I like this crash bet. Only the good Lord and baby Jesus know where stocks will end up on Friday, following a possible BREXIT. The very idea of England messing up the globalist apple card is enough to drive G. Soros insane, let alone tank the British pound again. There could be extreme pressures asserted onto markets, which may, in fact, force the British government to ignore the will of the people, for the good of the people.
Traders are throwing powerball bets at the SPY, betting on imminent catastrophe, something venerably delightful to yours truly. Odds are these contracts will expire worthless, just like the euro, eventually. But for now, like a lotto ticket, the allure of turning a 100,000% profit on a weekly SPY put contract, betting on a 20% market drop, is what dreams are made from.
Consider one S&P 500 contract that would move in the money should the index plunge 20 percent to 1,675 by Friday. Open interest in the put has doubled and is now the second highest of any bearish weekly contract tracked by Bloomberg. “It’s a black swan type of put,” said Steve Sosnick of Timber Hill LLC. “It’s very possible there will be an extreme result, and people like to have insurance against a low-probability, high-outcome event.”
Here is this week’s option montage and the next. Keep note of the lunatic(s) who’ve positioned into $135 puts.
“What we call here a Black Swan (and capitalize it) is an event with the following three attributes.
First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme ‘impact’. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.
I stop and summarize the triplet: rarity, extreme ‘impact’, and retrospective (though not prospective) predictability.”
This “brexit” is a blue duck, or an orange parakeet, or a purple turkey.
or rainbow owl
Most of those bets are retarded. Especially considering the market is closed for the day if the level 3 (20%) circuit breaker is triggered. So they need 2 consecutive huge drops to get in the money
the end of the world call only works one time….and it’ll be a bitch to collect on.
“which may, in fact, force the British government to ignore the will of the people, for the good of the people.”
That is Indeed the likely outcome. Whenever have/has the political Hooligans respected the wishes/voice’ of the citizenry, let alone, represent?
Heads; We Win – Tales; You Lose.
Carry On.
Remember there is someone who wrote those puts.
There will be vol for sure but its not the end of the world just the EU. Spain on deck next week.
Some of these bets are assuming charred wreckage swarming with Zika zombies.