OK, some people call me a "Maverick". It may be because "Top Gun" was one of the first movies I ever saw with my wife.
Or maybe it was "Hot Shots", not sure, it was a long time ago.
Anyway, here's some Maverick-y ideas to play with this market.
Buy nearish term calls or puts, or both, and trade stock against it. Your risk is that you're buying volatility at the highs, you're reward is the market just won't stop plowing around.
A little squeemish with that one? Me too, not buying much of anything in options any more. My position now is like one big OTM call, with a couple puts left as a hedge.
How about buying bullish call spreads? You don't really risk volatility.
Well, that's fine, but depending on the numbers involved, it's not all that different from simply buying calls. I mean if you buy 1 call for $8 or 2 call verticals for $4, you're really just risking the same amount of money if the stock implodes. But you're reward is better buying calls. So it depends on the specifics, but I kind of feel like if I'm going to risk throwing away the premium on a directional move, I'd rather just keep the upside.
How about just buying stocks with stops?
Well, hasn't exactly worked like a charm lately, but you can certainly make a case we got so unbelievably extreme it's not a bad idea to take a shot. Cramer's calling for a 20% decline, what better indicator can we get than that?
What about some ratio call spreads? Like buy one of a call here and short a greater number at some distant OTM price that has some real volatility pumpage too?
Kind of like this one, but again, it's about the specifics. I do expect volatility to stay frothy until we actually rally (as opposed to us settling in here in any meaningful way), but once we rally, it's pretty clear options have a lot of room to get pounded. Current ATM's will hold up better in that situation, as their intrinsic value will explode. So while I like the idea in concept (especially since unlike a straight vertical, you may even structure it to take a credit in), it's a little trickier in practice. I tried it in POT the other day for a small credit, and the stock has only gotten plowed since, so at this point I really have not accomplished anything.
.......And special kudos to Power Lunch on their Umbrage contest earlier regarding the questioning Dick Fuld's pay package. Surprised, but the Gold Medal in "Most Outrage at Questioning Someone's Pay Package" goes to .......Matt Nesto. Other trophy for today is awarded to Dennis and MCC for their interview Sheldon Adelson for declaring we should ban shorting (um, we're actually banning alot of shorting right now and it's not exactly working) and we should get rid of Mark to Market accounting. The last way to get a useless guest back is to question him on transparently ridiculous points. So congrats, he's now primed to be a regular.
Oh, and Octobox Award to the entire group for continuing to genuflect in the presence of every CEO. They are truly all-knowing. On the way up.
.....OK, according to Cooper on MV, this Sheldon Adelson owns Las Vegas Sands. Which is kind of ironic, since he believes short selling should be banned because it's "gambling".
