Stock Market Crash Prediction!

[UpLate]

Can anybody veryfy if this guy is telling the truth?

http://www.youtube.com/watch?v=Nx9kb12gdRo

Billions in "Puts" suggest the crash of the stock market.

also see www.rfrank118.com/Videos3.htm The GAO suggests the U.S. is Insolvent.

[Albert0373]

Interesting, I'm reading up on it right now...

Found this, it's when they first discovered it and people started talking about it:
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669

Quick Summary:
There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade . But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep in the money calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before. I've been doing this about 25 years.

The entity or individual offering these sales can only make money if the market drops 30%-50% within the next four weeks. If the market does not drop, the entity or individual involved stands to lose over $1 billion just for engaging in these contracts!

Clearly, someone knows something big is going to happen BEFORE the options expire on Sept. 21.

THEORIES:
The following theories are being discussed widely within the stock and options markets today regarding the enormous and very unusual activity reported above and two stories below. Those theories are:

1) A massive terrorist attack is going to take place before Sept. 21 to tank the markets, OR;
2) China, reeling over losing $10 Billion in bad loans to the sub-prime mortgage collapse presently taking place, is going to dump US currency and tank all of Capitalism with a Communist financial revolution.

Either scenario is bad and the clock is ticking. The drop-dead date of these contracts is September 21. Whatever is going to happen MUST take place between now and then or the folks involved in these contracts will lose over $1 billion for having engaged in this activity.

[TonyM]

Interesting, I'm reading up on it right now...

Found this, it's when they first discovered it and people started talking about it:
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669

Quick Summary:

Has to be a player or players that also own some casinos, that is one gutsy gamble. Then again, if one's net worth is in the hundreds of billions it's not really that big of a deal, all a matter of perspective.

[Svenwulf]

great find albert, thanks for the post.

[TonyM]

I was thinking about this a little more lately as it occured to me that perhaps the 'bet' is just a part of an options strategy such as a straddle, maybe Aiki could look at the $spx Sept. options and see if he sees any options strategies that might be in play.

Anyhow, I see that there are 1.73 million puts between the strike prices of $1400 and $700 vs 287k calls in the same strike price range, I don't see how any options strategy of playing both sides of the trade could work with such a huge imbalance of puts vs calls.

The key call area is at $1400 strike whereas the key put areas (open interest of 60k or more) are at; $700, $1125, $1150, $1200, $1225, $1250, $1300, $1325, $1350, $1375 and $1400. The largest open interest strike is at $1400 with 138k calls vs 244k puts.

All conspiracy theories aside, either way you slice it, there's a lot of speculation that the S&P will fall under 1400 by expiry.

[aiki14]

I was thinking about this a little more lately as it occured to me that perhaps the 'bet' is just a part of an options strategy such as a straddle, maybe Aiki could look at the $spx Sept. options and see if he sees any options strategies that might be in play.

Anyhow, I see that there are 1.73 million puts between the strike prices of $1400 and $700 vs 287k calls in the same strike price range, I don't see how any options strategy of playing both sides of the trade could work with such a huge imbalance of puts vs calls.

The key call area is at $1400 strike whereas the key put areas (open interest of 60k or more) are at; $700, $1125, $1150, $1200, $1225, $1250, $1300, $1325, $1350, $1375 and $1400. The largest open interest strike is at $1400 with 138k calls vs 244k puts.

All conspiracy theories aside, either way you slice it, there's a lot of speculation that the S&P will fall under 1400 by expiry.

I did look at it and I couldn't find the open interest. So I looked at the box spreads after seeing the article I posted here:
http://www.onlinetradersforum.com/showthread.php?t=14259
It explains the concept and why it could be mistaken for a precursor to an attack. Also, why use a 700 strike when you could use a more realistic 1200 and get way more likely returns. 700 puts would be a penny, you'd need 7 billion contracts for 700 million dollars, 65000 would be 650 dollars.
That all said I am more in cash today than in the previous year, but that was due to the FOMC and the employment report, not terrorists.

[TonyM]

Thanks for the link to the article, I figured there might be some type of options strategy that I had not even heard of. It would seem then that there is just a bearish sentiment among the options traders, moreso than any wholesale market chaos scenario.

Fwiw, the $700 calls settled at $757.10 x $759.10 volume = 2800 and open interest = 61830

The $700 puts settled at $0.00 x $0.05 volume = 1000 and open interest = 116961

[Luc1Grunt]

Sep 21 looming ahead.

[TonyM]

Yes it is, but I think the box option strategy put forth by Aiki14 makes more sense than any type of conspiracy or insider trading scenario.

[Svenwulf]

Sep 21 looming ahead.

i like to buy low. betcha puts will look kinda cheap tomorrow.

[Svenwulf]

i like to buy low. betcha puts will look kinda cheap tomorrow.

hope you got those puts- i think it could get bad today. friday i thought dow down 50 to 100 on monday- the action looks a lil worse then that this morning. i just wonder where the news could come from? best wishes.

[MoMoney4Me]

The 3rd quarter was quite volitile but it's resiliance is indicative of the positive results a long-term investor can expect.
Rather than fear the possibility of a correction or crash, history shows that it pays to be long in the market. Put the bulk of your assets in a diversified portfolio and let it ride, resisiting the temptation to trade market swings. If your inclined to do so, do it with a small percentage of your assets (mad money).

Don't fear a crash or correction, use it to your advantage. Here's a few facts of market history ,,,,,,

In the days between October 14 and October 19, 1987, major indexes of market valuation in the United States dropped 30 percent or more. On October 19, 1987, a date that subsequently became known as "Black Monday," the Dow Jones Industrial Average plummeted 508 points, losing 22.6% of its total value. The S&P 500 dropped 20.4%, falling from 282.7 to 225.06. This was the greatest loss Wall Street had ever suffered on a single day. The 1987 crash marked the end of a five year bull market that had seen the Dow rise from 776 points in August 1982 to a high of 2,722.42 points in August 1987.

Scary stuff, but look what happens next ,,,,,,

The market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday October 22. It took only two years for the Dow to recover completely; by September of 1989, the market had regained all of the value it had lost in the '87 crash.

Many feared that the crash would trigger a recession. Instead, the fallout from the crash turned out to be surprisingly small. This phenomenon was due, in part, to the intervention of the Federal Reserve.

Since then we've seen numerous corrections that have all been followed by recovery and a move to new highs in the market. We've seen it this past quarter as the Dow topped 14000, dropped 10%, and has since bounced back again.

All that said, I think we'll continue to see the volitility and experiance periods of contraction and correction, but the majority of the traders on this forum, who are much younger than I am and have many years to reap the gains will benefit immensely just by keeping their portfolios diversified and stay in the markets. Don't let it's swings scare you from your long-term goals !!

If the next 20 years are as good as the past 20, you should all be millionaires !