Did you see this?
Huh? Was today's spike in put option buying a case of long equity hedging venturing to put a floor under the bid, or has some prospective disaster suddenly gained probability?
Enter Anglo Irish Bank. Apparently things in Europe are coming to a boil again.
Still, given today's slight pullback on relatively thin volume following last week's lift — this amidst technical reason to expect a brief period levitating — and with September options expiration but eight trading days away ... well, today's surge in put option buying probably bought as much cheap insurance as might be needed for five or so days more levitating, as well as prepare for what appears to be a nasty storm blowing in from the Emerald Island.
Whether some further lift higher lies ahead in levitation or something else leaving intact last Friday's high is no more clearer today. Which ever way the wind blows we probably are some days from the big show down hard.
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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.
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