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The Bear's Rave Party


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Well, this will go down as one huge day for the bears.

 

Last time I remember this happening during a bull phase was the summer of 1996.

 

Here's where we ended up:

 

big.chart?symb=spx&compidx=aaaaa%3A0&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=3377&style=320&freq=1&startdate=1%2F4%2F1995&enddate=7%2F17%2F1996&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=3328&mocktick=1

 

 

The selloff lasted a little while longer into the end of the month, then resumed its climb.

 

big.chart?symb=spx&compidx=aaaaa%3A0&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=3377&style=320&freq=1&startdate=5%2F4%2F1995&enddate=5%2F17%2F1997&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=3333&mocktick=1

 

 

Not saying it will happen this time, but its worth watching.....

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I think it's waaaay too early to say the bull is over.

 

All I can see now is a deep correction, and that's it for the time being.

 

But the intensity of the selling today is something I haven't seen in a looong time, so we have to keep watching.

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Floor trader on bloombox says the word was that when the sow was down 540, the fed had called major center banks and guaranteed liquidity, and in minutes it was up 200.? He said the PPT done it.?  :P?  Imagine that.

 

I'm shocked, SHOCKED, to see manip in the markets.?  :lol:? :lol:

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But of course. Maintaining unreality in markets is a matter of national security. Our tax dollars at work. :ph34r: My take is guaranteed liquidity, to which there must be a limit, can only protract and make more orderly rather than forestall a decline.

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I wonder how much 'liquidity' gentle ben is willing or able to supply. If 1/2 a trillion in US toxic paper were to tumble out, would he buy the lot? If not, rates would skyrocket. I suppose the Fed could end up owning the entire US economy or it's equivalent in waste paper.

 

I wonder if there will be any pop at all? perhaps we continue gapping down for several days. That would make anyone with the playbook a 'vast fortune' when they put in the needle bottom, and dead catted it straight up to new highs, where they will reverse engines, standing another load of bulls on an island in the sky.

 

What a day! :blink: :o :lol:

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I would think that whoever gave you that piece of info is mistaken. If you can't exercise it, then it's not an option, is it? What would give it its value?

563606[/snapback]

 

 

Wouldn't be the first time I'm wrong. :rolleyes:

 

The devil may be in the terms. With an option, I understand you can have three choices: expiration, cancellation, and exercise. To your question above, cancellation would provide the value where you capture the difference between current value and price paid.

 

I may be mistaken, but I think exercise only works for calls. For people who have no margins but have options privileges (most IRA accounts with option privileges), exercising the put for a short margin wouldn't be possible.

 

There's plenty of differences between puts and calls. You can't write covered puts, and the dividends on options are deducted from calls, but not puts.

 

Again, I may be wrong. But I just don't think you can exercise puts. You can cancel them for profit or let them expire worthless.

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Somebody has to be able to write covered puts.

 

Where did you get this information. It just doesn't seem right.

 

I would think that for sure puts can be exercised. The potential for exercise is what makes it an option by definition. If it can't be exercised, it's not an option.

 

As for not being able to write covered puts, that doesn't seem right either.

 

But I am definitely not an options guy.

 

Any brokers out there can set us straight?

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Floor trader on bloombox says the word was that when the sow was down 540, the fed had called major center banks and guaranteed liquidity, and in minutes it was up 200.? He said the PPT done it.?  :P?  Imagine that.

 

I'm shocked, SHOCKED, to see manip in the markets.?  :lol:? :lol:

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That's nothing ... 1/4 - 1/2 point rate cut by Turdsday if this stays submerged.

 

However, that will boost the Yen even further.

 

Bernanke caught between rock and hard place.

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Yeah, I bet we hear a lot about 'Printing press Bernanke' in the media just ahead. :lol: I wonder if he will do an emergency cut?

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I think it's waaaay too early to say the bull is over.

 

All I can see now is a deep correction, and that's it for the time being.

 

But the intensity of the selling today is something I haven't seen in a looong time, so we have to keep watching.

563631[/snapback]

 

Looks to me like that 6 month cycle went a little extended from July, but it has commenced.... or should I say, starting to conclude. :) Hmmm...

 

 

Cheers to Hurst & Doc Stool.

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Somebody has to be able to write covered puts. 

 

Where did you get this information. It just doesn't seem right.

 

I would think that for sure puts can be exercised. The potential for exercise is what makes it an option by definition. If it can't be exercised, it's not an option.

 

As for not being able to write covered puts, that doesn't seem right either.

 

But I am definitely not an options guy.

 

Any brokers out there can set us straight?

