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To: mojito

And yet no names of these speculators ever comes to light.... just that it happens, like it happens every day,...


2 posted on 08/31/2007 1:20:08 PM PDT by theDentist (Qwerty ergo typo : I type, therefore I misspelll.)
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To: theDentist
The rumors are apparently true: some entity or entity has taken a very big position on a dramatic decline in the S&P 500 before Sept. 21, 2007.

http://www.thestreet.com/newsanalysis/optionsfutures/10377063.html

An excerpt of the article, which tries to explain this as part of an investment strategy called a “box-spread trade”:

“As if the mortgage-market meltdown wasn’t enough to spook investors, some market players expressed concerns about unusual options bets that some observers have dubbed “Bin Laden Trades.”

The blogosphere and options trading desks have been rife with speculation about these trades, which are unusually large bets that the market will make a huge move in the next month. Some entity, or entities, has taken a large position on extremely deep in the money S&P 500 options, both puts and calls, that won’t pay off unless the market undergoes an extremely large price move between now and the options’ expiration on Sept. 21.”

Frankly, I don’t buy it. I’m somewhat familiar with this strategy, which is meant to spread risk in a roiled market. Rather, this is a HUGE stake betting on a near-catastrophic melt-down in the financial markets.

6 posted on 08/31/2007 1:28:48 PM PDT by mojito
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