One more chance to pack up on options $SPY $GLD $DJIA

Following yesterday’s plunge of stock markets world wide, the $DJIA, and $SPY are rallying today, as investors await the Fed. Monday morning I hedged my long assets to avoid being affected by the downgrade, I did this by buying puts. The volatility was out of this world and those longing options, such as myself, made significant gains. My hedging paid off 200%, since the fear and doubt aura began in this market, and especially yesterday. I cautiously sold my puts by days end yesterday, and bought much longer expiring puts on the $SPY. We’re not out of this mad market, but I prefer to take less risk.

The $VIX was down a bit today, and this is giving us another opportunity to pack up on puts, and maybe get out of the long assets that may be more vulnerable of the crisis to come. If not, it’s always safer to go through the tough times ahead by hedging these positions.

$GLD maybe a good indicator of a crisis, if we look at 2008, following rising prices for gold for the past years, there was a sell off around October, as the recession began. Right now, gold is still strong but oil is letting go of its grip on high prices, I believe that when gold starts dropping too, this will be one sign of a big dip to come.

Once again I will hedge my investments for the days to come, at least until the end of August.

My opinion is that the day to day trading will be affected greatly by the news, especially by how much it will add to the uncertainty of the market the following session.

Also, I believe that just like European markets will affect markets world wide.

Share

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Market and trading news