 

An exercise is basically I'm going to convert my option into the shares. With a put, the guy who wrote the put doesn't have the shares to give you b/c you want to unload the shares on him.

 

A cancellation is I don't want the shares or anything to do with them, but I'm closing out the option for the delta - delta being profit or loss.

 

A put writer doesn't need to have anything to do with shares because his obligation is ultimately to give you money for the option - i.e., you virtually sold him the shares. In theory you are selling him the shares, but in fact, you may not own any since the option is a right. If I were to hedge my long positions with puts, to come out even, I'd have to do two separate transactions mutually exclusive of each other: cancel the put for profit, sell the stock at loss.

 

A call writer may need to either give you money (if you cancel) or shares (if you exercise).

 

Sounds funny, huh?

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At least they don't have to say it was a 400 point down day.

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uhhhhh......

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Wow, that was amazing. at 3:59 my streamer was showing Dow down 391. Now, down almost 416.

 

There was a lead story on the 4:00 news update on NBC about the "correction."

 

To their credit, at least they interviewed some talking head from Crapvision who said there was no way of telling if it would continue tomorrow.

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Code for "YES!"

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Speakeasy-

 

Check your PM box.

 

Tanks.

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When I clicked on the message at top, I got this

 

 

mySQL error: Too many connections

mySQL error code:

Date: Tuesday 27th of February 2007 03:27:31 PM

 

Seems gone now?

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Anybody else locked out of the site with a "too many connections" error message?

 

About the puts thing: Dr. Bob says you can exercise them, and he's a pro in the field.

 

However, I am sure that you have to contact the broker by phone to do it, and at wild times like today it probably will take a half hour on hold to do that. :P

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I would think that whoever gave you that piece of info is mistaken. If you can't exercise it, then it's not an option, is it? What would give it its value?

563606[/snapback]

 

 

Wouldn't be the first time I'm wrong. :rolleyes:

 

The devil may be in the terms. With an option, I understand you can have three choices: expiration, cancellation, and exercise. To your question above, cancellation would provide the value where you capture the difference between current value and price paid.

 

I may be mistaken, but I think exercise only works for calls. For people who have no margins but have options privileges (most IRA accounts with option privileges), exercising the put for a short margin wouldn't be possible.

 

There's plenty of differences between puts and calls. You can't write covered puts, and the dividends on options are deducted from calls, but not puts.

 

Again, I may be wrong. But I just don't think you can exercise puts. You can cancel them for profit or let them expire worthless.

563619[/snapback]

 

Somebody has to be able to write covered puts.

 

Where did you get this information. It just doesn't seem right.

 

I would think that for sure puts can be exercised. The potential for exercise is what makes it an option by definition. If it can't be exercised, it's not an option.

 

As for not being able to write covered puts, that doesn't seem right either.

 

But I am definitely not an options guy.

 

Any brokers out there can set us straight?

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Put option is a contract that gives the option holder the right, but not obligation, to sell a set amount of shares (100 shares per contract) at a set price. If the option is exercised, the option writer must purchase the shares from the option holder.

 

The opposite of a put option is a call option, which gives the holder the right to purchase a set amount of shares at a set price. Whether a put or a call option, however, the option holder can exercise or act on the contract at any time (American option) until its expiration date.

 

If the holder wants to exercise the contract, he or she simply lets the broker know of the intent to exercise. For example, if Max purchases one March $10 put option on Ford Motor Co., it gives him the right to sell 100 shares of Ford at $10 before the expiration date in March, which usually falls on the third Friday. If Max already holds 100 shares of Ford, his broker will simply sell these shares at the $10 price. In this case, Max would realize a gain if the current price for which he could sell the Ford shares in the market was below the $10 exercise price. For example, if, after Max has purchased the put option, shares fall to $5, he would still be able to sell 100 shares at $10 ($1,000) instead of the $500 ($5 x 100) for which he could currently sell the shares in the market. This transaction would represent an economic gain of $500 for Max.

 

Now let's assume that Max does not have shares of Ford Motor Co. in his account and he notifies his broker that he wants to exercise the option. Max's broker could then purchase 100 shares of Ford at $5 and sell them at $10. In this case, Max would also receive a gain of $500 on the option.

 

The other alternative to exercising an option is to simply sell the option back to the market. If Max chooses this route, the price he would receive in the market would be equivalent to the gain of exercising. In this case, each option would sell for $5, which would cost a purchaser $500 - this price is determined by the price of the option times the shares it controls ($5 x 100).

 

To learn more, see Options Basics and Trading A Stock Versus Stock Options - Part 1.

 

http://www.investopedia.com/ask/answers/06...onexcercise.asp

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