:14 | 2270374 Zeff
Zeff's picture

+1

Mon, 03/19/2012 - 14:26 | 2270416 Howdan
Howdan's picture

Hahaha Gubbmint I love your nostalgia. Ahhh yes the good old days. Well I'm afraid the "D-Word" just isn't allowed anymore now that our dear leaders have outlawed gravity and made anyone who questions their incompetence, and I quote "a (financial) terrorist".

My fingers are severly burnt now from attempting to short this absurd market and now I'm wary. Very, very wary about trying to short again.

 

Mon, 03/19/2012 - 14:32 | 2270431 slaughterer
slaughterer's picture

along same lines as article above: TVIX is not issuing new shares. 

Mon, 03/19/2012 - 18:26 | 2271117 lineskis
lineskis's picture

Yeah, it's been almost a month or so. But there's still UVXY, which BTW gained in volume after CS announced TVIX stopped issuing new shares...

Mon, 03/19/2012 - 21:54 | 2271740 skidrow
skidrow's picture

TVIX rips.. that's unfortunate

Mon, 03/19/2012 - 14:38 | 2270456 BandGap
BandGap's picture

Can't happened because know one knows where the bottom is.  This has been pumped up artificially for so long that it would be akin to an avalanche. 

Mon, 03/19/2012 - 15:01 | 2270535 Vince Clortho
Vince Clortho's picture

Yes, the man who saved the world economy fixed it all.

He did it for all of us.

Go Long.  Stay Long.  20+% returns for ever.

Mon, 03/19/2012 - 14:08 | 2270353 ekm
ekm's picture

 

Bear stearns

Lehman

MF Global

Who's next? - Meryll Lynch?

 

Mon, 03/19/2012 - 14:10 | 2270361 GeneMarchbanks
GeneMarchbanks's picture

If only they were still around, what you meant was BAC and no, it won't be them.

 

Mon, 03/19/2012 - 14:24 | 2270412 ekm
ekm's picture

Well, it can't be Cantor Fitz. It can't be the non american PDs.

Jefferies or Merryll Lynch. These are the weakest.

On Fed's website, Bank of America is not mentioned, just Merryll Lynch etc.

Mon, 03/19/2012 - 15:49 | 2270729 JPM Hater001
JPM Hater001's picture

My money is still on HSBC...Well, technically its shorting the SPX but my money would be on HSBC if a 10% drop = $14,000 of gain.

Mon, 03/19/2012 - 16:02 | 2270787 ekm
ekm's picture

I wish you good luck, but I don't think the Fed could force the non USA based PDs to buy up the NYSE. However, you never know.

Mon, 03/19/2012 - 14:31 | 2270428 slaughterer
slaughterer's picture

ML, nah...

Citigroup, Regions Financial, and Sun Trust---a nice trifecta of doom. 

Mon, 03/19/2012 - 14:42 | 2270470 ekm
ekm's picture

Only Citigroup is a primary dealer.

Are you saying C is next?

Mon, 03/19/2012 - 15:22 | 2270619 slaughterer
slaughterer's picture

C is a disaster.

Mon, 03/19/2012 - 15:30 | 2270652 ekm
ekm's picture

Why not ML? I don't know whether they are allowed to buy BAC, but who is freaking buying a worthless BAC? (Wow price just collapsed right now...wowo wowo wowo).

I think ML is buying BAC and getting stuffed and stuck with it.

Mon, 03/19/2012 - 15:53 | 2270755 JPM Hater001
JPM Hater001's picture

What am I missing...

As of 2011 HSBC was the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine.

Sounds like a big enough target with plenty of exposure to Europe, China, US, and 100 million customers.

Dare I say there might be a counter party risk in there somewhere?

Mon, 03/19/2012 - 14:08 | 2270356 Ese Pinche
Ese Pinche's picture

up we go.. cant stop this manipulated addict hooker from getting her "highs"..

Mon, 03/19/2012 - 14:10 | 2270360 JeremyWS
JeremyWS's picture

Don't worry any downtick will be trampled on by any QE3 rumour, no thta you have no fear BUY BUY BUY!!!

Mon, 03/19/2012 - 14:11 | 2270366 Dr. Engali
Dr. Engali's picture

There's a lot of leverage in this market trying to suck in retail. Somebody is going to get a margin call soon. My bet is they will have  strong position in Apple.

