Large Mystery Bearish Trader out there?

I thought you guys might find these links interesting about the large options positions being put on recently.

http://thetradingdigest.com/blog/2007/08/25/mystery-bearish-trader-in-the-market/

 

I hate to say this but it could be somone betting on another 9 11 type incident, or worse, could be Bin Laden, who knows?

I don't like that hearing that kind of info.

 

Trying to do a Blackstone.

 

could be some black box try to to bet big.
a case study; they shorted The Washington Post.
....
from a mere 50,809 shares in August, reaching 100,000 in June and jumping to 119,193 in July. Thus the shorts more than doubled their position in less than a year...
their bet went wrong.
...
Then, on August 3rd, the company reported earnings that meant nothing much in the scheme of things—and yet the stock made a Google-ish 60-point move to a high of $850 on four-times the normal average volume, closing up 4% $825.50 a share.

http://jeffmatthewsisnotmakingthisup.blogspot.com/

 

Also look at the odd volume action in SPY calls Friday
http://finance.yahoo.com/q/op?s=SPY

 

Yeah. Basket programs, buying blocks for protection.
Always good to have a spy screen to refer to every 15 minutes or so while trading. It's a good way to determine the days trend.

Trade in the direction of the premium expansion of the SPY.

Down days see calls down and puts up across the board in every strike and for several strike months.

Up days will see all the calls up and the puts down.

The amount of the premium collapse will tell you how big the program is.

...and they're not done.

 

"The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.

The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg."

Now that's one godzilla sized put position...


:eek:

 

S&P closed very close to 1485 resistance on a light volume. So let's say that close above 1495 will negate this whole move to the down side and market will move on higher from here. Big managers are not able to buy and sell as small day traders can. So hedging your position here and paying a small insurance (15 S&P points) just in case market will go down is a small price for smart manager.

It is quiet possible not a lot of bets just to short this market.

Edit: didn't see the above two posts while was typing.

 

the date of that article was aug 16 around the recent panic bottom

when the VIX was in the mid to upper 30's

 

It's probably meant to hedge a large long-position elsewhere.