Unfortunately we will have to cut back our regularly scheduled overcoverage of French anchoring talent in light of .....actual interesting developments in the options marts.
FNM and FRE options insane on any rationale "percentage of the stock you have to pay for the options" metric. But with the stocks so low, the eye-popping ability has limits.
Not so in SKF.
The July 180-190 strangle changing hands for a cool $22.
Yes, this has 4.5 days to go, there's no weekend uncertainty to deal with, and if nothing else, we have some light shed on the Fed's path. And neither side of this play is in the money right this second. You can sell this and *win* if the SKF goes out anywhere between $158 and $212.
Not doing that trade, just trying to highlight the truly incredible magnitude of nervousness right now. Forget the relative complacency of VIX and VXO and friends. Fear is alive and well.
.....and in the interests of follow-up, out of my FNM. If I annualize that investment, I have huge returns. Another way to look at it is I can fill up the Crossover AND get an iced coffee this afternoon on Hank and Ben, lol. In other words, the PPT needs to get more mojo.
2 comments:
When I took my options course in B-School oh those many years ago, we had a professional trader who came in and talked to the class.
He had many bon mots worth savoring, but one I remember is this.
"Never...and I mean NEVER...annualize your short term returns for it will deceive you into oblivion."
Sounds, Adam, like you did for a moment, and then shook yourself out of that stupor.
yeah, I was just kidding around, everyone's always looking at options like that "earn X % if assigned 6 month's from now" angle.
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