Mon, 03/19/2012 - 14:45 | 2270483 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Retail is jobless, broke and homeless. That is not exactly the ideal conditions for stock investing.

Mon, 03/19/2012 - 15:04 | 2270550 ekm
ekm's picture

I would also add that their liabilities exceed their assets do to ultra low house prices.

Mon, 03/19/2012 - 14:11 | 2270367 asteroids
asteroids's picture

The bears refuse to step up to the plate having had their faces ripped off repeatedly. I don't blame them one bit. You just can't short this market. No one is willing to sell.

Mon, 03/19/2012 - 14:14 | 2270376 Cdad
Cdad's picture

No one is willing to sell.

This statement may be true.  However, what is clearly true is that no one is willing to buy [volume].  One statement renders the other statement utterly useless.

And the truth is, of course, that there is no market to buy or sell...which is why capital has fled...far far away from equities.

Mon, 03/19/2012 - 14:35 | 2270447 Village Smithy
Village Smithy's picture

Right now the PDs have a deal going on: Using the Feds' money it's, I buy,then you buy then they buy, then I buy, then you buy.. and so on spiralling upward. The idea was that eventually retail would come in a buy the shit and take it off their hands for big profit. Ooops! No retail calvary came. New strategy: Using the Feds' money, I buy, then you buy...until someone blinks. Watch the movie "Margin Call" (bareable..just) for a hint as to who will be the first to cut and run. 

Mon, 03/19/2012 - 14:57 | 2270523 MFL8240
MFL8240's picture

No sir, you are dead wrong.  The Federal Reserve is pumping billions into this sham, no one is buying except them.  Get the facts straight.

Mon, 03/19/2012 - 15:06 | 2270556 ekm
ekm's picture

Amen.

Mon, 03/19/2012 - 22:19 | 2271820 HD
HD's picture

Smithy is correct - the fed doesn't buy directly, everything is filtered through the primary dealers. The Fed can print til doomsday but has a hell of a time getting the money to flow exactly where it wants. Ol' Ben would just love to buy SPY directly and be done with it...

 

Tue, 03/20/2012 - 00:17 | 2272198 Excursionist
Excursionist's picture

Long / short guys will always have to be willing to sell something..  I'd get my nuts cut off and served for lunch if I didn't have downside hedges on.

Mon, 03/19/2012 - 14:12 | 2270371 CryingBear
CryingBear's picture

looks like h&s

 

Mon, 03/19/2012 - 14:37 | 2270455 rubearish10
rubearish10's picture

6 unhappy faces.

Mon, 03/19/2012 - 14:12 | 2270372 Pairadimes
Pairadimes's picture

Bullish prescription anxiety drugs.

Mon, 03/19/2012 - 14:15 | 2270380 LawsofPhysics
LawsofPhysics's picture

More technical analysis, a lot of comedy on ZH today, nice.

Mon, 03/19/2012 - 14:32 | 2270430 Tsar Pointless
Tsar Pointless's picture

I know, right?

"A bull, a bear, and a Central Banker walk into a printer's shop..."

Mon, 03/19/2012 - 14:17 | 2270385 Everybodys All ...
Everybodys All American's picture

irrational? exuberant? check and check.

Mon, 03/19/2012 - 14:17 | 2270386 WoodMizer
WoodMizer's picture

Ameritrade is running out of suckers, oops, customers.

Mon, 03/19/2012 - 14:35 | 2270442 mt paul
mt paul's picture

more muppets...

Mon, 03/19/2012 - 14:24 | 2270387 q99x2
q99x2's picture

Get your traveler's insurance and short Citi.

They had to jack the EURO a lot to get the bump up. Apple didn't do it.

Mon, 03/19/2012 - 14:17 | 2270390 Fidel Sarcastro
Fidel Sarcastro's picture

Down?  As in a drop in prices?  AAAAAhahahahahahaaaaaaaaaa!!  Sorry folks, that's just not allowed any longer.  All hail the Central Planning masters at work.

Mon, 03/19/2012 - 14:22 | 2270408 slaughterer
slaughterer's picture

Just got a text from Robo:

"Down?  When ADBE, TIF, ORCL, NKE and (my "cult retail" favorite) LULU are supposed to report blow-out earnings this week?" 

