I would like to start a thread of wild speculations. This hopefully could be a thread where people put wild ideas that they actually think could pan out. Here is mine SONS - Sonus Major panick selling resulting in a very high volume hammer, followed, I hope , by a bounce that will be large in percentage terms. ( disclaimer, I bought some today instead of spending the money on a new TV, and I would appreciate it if you all would pile in and drive it up beyond all sanity so that I can buy a new racing bicycle. Thanks in advance. )
Lots of folks will think this is wild....some of my open buy orders I expect to get hit before it's over. SMH @ $17.50 SPY @ $60.00 QQQ @ $18.00 DIA @ $56.00
Gold hits $800 an ounce as JPM unwinds major short derivatives position at 700:1 leverage. JPM collapses in the process. See www.lemetropolecafe.com This is of course wild speculation but an interesting sidebet nonetheless. Was dissapointed I didn't buy those Dec 15 puts at 0.30 earlier this month. They hit 1.50 the other day on JPM's 10% gap down selloff. Of course that's hindsight. You can't spend these "nice calls".
I just posted this over at Wilmott. Those guys couldn't agree on an answer. I suspect that while their answers our likely more theoretically correct the good folks at elitetrader might be able to give me something a bit more robust and useful. "I have been following this thread with great interest. I am an intraday futures trader who is usually more concerned with the tick by tick movements of the market than the lofty nuances of pricing theory but I have been wondering as of late how to transfer the option prices I see into probabilities or odds. I have a challenge for you folks seeing that there is some disagreement as to how to go about this. I would like to know what the market agrees upon as the odds of JPM falling to a price below $10 by December expiration. Here are the variables: S = 18.5 X = 10 T = 0.3333 r = 2.00% V = 83.7% d1 = 1.5289 d2 = 1.0459 N(-d1) = 0.06313975 N(-d2) = 0.14779857 Put Value = 0.30 I would imagine that the odds are relatively high seing that JPM has been getting some very negative press lately with the outlying chance of their total collapse appearing greater than normal. Please excuse my ignorance if any of this is glaringly incorrect. I am still learning and this looks like the place to do it." The big debate was if the probability was closer to N(-d1) or N(-d2) and how this was in relation to volatility smiles and risk neutral probabilities. Interesting stuff but not a directly applicable answer.
Someone on a thread a few months ago called them "chaos puts"...Try out the interview with Saliba from MW...He discusses a specific strategy he used to "finance" his chaos put positions...Its interesting
I've got one. MSO , yes, good old Martha Stewart. If she can manage to avoid a felony conviction she could totally rebound and make out like she was an innocent that just made a mistake or was mislead. MSO could turn from pariah to value stock if Martha can escape.