Trader Sold 19,000 SPX 2100 Puts

Discussion in 'Options' started by Option_Attack, Jan 15, 2019.

  1. NQurious and destriero like this.
  2. Looks like Dimon and Moynihan aren't the only ones desperately needing a Powell Life Jacket...

    James Cordier 5.0!
     
  3. Looks like the Fed it trying to toss it to them. What's it been, 3 or 4 days in the last week some Fed governor or Powell has been making it a point to publicly jawbone rates? Sounding more and more like the Bernanke and Yellen years.
     
    Last edited: Jan 15, 2019
  4. destriero

    destriero


    I did hear about it. The rumor is it was GS hedging a client's OTC position. Who knows, but reportedly it was GS on the sale/short.
     
    NQurious and Option_Attack like this.
  5. destriero

    destriero

    Regardless, it implies that the customer is bullish, absent another leg.
     
  6. They are doing the right thing for the general economy, but considering huge money at stakes and peoples livelihoods, it's hard to defend what Fed is doing screwing with sentiment which makes the market go sideways short term, but understandable imo to what is coming... They need to roll off the maximum off there balance sheet before it pops, it will be a violent recession
     
  7. https://www.thestreet.com/markets/j...ed-by-veiled-losses-on-bond-holdings-14748752

    Bank of America and Citigroup are the only ones who disclose the market losses clearly, on an after-tax basis, so that they're comparable to net income; Wells Fargo only discloses the losses on a pre-tax basis. JPMorgan doesn't break them out at all, until several weeks later, when the bank files its quarterly report with the Securities and Exchange Commission. (In other words, the losses are so serious -- and real -- that the banks might get in trouble with regulators if they didn't disclose them in SEC filings.)

    Under the accounting rules, the banks aren't required to deduct the bond losses from net income. That helps executives report higher headline profits, while giving Wall Street analysts and traders something to cheer about.

    But the losses are deducted from "common-equity capital" -- the extra money that regulators require banks to keep on hand to withstand a big economic downturn. The common-equity capital is also used to support new loans or make payouts to shareholders in the form of dividends or stock buybacks.

    The deductions are crucial because, as most sophisticated investors know, bank stocks are rarely valued as a multiple of earnings, but as a multiple of common equity. Under the accounting jargon, the losses on the bond portfolios -- usually called "available-for-sale securities" -- are recorded in an account known as "other comprehensive income," or OCI.

    It's a tangle of technical terms to describe a simple concept: The banks are losing money on their giant bond holdings.
     
    murray t turtle and MACD like this.
  8. Take Bank of America, for example. The company reported a third-quarter profit of $7.17 billion, up $1.74 billion from the prior year. But unrealized market losses on its $446 billion of bonds and other investment securities totaled $1.17 billion. In other words, roughly two-thirds of the entire bank's year-over-year profit growth would have been wiped out had the company been required to deduct the bond losses from net income.

    To be fair to the companies, they have little choice but to hold big bond portfolios: Regulators force bank treasurers and risk-managers to keep a pile of extra cash and bonds on hand, as a source of ready liquidity in the event of a panic-fueled run by depositors or other clients.

    But the treasurers do have leeway in what types of bonds they choose to invest the money in: They can buy corporate securities, which are riskier than U.S. Treasuries, to capture a little extra yield. Or they can buy longer-dated bonds, such as 30-year Treasury bonds, instead of short-term bills -- also for a little extra yield, and with a little more risk.

    It's the riskier bonds that tend to lose more money, such as when interest rates go up or when the likelihood of default increases on corporate bonds.
     
    MACD likes this.
  9. Never thought about it like that! Do you have any evidence as to why this might be the case? Setting everyone up for a soft landing?
     
    murray t turtle likes this.
  10. Right....no way anyone could say what net position the guy has on...
     
    #10     Jan 15, 2019
    murray t turtle likes this.