Mon, 03/19/2012 - 14:40 | 2270463 SheepDog-One
SheepDog-One's picture

Thats just what they want everyone to think....conditioning the sheeple to just stand their and chew their cud and believe nothing bad will happen ever again is easy as pie.

Mon, 03/19/2012 - 15:03 | 2270538 ekm
ekm's picture

Amen

Only that this time even if the sheeple get convinced, since their liabilities are higher than assets (assets = house prices), they can't be suckered.

Mon, 03/19/2012 - 14:19 | 2270396 Moneyswirth
Moneyswirth's picture

Don't fight the tape.

The trend is your friend.

This time it's different.

Is this a haiku?

Mon, 03/19/2012 - 14:37 | 2270443 LowProfile
LowProfile's picture

 

 

 

Fight the tape and lose

Bet the tape and think you win

Smart money bought gold

Mon, 03/19/2012 - 14:21 | 2270406 Quizzical
Quizzical's picture

Bullish!

Mon, 03/19/2012 - 14:26 | 2270414 Die Weiße Rose
Die Weiße Rose's picture

US National Debt $15,540,923,000,000 trillion (ticking up $10,000 per 1 second)

US Gross Domestic Product $15,074,231,000,000 trillion (ticking up only $5,000 per 1 second, half speed)

US Total National Assets $83,034,598,000,000 trillion (ticking up $20,000 per 1 second, double speed)

 

http://www.usdebtclock.org/

must be all the Apple I-Pads that makes US National Assets go up so fast...

what else could it possibly be ?

wr;)

Mon, 03/19/2012 - 14:41 | 2270467 SheepDog-One
SheepDog-One's picture

WOW that makes me depressed realizing I have only about 2 seconds worth of savings.

Mon, 03/19/2012 - 14:28 | 2270420 firstdivision
firstdivision's picture

Look at how steep the long end is getting.  That will sure spark a home buying rally....oh and save the US budget problems....

Mon, 03/19/2012 - 14:29 | 2270423 monopoly
monopoly's picture

Yes, back in the day, when you could trade a market. Ahhh, memories are so sweet.

Mon, 03/19/2012 - 14:29 | 2270424 Cdad
Cdad's picture

Ok...official...the BlowHorn [CNBC] is no more listenable via stream than it is watchable on a television.  Between this morning's AAPL orgy and J. Cramer-gasms, and this afternoon's treat of hearing T. Mathisen eating potato chips on mic, and then later talking about "sex in a box"...it is now official that any exposure at all to this bankrupt network is hazardous to your health.

 

Mon, 03/19/2012 - 14:33 | 2270436 Tsar Pointless
Tsar Pointless's picture

You STILL watch CNBS?

I turned it off in 2009 and never looked back.

Mon, 03/19/2012 - 15:47 | 2270723 Moneyswirth
Moneyswirth's picture

Sucks to be you.  You're missing some great cleavage. 

Mon, 03/19/2012 - 14:30 | 2270425 LawsofPhysics
LawsofPhysics's picture

Anyone have a read on what to expect when earnings are reported shortly?  More "mark to fantasy" and "liabilities are now assets" accounting?

Mon, 03/19/2012 - 14:45 | 2270488 mt paul
mt paul's picture

mark 

to muppet

Mon, 03/19/2012 - 15:26 | 2270632 hooligan2009
hooligan2009's picture

heh..polar bear humour!

Mon, 03/19/2012 - 14:31 | 2270427 dwdollar
dwdollar's picture

What could go wrong???

Mon, 03/19/2012 - 14:32 | 2270429 monopoly
monopoly's picture

I turned it off 2 years ago. Why anyone here watches that bullshit is beyond me. Don't get it. Nothing but propaganda from idiots that barely know how to buy or sell a stock. They are there for "personality", not intelligence. 

Come on guys. Turn it off.

Mon, 03/19/2012 - 14:33 | 2270433 Dapper Dan
Dapper Dan's picture

OT:  Plus a great video!

From Counterpunch. http://www.counterpunch.org/2012/03/19/goldman-sachs-trader-finds-a-new-occupy-tactic/

March 19, 2012
 8.1K Wake Up Congress; Before the Next Collapse Goldman Sachs’ Trader Finds a New Occupy Tactic by PAM MARTENS

In the last decade, Wall Street has evolved from predator to organized crime with a speed dial to Washington. Instead of Washington reforming Wall Street, it has seduced and corrupted Washington. It didn’t have to come to this.

