Trading the US debt ceiling event.

Discussion in 'Trading' started by rros, Jul 2, 2011.

  1. rros


    Hello friends... wanted to check how others will be playing a potential delay in the raising of the debt limit. What's the best way to leverage a sell off? Vxx sucks balls.
  2. you should position yourself to be long as announcement comes for debt ceiling

    in case of stocks it will be 3%+ day, maybe even 5% and this event will prop market into all time highs within a week
  3. klurby


    To be honest, I believe there will be another mini crash again before the debt ceiling announcement. Reason being, the media will instill fear into all investors by saying. "If a decision is not reached on the debt ceiling by this day then the results for the world economy and US dollar will be catastrophic." They will also throw in things about how unemployment is up. Basically in my opinion what will happen is, next week or the following week the spx is going to take a big hit, and the vix will run to 20, 21, or 22. I am waiting to purchase some vix calls when vix is trading near 14 most likely in the upcoming week. Then once they announce the passing of the debt ceiling increase in august, the market is going to run like no other.
  4. Very very very few people actually believe there won't be a deal. So if it doesn't happen, that's likely where the "unaccounted for" movement will be.

    Haven't even looked at prices - how much IV is baked into ATM in SPY/QQQQ?
  5. i'll go with that. thinking about it, what would be the effect ? would usds go down or up ? Gold ?

    markets down i guess.
  6. If it's not a bluff, we're looking at an "austerity" budget in the US, and an instant recession (or deepening if we're already in one). Hard to see that as a positive for the markets.

    But every time this has come up in the past, the self-described deficit hawks have turned out to be just posturing.
  7. achilles28


    Don't tell that to raging bulls around here. They're convinced all this talk of the debt ceiling and contagion is mass hysteria...
  8. it has been nicely imprinted in brain and reinforced this week with greek story. internet bunch is convinced its one way streret from here. Shorts are on horizon.
  9. achilles28


    For sure. Consensus is a raise in the ceiling. Buy the rumor, sell the news. If they don't get it, all bets are off. The US economy is fundamentally deficient by about 10-15% GDP, or so. No big deal...
  10. You are correct anyone who can will move there wealth out of harms way. Happens all the time big news and the market does not move. The "baked in" factor large caps and indexes have already been protected. The location were the beta will occur should eb in the currencies. Commidities will take a hit The process follows as such. Decision, action, result, reasponse check out what 4GW is when you have a chance.

    #10     Jul 3, 2011