Betting on a Crash With Options
- Thread starter louisjxn
- Start date
Very interesting observation. Thanks for sharing. Seemed like something bad happened every 8-10 years.
All major currency issuers had/are printing money like mad. Something bad is going to happen I just don't know what when or where. It could end in inflation, then asset bubbles, then a crash. Or it could end in a crash right away due to some bad trigger like China or oil or war/terrorism. The outcome for 2016 will be very different depending on which scenario prevails.
What do you think will happen?
Very interesting observation. Thanks for sharing. Seemed like something bad happened every 8-10 years.
All major currency issuers had/are printing money like mad. Something bad is going to happen I just don't know what when or where. It could end in inflation, then asset bubbles, then a crash. Or it could end in a crash right away due to some bad trigger like China or oil or war/terrorism. The outcome for 2016 will be very different depending on which scenario prevails.
What do you think will happen?
The second term election stats may be due to uncertainty of regime change after the public is used to one guy for 8 years? I don't really know for sure, but thought it was an interesting stat.
The answer has always been print more money. So in the future I think they will print more money. Now could SP500 go to 1,000? Sure. Then below that they'd probably do another massive stimulus.
China-
First they open the stock market floodgates and get millions of retail to start buying stocks causing a huge bubble, they have ghost cities, something like 350% GDP. They have out printed the fed on a massive scale. They had circuit breakers now they don't. They said last sunday that the selling ban would be lifted and by friday they were retracting that statement and saying it'll be longer
For a hedge against the fiat system and because I like control over my own money, I've been in metals since 08 , I like cryptocurrency because it's the ultimate free market , decentralized, can't be halted, printed.
Any money I have in a bank or futures brokerage I assume could be gone overnight . I don't trust the current system because at some point in my life I know there will be another 1929 like depression or a big reset due to all the fiat funny money out there. There is something like 200+ paper claims per 1 oz of gold.
So I keep as little as possible in banks and my brokerage accounts.
At this very moment, for my futures trading I'm bearish on Russell 2k due to the weekly monthly chart's looking like a big HnS, Russell also has had a ridiculous PE vs other indexes. China seems to be blowing up right now too. Now could I be stoped out next week , sure. That's why I use price to get me out of if my theory is wrong in leveraged futures trading.
Here is that chart of Russell.
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Just think of it like insurance.
Options on events that are very unlikely to happen are sold very cheaply by option writers. If you buy a put option well out of the money with little time to expiration you can pick it up for a couple pennies. If a huge 7 sigma crash in world stock markets occurs your options can skyrocket to multiple dollars in value 10k can turn into financial freedom.
Taleb has said that he made 97% of his lifetime wealth on a single day during the crash of 1987 something around $35m from otm options.
'.,it never rains,but it pours.,.'
(that saying that things usually happen all at once, or within close proximity -- can be good or bad)
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syswizard hit it on the head. The premiums are already through the roof. Better to wait for volatility crush.
Betting on an all out crash isn't a very smart thing to do though since nobody can time the markets with any accuracy at all.
So what you want to do is find some option strategies that will profit from a decline, but can be managed if a decline doesn't happen.
Out of the money Put Calendars for example can be used to take a generally bearish market position, but don't get slaughtered if markets chop around without doing a whole lot. Down bias broken wing butterflies / Iron condors or bear call spreads can work well too.
The key to making money is to take as many SMART trades as you can, as consistently as you can, for as long as you can, and let statistics and probabilities take care of the rest.
So what you want to do is find some option strategies that will profit from a decline, but can be managed if a decline doesn't happen.
Out of the money Put Calendars for example can be used to take a generally bearish market position, but don't get slaughtered if markets chop around without doing a whole lot. Down bias broken wing butterflies / Iron condors or bear call spreads can work well too.
The key to making money is to take as many SMART trades as you can, as consistently as you can, for as long as you can, and let statistics and probabilities take care of the rest.