Since at least 1989, incredibly talented, hardworking men and women have been leaving high paying positions at major Wall Street institutions and alerting the public in meticulously crafted, first-hand narratives released by venerable publishing houses that Wall Street wants to rip off its clients’ faces.

On Wednesday, March 14, Greg Smith – following in the proud lineage of Micheal Lewis, Frank Partnoy and Nomi Prins – simply bypassed the tedious route of galleys and nit-picking editors and went straight to the OpEd page of the New York Times with his resignation letter decrying Goldman Sachs for abusing its clients. “It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail,” Smith said. He called the current environment at Goldman “as toxic and destructive as I have ever seen it.”

Each day since then, corporate media pundits have frenetically struggled to characterize the motives of this 33-year old earning $500,000 a year. The defining moment in this debate came in this video where Evan Newmark, Wall Street Journal columnist and a former Managing Director of Goldman Sachs, asks MarketWatch writer Jon Friedman the following question in reference to the 3 million page hits Smith’s OpEd had received on line: “Do you think Greg Smith will have an easy time monetizing his popularity?” I had to play the tape three times to be sure I wasn’t hallucinating.

A young man throws both caution and his career to the wind in a virtual scream for the leadership of this country to wake up to what’s still transpiring on Wall Street and a journalist for the newspaper covering Wall Street can only relate the selfless act to dollar signs. The Wall Street culture of greed is metastasizing into the larger society at a gut churning pace. The assumption by Newmark is that there is no one earning $500,000 who might love his country, its future, the next generation’s future more than his love of money.

Mon, 03/19/2012 - 14:37 | 2270439 Stoploss
Stoploss's picture

Anyone catch that little disruption in the emini a couple mins ago?  I saw a 10 point diff pop up to the red side. Fortunately, it was caught. God forbid the SOB goes down today.

 

1407 down to 1397, then back to 1414.  Fukin motion sickness..

Mon, 03/19/2012 - 14:44 | 2270484 mt paul
mt paul's picture

muppets

have fat fingers

Mon, 03/19/2012 - 14:46 | 2270491 rubearish10
rubearish10's picture

You mean God forbid it ever goes down again! Feels like perhaps many of us would like to think we're in the eye of a hurricane but maybe not. That would be unopportunistic!

Mon, 03/19/2012 - 15:24 | 2270627 slaughterer
slaughterer's picture

Caught that blip as well.  Move on, does not mean anything.

Mon, 03/19/2012 - 14:35 | 2270444 nobusiness
nobusiness's picture

This market can really explode to the upside with quarter end window dressing.

Mon, 03/19/2012 - 14:41 | 2270466 Stoploss
Stoploss's picture

      .  .

       0

Mon, 03/19/2012 - 14:40 | 2270464 rubearish10
rubearish10's picture

This post makes me certainly not feel alone.

Mon, 03/19/2012 - 14:42 | 2270473 nestle
nestle's picture

only pussies hedge!!

ALL IN for S&P2000 !!

Mon, 03/19/2012 - 14:43 | 2270479 mt paul
mt paul's picture

muppets 

in the hedges..

Mon, 03/19/2012 - 15:05 | 2270552 Vince Clortho
Vince Clortho's picture

When I was very young, I told my friends that the treasury could print money and give it to everyone, that no one had to be poor - we could all be millionaires.

The last decade has verified that I should have started my own school of economics.

Mon, 03/19/2012 - 17:28 | 2271020 Matt
Matt's picture

What good is it to be a millionaire, if a hamburger costs $15 million?

http://www.creators.com/opinion/walter-williams/africa-a-tragic-continent.html

Mon, 03/19/2012 - 15:17 | 2270566 ebworthen
ebworthen's picture

"Where did all the Humans go!?!?

What about our poker game?

I'm a fair dealer, really I am.

Solitaire isn't nearly as much fun."

http://community.digitalmediaacademy.org/wp-content/uploads/2011/10/T-800-terminator.png

Mon, 03/19/2012 - 15:50 | 2270733 slewie the pi-rat
slewie the pi-rat's picture

what is a 95% put, tyler?

an out-of the-money with a strike 95% of the underlying or more?

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